Plans to build a Wal-Mart in Rockville sit shelved in the freezer behind the pizza and the bagels.
That’s the word from Weingarten Realty of Houston, which announced it paid $54 million to acquire the Pike Center strip mall, but has no plans to redevelop it with the mother of big-box stores.
Although the company owns malls anchored by Wal-Mart stores in several states, the 81,300-square-foot Pike Center at the intersection of Rockville Pike and Bou Avenue will “for the foreseeable future” retain its mix of retailers, which includes Cici's Pizza, Bagel City, T.G.I. Fridays and Office Depot, said Drew Alexander, Weingarten’s president and CEO.
“We love Wal-Mart and have worked with them before, but we have no plans to redevelop the property any time soon,” he said.
So ends for now one of the more bitter battles in Montgomery County, which is wrestling with how to encourage high-quality development and high-paying jobs.
“We plan to lease and operate the Pike Center property pretty much like it is and develop it at some point in the future,” Alexander said.
The mall’s previous owners — the JBG Cos. and JBG Rosenfeld Retail of Chevy Chase — announced plans in October to replace most of the strip mall with a Wal-Mart as the retail anchor of a mixed-use development that would also include more than 200 apartments. Construction was anticipated to start next year, but a recently built M&T Bank branch and Jared jewelry store — both freestanding — would remain.
The proposal sparked debate about the direction of development in Montgomery County, where planners have been building a zoning structure designed to replace the strip malls and their massive parking lots along Rockville Pike with a densely populated urban center defined by office buildings, retail and multifamily housing stretching for miles along pedestrian-friendly sidewalks.
The JBG proposal whipped up intense opposition, even though the Rockville Wal-Mart — at 80,000 square feet with a 600-space underground garage — would look nothing like the only other Wal-Mart in the county, a 157,000-square-foot Supercenter with acres of surface parking in Germantown.
As has happened across the state and the nation, the prospect of a large “category killer” store with non-union grocery workers stirred civic associations, the United Food and Commercial Workers Local 400 union and County Council members to oppose the project. The council took up three measures customized to erect hurdles to the Rockville Wal-Mart and plans for another Wal-Mart store 3.5 miles to the east in Aspen Hill — even before the county Planning Board began considering zoning changes.
Still, JBG seemed to have cleared those political roadblocks.
The council held a hearing in November on Council President Valerie Ervin’s bill, 33-11, requiring developers of big-box stores larger than 75,000 square feet to seek community benefits agreements with at least three civic groups on issues such as traffic mitigation, living wages and funds for community programs. But the measure has not moved and even if it were to pass the council, County Executive Isiah Leggett (D) promised to veto it after County Attorney Marc Hansen opined that it was unconstitutional because it unlawfully delegates government power to private citizens.
In March, the Planning Board approved a pair of council zoning text amendments targeted at big-box stores. The first, ZTA 12-01, would require new stores larger than 50,000 square feet within a half-mile of Metro stations to be limited to 80,000 square feet and include smaller retailers in a mixed-use project. Other requirements include design standards for use of windows, lighting, vehicular access and screening of the site from neighboring residential properties. The second measure, ZTA 12-02, would include similar requirements as the first, but also require that the proposed Aspen Hill store go through the special exception review process in addition to the property being rezoned from its current office space designation.
The council has not acted on the second zoning amendment, but it passed the first, which a lawyer representing JBG said was workable.
Despite buying a property where county officials seemed resigned to allowing a Wal-Mart, Weingarten is not ready to jump through the remaining zoning hoops to build it.
“It will take a lot of work and a lot of time to redevelop Pike Center and that’s not part of our current plans,” Alexander said.
Still, Weingarten clearly bought the property for its long-term development prospects. The company’s news release noted the site’s location between the Twinbrook and White Flint Metro stations, where Montgomery County’s proposed White Flint Sector 2 plan would amend existing zoning to allow high density mixed-use development.
“Pike Center is an outstanding investment which should provide [Weingarten] with approximately a 6 percent return on our investment and further offers tremendous upside when the property is redeveloped at some point in the future,” Alexander said in the news release.
