The collapse of the Francis Scott Key Bridge, the imposition and alteration of numerous import tariffs, shifting economic outlooks, the prospect of a new container terminal, and the completion of CSX’s Howard Street Tunnel project have conjured a mix of prospects, problems and uncertainties for traffic through the Port of Baltimore and the CRE properties that support it.
So what could happen with port traffic and associated CRE needs in the coming years?
The completion of the CSX Howard Street Tunnel project is expected to bring an additional 160,000 containers through the port annually due to double-stacking capacity.
“While the port’s roll-on, roll-off capabilities spur much of its demand, it sees a substantial tonnage in bulk and breakbulk cargo that stand to benefit from improved transit capabilities, such as the Howard Street Tunnel’s new double-stack clearance,” said Emily Smith, Vice President and Market Officer for Prologis’ Mid-Atlantic operating portfolio.
“Warehouse and distribution facilities with higher clear heights and dock ratios are often well suited for the needs of these port users,” Smith said. “Third party logistics providers and e-commerce businesses, as well as sectors dealing with cargo that requires rail tunnel height such as heavy machinery and automotive, could also continue generating demand for space.”
Tradepoint Atlantic anticipates that expansion in cargo-handling infrastructure on CSX plus its proposed construction of a container terminal will accelerate the buildout of six million square feet of planned warehouse space at its Sparrow’s Point site, said Aaron Tomarchio, Executive Vice President, Corporate Affairs.
“It will also increase warehouse demand within the region because you have additional throughput that will be coming through this new container terminal with our partnership with TIL and MSC,” Tomarchio said. Terminal Investment Limited, a subsidiary of the global shipping company MSC, is a partner in the joint venture to develop the container terminal.
Construction of the terminal is tentatively set to begin in the first quarter of 2026. The project, however, still has to clear multiple regulatory bars and contend with a heightened financial challenge.
The planned, $1 billion terminal “is well over budget, given the trade pressures created by tariffs,” Tomarchio said. “The cost of equipment has escalated. Inflationary and tariff trade pressures are all coming together and creating a far more expensive project than what was envisioned.”
The joint venture partners will have to decide if they are willing to shoulder those added costs.
Meanwhile, companies active in port operations and industrial real estate companies have been navigating changing economic conditions and outlooks.
“While broader economic uncertainty in the first half of 2025 brought negative absorption and increased concessions in some submarkets, these dynamics are ever changing,” Smith said. “In recent months, some companies have shifted to a long-term outlook, moving forward with port-centric activities and real estate decisions despite short-term uncertainty. Tariffs remain a stressor on all ports and their full impact is not yet in focus.”
“My experience is the demand for industrial product is more tied to the business cycle of the economy and GDP than any other factor,” said James Lighthizer, Principal, Managing Partner of Chesapeake Real Estate Group. “We are on the downswing of the cycle right now and there is more availability than there is demand.”
North of the Howard Street Tunnel in Baltimore, Harford and Cecil counties, less than two dozen industrial buildings are available and most of those are larger than 200,000 square feet, Lighthizer said. “South of the tunnel, there are dozens of available spaces, but they are relatively small, less than 200,000 square feet,” he said.
The completion of the CSX project “will help fill the smaller spaces in the Baltimore-Washington corridor,” Lighthizer added. “The improvements should also help create some demand for larger spaces available north of town.”
To meet anticipated growth in demand for logistics space, Tradepoint Atlantic this spring announced plans to build a $100 million, 500,000-square-foot logistics complex in Savage. In addition to supporting logistics and distribution, Tradepoint expects the Tradepoint at Savage Crossing complex could also support life sciences and research-and-development companies in Howard County, Tomarchio said.
Growing demand for warehouse space in central Maryland, however, may not materialize quickly.
“Industrial demand in Baltimore has always gone the way of GDP, first and foremost,” Lighthizer said. “The demand from these rail improvements should result in a gradual, slow increase in the local market demand. This will particularly be the case until the bridge gets rebuilt.”