×

How to fix problems in Baltimore: Business leader

There is a sense of hopelessness for urban African-Americans, as evidenced by the riots in Baltimore, that can be fixed, in part, by promoting entrepreneurship in the community, real estate entrepreneur Don Peebles said Tuesday.

The city began cleaning up Tuesday from the looting and fires that erupted after the funeral of a 25-year-old black man who died in police custody.

Peebles, the CEO and chairman of The Peebles Corp., noted that the unemployment rate in Baltimore for African-American men is almost 40 percent.

"You have this tremendous wealth disparity, and that's what we're seeing here. There's a sense of hopelessness and frustration," he said in an interview with "Power Lunch."

A man with his hands up as officers move forward during a protest for Freddie Gray in Baltimore, April 27, 2015.
Jabin Botsford | The Washington Post | Getty Images
A man with his hands up as officers move forward during a protest for Freddie Gray in Baltimore, April 27, 2015.

From an economic standpoint, the remedy can be found in entrepreneurship, he added.

For instance, in New York 2.7 percent of the city's contracts are with minority-owned businesses, yet 64 percent of the population is minority, Peebles said. Baltimore's numbers are better, but not by much, he added. However, he noted that Washington, D.C., has a much higher level of entrepreneurship, and "doesn't see this type of unrest."

"Locally based, minority-owned businesses will actually hire minority residents," Peebles said. "This is a long-term solution for a problem that's been long coming."

Read More Obama: Baltimore riots 'counterproductive' and 'no excuse' for it

Short-term, he believes Baltimore needs to give the business community comfort that the city is a safe place to invest.

On Monday, looters ransacked stores, pharmacies and a shopping mall while clashing with police. The unrest was the most violent in the United States since last year's riots in Ferguson, Missouri.

Maryland Gov. Larry Hogan declared a state of emergency Monday and a one-week curfew was imposed starting Tuesday night.

Baltimore-based fund manager T. Rowe Price said it would close its downtown office on Tuesday while Legg Mason, also headquartered downtown, said its office would be open but it was encouraging employees to work from home.

Former Baltimore Mayor Kurt Schmoke, now the president of the University of Baltimore, called the economic impact "serious."

When the mayor and governor called out the National Guard, they knew it would have a ripple effect for quite a while, he said in an interview with "Closing Bell."

"It is the last resort that any city wants to turn to," Schmoke said. "You can count the dollars in damaged property right now but the future impact, that business that's not going to come here or conferences that were thinking about Baltimore now going elsewhere, it's hard to predict."

Across the river at the Port of Baltimore, it was business as usual Tuesday, said James White, head of the Maryland Port Association.

The port, which ships $52 billion in cargo each year, had a full complement of labor working, nine ships and a cruise ship.

"We had somewhat of an apprehensive start this morning with cabs transporting the passengers to and from the ship but that quickly resolved itself and it's been business as normal," White told "Power Lunch."

Read MoreBaltimore smolders after riot over black man's police-custody death

Despite the unrest, Peebles said he'd still consider conducting business in the city, noting that it was a natural place for The Peebles Corp. to grow.

As for rebuilding, the private sector has an obligation to do its share, he said.

"All of us as entrepreneurs have a dual responsibility. We need to make a profit for our shareholders and our investors but also make sure that the economic activity that we engage in is all-inclusive."

—Reuters contributed to this report.