Towne Centre at Laurel finally is a go
Five years after managers announced plans to revitalize the Laurel Mall, developers finally broke ground Tuesday — and area businesspeople could not be happier.
Plans for the overhauled 31-year-old mall include 50 spaces for stores and restaurants and a 435-unit residential development on the corner of Cherry Lane and Fourth Street. The $130 million project is known as the Towne Centre at Laurel.
“Whenever you have a regional shopping center, it becomes a nexus for activity,” said H. Walter Townshend, CEO of the Baltimore-Washington Corridor Chamber of Commerce in Laurel. “This has taken much longer than anyone ever anticipated, but I think it will be a great thing.”
The mall has faced ongoing financial struggles, leading to Somera Capital Management and AEW Capital Management acquiring it in 2006 for $31 million with hopes of redeveloping it. They planned for the first phase, which would have included a 16-screen Regal Cinemas movie theater, to be completed by December 2008.
But the Great Recession derailed those plans, even though the developers landed almost $16 million in public financing for the project from the Laurel City Council.
Owings Mills developer Greenberg Gibbons signed on to develop the project in February 2011. The developer is known for such projects as Annapolis Towne Center and Hunt Valley Towne Centre, both of which previously had been considered lost causes, CEO Brian Gibbons said in previous interviews.
Although the project was expected to get under way last winter, tenant negotiations — particularly with Burlington Coat Factory, which carries a lease through 2020, though it may close for six months — delayed the mall’s official closing until May 1. Burlington remains open and is slated to be part of the new development.
Gibbons said construction is slated to begin in about six months, with an opening expected in fall 2014.
Tenants will be announced by the end of this year, he said. Regal Cinemas has committed to building a 12-screen theater and Harris Teeter is a prospective tenant, according to Greenberg Gibbons’ website.
Townshend praised Greenberg Gibbons, saying the project looks to be an “attractive addition” to the community and likely to draw people from elsewhere.
“We’re really ecstatic,” said Caleb Gould, vice president of Konterra, a 2,200-acre, mixed-used development planned in Laurel. “We think all quality development helps everybody.”
Konterra also includes plans for a 488-acre town center known as Konterra Town Center East.
Gould said Konterra does not anticipate much competition with Laurel Town Centre, as they will offer different retail tenants.
“This has been an underperforming mall for many years,” he said. “It’s going to be wonderful. They’ve got a good program and a good developer.”
Howard Smith, owner of Mr. Smith’s Barber Studio in Laurel, said revitalization also could bring a “tremendous” boost for the nearby Laurel Shopping Center, where his shop is located.
“I’ve seen the plans. If that’s the reality, it will be great,” Smith said. “I’m very excited. It’s going to be huge, no doubt about it.”
Debbie Zook, owner of Rainbow Florist & Delectables in Laurel for 20 years, said she still can remember when the Laurel Mall was a vital piece of the community.
“If you lived in Laurel, you could shop in Laurel. Now, nobody stays in Laurel to shop,” Zook said. “If they put decent stores in it to attract people to stay and shop in Laurel, it could help the whole city.”
Bankrupt apartment complex in Silver Spring sells for $168M
Pantzer Properties of New York announced that one of its funds has bought the troubled Georgian apartment complex in downtown Silver Spring out of bankruptcy for $168 million.
The sale of the 891-unit, mixed-use property was a deep discount because the prior owner had stacked up debt of $215 million on the two-tower complex. The Georgian — which Pantzer renamed the Point at Silver Spring — was in receivership for almost three years and bankruptcy for one year. The complex has an assessed property value of $118 million.
“Our strategy continues to be the opportunistic acquisition of value-add real estate, as well as Class A properties and originating and acquiring debt,” Edward Pantzer, the company’s chairman, said in a news release.
Pantzer described the property as class B-plus and said it will continue renovations started by the prior owner. Stellar Management of New York defaulted on $185 million in debt and lost control of the property to a court-appointed receiver in December 2009.
