New lease could mean new tenants at Harborplace

An affiliate of General Growth Properties Inc. may operate Harborplace for another 75 years — assuming the city Board of Estimates approves its lease extension on Wednesday — but that hardly guarantees that the retailers there will enjoy the same longevity.

The proposed deal between Harbor Place Associates Limited Partnership and the Baltimore Development Corp. will extend the operator’s lease through 2087 while increasing its rent by 158 percent.

That financial burden could be passed along to retailers inside Harborplace’s two pavilions, but a rent increase would be hard to swallow for many store owners, who say they already pay a steep price for what’s considered prime real estate.

Some shops, like Hats in the Belfry — one of two original tenants still remaining in the mall — might close their doors if rent soars out of reach, according to manager Justin Seidler.

“I can flat out say that if they were to increase our rent beyond what it is right now, my company would probably move to a location outside of Harborplace,” Seidler said. “Because of our five locations, the Harborplace lease is one of the most expensive and it’s the smallest space by far.”

Managers at Ripley’s Believe or Not Odditorium, which opened in the Light Street Pavilion in June, said Tuesday they were not aware of the lease extension or rent increase.

Harbor Place Associates and BDC officials did not return calls for comment Tuesday.

Harbor Place Associates paid an average rent of $101,700 during the past five years, but under the new lease, it will pay $262,500 until August 2022, when the deal tacks on an additional 5 percent.

The new rate is 7 percent of the development’s fair market value, which is estimated by the BDC to be $3.75 million.

The sizeable jump in base rent is enough by itself to raise a few eyebrows. But the agreement — and business owners’ reactions to it — also underscores broader, persistent complaints about the development and how it’s operated.

Hats in the Belfry has weathered many a storm in the Inner Harbor, Seidler said, since the small hat shop hunkered down inside the Pratt Street Pavilion when the mall opened 32 years ago. But owners plan to re-evaluate the business patterns and customer base of the Inner Harbor location once they finish out their current lease, he said.

“We’ve always had long leases,” Seidler said. “But the last lease we signed was only three years because we have a lot of questions about the longevity of this particular location, and the way it’s maintained and the customer base.”

Even if large, newly added chain stores stay put, Seidler said small retailers share the fear they’ll be forced out.

“It’s definitely something that we think about and are concerned with,” he said.

The lease extension also requires Harbor Place Associates to invest in major capital improvements within three years — including interior and exterior lighting upgrades, outdoor awnings replacements, landscaping, and cleaning and repairs of the concrete pavilions and pedestrian bridges.

But Seidler said the improvements won’t address what he believes are the fundamental problems with the area. Harborplace’s business landscape is definitely calling out for attention, he said, but it needs more than a superficial makeover.

“That’s all just cosmetic stuff,” he said. “The things they should require of Harborplace, if they’re going to make changes, are making a better commitment to safety, having more personnel out there, better enforcement.”