Editor’s note: After decades of decline, many U.S. cities are showing signs of rebirth. This three-part series examines a little of what happened to pull people and development away from cities, what’s attracting them back, how shrewd private investors are spotting trends, and what institutional investment and redevelopment projects have done to bring some cities back to life. (Read Part 1, “Why cities shrink … and grow,” and Part 2, “Local knowledge key for small investors in urban areas.”)

If you’re going to bet, bet big.

That’s the idea behind redevelopment efforts in many cities that have tried to restart attractively located real estate that’s fallen into wretchedness and vacancy over the last 50 years. Government subsidies, public-private partnerships, huge investment cooperatives and decades-long planning go into these efforts with no guarantee of success. And yet, sometimes, the results are spectacular.

From what soil does a forest grow? In Baltimore’s Inner Harbor, it was rotting piers in an impassible harbor, rats scuttling through abandoned warehouses. According to a 1979 article, even as far back as the ’50s it was “ringed by flophouses, brothels and seedy taverns — each with its own connections to political bosslets.”

And so it remained in 1971 when newly elected Mayor William Donald Schaefer took the reins for the area’s renovation. First, numerous buildings were torn down and replaced by grassy waterfront parks. Then, the Maryland Science Center relocated to the Inner Harbor in 1976, followed by a ribbon-cutting at the nearby Baltimore Convention Center in 1979. Their success encouraged the first major commercial development, a two-building retail pavilion named Harborplace in 1980, the National Aquarium in Baltimore in 1981, and a third Harborplace building in 1987.

Now comes the mightiest of oaks, a 59-story, mixed-use tower known simply as 10 Inner Harbor. At its completion in 2010, its 750 vertical feet and 1.8 million square feet of retail, office, hotel and residential space will steal from the nearby Legg Mason Building the title of “tallest building” in both the state of Maryland and the entire stretch between Philadelphia and Charlotte, N.C.

What sort of courage could have inspired the Inner Harbor’s pioneers, when the city as a whole had been bleeding population since the 1950s? One answer can be found in the culture of the 1970s, when urban policies of the previous two decades had been partly responsible for driving the population’s push to the suburbs. Freeway revolts of the period reasserted cities as destinations in and of themselves, rather than just places to pass through.

But the Inner Harbor’s roots go much further back to when Schaefer was first elected to Baltimore’s city council in 1955. He was a strong booster of a proposed nearby development, Charles Center, which was spearheaded by two newly formed business groups, the Greater Baltimore Committee and the Committee for Downtown. Its success led to a 1964 public-private partnership with an ambitious, 30-year plan to develop the 240 acres leading from Charles Center to the Harbor — a development that resulted in today’s booming Inner Harbor.

The risk that Baltimore’s business leaders faced then is little different from those confronting investors in modern-day cities such as Buffalo and Detroit. As Ilya Snyder of the Karras Brothers Co. put it, “Everybody wants to know there’s going to be demand before they build. But (in a shrinking city) there won’t be demand until you build! You can end up sitting on the fence forever. If you don’t have a leader mentality you won’t take the risk because you won’t have the vision needed to see a project’s opportunity. But I think the reward is worth it.”

Snyder is currently working on development of ground-floor retail and 50-60 units of rental residences above in downtown Detroit, with a combined investment of approximately $5 million to $7 million.

Any such development is high-risk, whether driven by profit or a desire for the public good. Alongside such successes as Harborplace are failed festival marketplaces such as Bandana Square in St. Paul, Minn., and Indianapolis’ Union Station.

And Pittsburgh, Pa., suffered a setback when the downtown Lazarus and Lord & Taylor stores failed after a few years, despite public subsidies. Then-Mayor Tom Murphy said, “We tried to create a one-of-a-kind retail base in Pittsburgh, but it was a bridge too far for us. Parts of the groundwork we laid then are now happening, though. We were probably ahead of our time, and it was probably too big an initiative for most people. My view at the time was that, if Pittsburgh was going to succeed, it wasn’t going to do so incrementally: It needed some big investments.”

Back in present-day Baltimore, Ambrosi points to that city’s fundamentals in explaining his company’s confidence in making one such big investment in the 10 Inner Harbor project. “Baltimore’s exploded, with all sorts of expansion along the waterfront. We see it as a very dynamic city: It has a good airport; it’s on the main Amtrak line; has a good educational base with a lot of universities and research hospitals, and plenty of corporations. Plus, it’s just a good living environment.”

By contrast, Ambrosi isn’t as impressed with Wilmington, Del., which he sees as “not as charged or dynamic” as the surrounding coastal areas between New York and Philadelphia, and Baltimore and Washington. “We looked at demographic trends, transportation, school systems, office growth … but it just wasn’t there (in Wilmington),” he said.

While ARC Properties has been around for more than 30 years, such urban investments wouldn’t have been as attractive 10 years ago, Ambrosi said. “Baltimore’s our largest project to date, but it’s all about the opportunity. Would we have done this 10 years ago in Philadelphia? No. But the urbanization of America — which is not even debatable — has been happening for 10 years, and has created these kinds of opportunities. Before, we were doing large suburban developments; now, we’re doing things around train stations, which have become real anchors for opportunity. We’ve seen a real slowdown of areas with one-acre and two-acre subdivisions: People just don’t want to live there anymore.”

Tom Geller is a freelance writer in San Francisco.


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