The redevelopment of Harborplace still faces a crucial hurdle — financing

It wasn’t when MCB Real Estate bought the Inner Harbor’s aging pavilions. It wasn’t when the firm’s managing partner, P. David Bramble, stood next to the mayor and governor and unveiled renderings of glittering buildings along the waterfront. And it wasn’t when voters effectively gave their stamp of approval.

The most important moment in the redevelopment of Harborplace will be when someone — most likely a mix of investors and lenders — commits hundreds of millions of dollars to the project.

So far, that hasn’t happened.

Over the next week, crowds will swarm the Inner Harbor to gawk at tall ships visiting for Sail250. Some may wonder: What’s up with these eerily empty mini-malls? Wasn’t something supposed to happen here?

To be four years into the redevelopment of Harborplace and not have the money to actually do something might seem strange to the average person.

It’s not.

When you want to buy a house, a bank preapproves you for a home loan. This lets the seller know you’re serious and gives you the confidence to make an offer. This is possible because homebuying is a standardized process that’s repeated thousands of times every day.

Developers do not have this luxury.

Despite a raft of imitations and near-replicas, there is only one Harborplace. And there is no loan preapproval process for demolishing it and building a massive mixed-use development in the heart of Baltimore.

Financing can come somewhere in the middle of a project, after renderings, preliminary approvals, rezonings, community meetings, permitting and more. Until financing is secured, the developers often bleed money because they pay for early expenses out of their own pockets.

When Bramble said MCB expected to invest at least $500 million into redeveloping Harborplace, that didn’t mean MCB had $500 million. It meant the Baltimore-based developer believed it could raise $500 million from investors and lenders.

MCB also anticipated that Maryland and the federal government would commit $400 million to public improvements around Harborplace. Legislative records show state lawmakers have so far earmarked and amended multiple appropriations for the project, totaling roughly $65 million.

In most major projects, the developer chips in a small portion of the overall price tag. A big chunk comes from investment banks, private equity or other funds. The bulk often comes from bank loans.

When a plot of land remains vacant or a proposal stalls out, it’s usually because the developer can’t convince these giant pools of money that their investment will be sufficiently profitable or that their loan will be repaid.

It’s not that a developer wants to sit on their hands; they just don’t have the money to do anything else.

Take the Superblock.

A few years ago, a team of developers put their heads together and came up with a unique plan to solve this long-stalled project on the west side of downtown.

Their mixed-use approach ticked nearly every box for what people wanted: It preserved historic storefronts. It memorialized the Civil Rights Movement sit-in at Read’s Drug Store. It added performance space to a designated arts district. It included apartments and retail space so people could shop at new stores, eat at new restaurants, and live downtown.

But the developers couldn’t get financing.

It wasn’t enough that they had a good idea, beautiful renderings, city support and public enthusiasm. Developers need investors and lenders.

MCB has a track record of completing sizable, mixed-use developments in Baltimore, such as Yard 56 and Northwood Commons.

But prior success does not automatically guarantee future financing. More than anything else, investors care about the rate of return (aka, how big the profits will be). Lenders want certainty that their loans will be repaid with interest. If there are more viable projects in other cities — say Nashville or Phoenix or Boston — that is where their money will flow.

Whether a developer gets financing sometimes has less to do with the merits of their project and more to do with macroeconomic trends outside their control. Things like interest rates, construction and labor costs, or projected rates of job and rent growth.

Except in rare instances, developers are not billionaires sitting on piles of cash that can be deployed at their whim. And neither are they dictators who can order the government to build their vision.

The commercial real estate developer is more like a symphony conductor.

Standing behind the rostrum, the developer raises his baton and looks out at his musicians. There are architects with flutes. Civil engineers with trumpets. Builders and subcontractors with tubas and trombones. Politicians and city planners with violins and oboes.

The developer waves his baton, cajoling, wheedling and menacing the symphony to play as one body. The song swirls and builds until it finally reaches the crescendo.

The investor bing-bong-bings the timpani. The banker crashes the cymbals. The developer gets financing.

Everything else that follows — the demolition, the construction, the ribbon-cutting — is the denouement.

Right now, with Harborplace, we are somewhere in the buildup to the crescendo. Bramble declined multiple interview requests, but our conductor appears to be waving that baton as furiously as ever.

His commitment to redeveloping Harborplace has never wavered. But his public comments on financing have vacillated from exuberant to alarmed.

When MCB went public with its intention to buy Harborplace in April 2022, Bramble called himself an optimist and said Baltimore had 10-times more upside than downside.

But two years later, he told Baltimore Fishbowl that MCB, a Baltimore-based firm with real estate investments across the country, could be pursuing projects much easier than redeveloping Harborplace.

“I don’t know how much you know about us,” Bramble said. “But we need this deal like we need a hole in the head.”

Earlier this year, Bramble sounded as bullish as ever, telling The Baltimore Sun that “people want to invest in this town now.”

Three months later, the Baltimore Business Journal reported that Bramble, talking at a real estate forum, lamented how difficult it was to get financing in Baltimore.

He blamed the city’s permitting system. He blamed competition with other cities. He also blamed “The Wire,” an acclaimed TV show set in Baltimore that aired its last season in 2008. The show featured the drug trade, gun violence, police brutality, failing schools, political corruption and sensationalist journalism.

“If you’re ever trying to raise investment capital and you call anyone in New York, California, Chicago to try to get money, the first thing you hear is, ‘Is Baltimore really ‘The Wire’?’” Bramble said. “You hear that over and over again.”

What does this mean for Harborplace? It’s unclear.

Earlier this month, Baltimore Fishbowl attended a meeting for potential subcontractors of the project. More than 150 people showed up, and the outlet reported that demolition is expected to start this year, regardless of whether financing has been secured.

All we have for now are renderings, and renderings are not etched in stone. They’re less like architectural blueprints and more like pictures on a Pinterest board.

What gets built — and what doesn’t — will depend on the money.