The complex, at 8750 Georgia Ave., was completed in 1969 and stood as an upscale northern gateway to downtown Silver Spring for decades before construction of Discovery Communications’ headquarters spurred wider new development. The property sold for $89.5 million in 2004 and underwent a $35 million luxury upgrade that was celebrated in 2009 with a party featuring a bikini-clad waitress whose prone body served as a sushi serving table.
The property includes 25,255 square feet of retail space and a 594-car, two-level underground garage.
CBRE brokered the deal, representing the seller and lenders. Berkeley Point arranged 10-year fixed rate financing from Freddie Mac for Pantzer.
“The Pantzer team stepped into a very difficult transaction, for it was in bankruptcy with significant complications,” William Roohan, vice chairman of CBRE, said in the news release.
Pantzer has been active in the Baltimore-Washington corridor, buying up almost $1 billion of properties in the last three years. In March, the company paid $68 million to acquire 1901 West St. in Annapolis, a 300-unit class A apartment project with about 19,200 square feet of retail space. Last year, Pantzer bought an eight-property regional portfolio — including the 218-unit Fox Run apartments in Germantown and 210-unit Watkins Station in Gaithersburg — for $460 million.
Lenders buy Hyatt Regency Bethesda for $106M in auction
The Hyatt Regency Hotel Bethesda, which escaped the auction block two years ago, sold on the courthouse steps Tuesday to its lenders, according to Tidewater Auctions, which conducted the bidding.
The previous owners, the Meridian Group of Bethesda and Rockwood Capital of San Francisco, lost control of the 390-room hotel to a special servicer in 2009 after falling behind on payments on the property’s $140 million mortgage held by Greenwich Capital. A refinancing deal was worked out in 2010 to avoid an auction sale but no such last-minute arrangement was made this time.
The hotel, at 1 Bethesda Metro Center on Wisconsin Avenue above the subway station, was completed in 1985. Its sale follows by a year the acquisition of Meridian’s 3 Bethesda Metro Center office building by Brookfield Office Properties of New York for $150.1 million.
Meridian originally bought the two properties in 1999 for $118 million. Meridian wanted to build 4 Metro Center, a 16-story tower next door, but the proposal was rejected by the Montgomery County Planning Board in 2008. Brookfield has held open the possibility of submitting a scaled-down plan but so far has simply renovated an existing food court that occupies the space.
MacKenzie managing Baltimore County portfolio
MacKenzie Management announced that Greenfield Partners hired it to manage the 845,000-square-foot Baltimore County portfolio that Greenfield recently acquired.
Greenfield, of South Norwalk, Conn., snapped up eight properties in White Marsh and Hunt Valley from Corporate Office Properties Trust of Columbia.
The portfolio includes 226 Schilling Circle, 10150 York Road, 11311 McCormick Road, 200 and 201 International Circle in Hunt Valley, and 7941-7949, 8029 and 8031 Corporate Drive in White Marsh.
Painting contractor leaves Gaithersburg for Frederick
Cochran & Mann, a commercial paint and wall covering contractor, has moved to Frederick from Gaithersburg.
The company signed a lease with St. John Properties of Baltimore for about 5,000 square feet in the newly renamed 423,000-square-foot Westview Business Park, which is near the intersection of Interstate 270 and Md. 85.
The 49-acre campus has nine research and development-office-flex buildings, with additional land that can be developed.
Cochran & Mann, a 22-year-old company, had been in the Montgomery County Airpark. J.B. Powell of Real Estate Teams represented the tenant and Danny Severn of St. John Properties represented the landlord.
The move gives the company more convenient access to customers in Maryland, Virginia and Washington, D.C., according to a St. John statement.
“Also compelling were Frederick County’s more favorable real estate tax structure as compared with Montgomery County; an attractive business-friendly environment; and the availability of newer, high-quality space at competitive leasing rates,” the statement continues.
“This latest lease builds upon Westview Business Park’s recent momentum of attracting companies relocating from Montgomery County, including the National Society of Public Surveyors, Gemini Corporation, Apex Diagnostics and Performance Automatic,” Matt Holbrook, regional partner for St. John, said in the statement.
The business park previously was called the Center of Monocacy.
“We believe the project’s new identity of the Westview Business Park more accurately reflects its prominence as an original anchor of the greater Westview area of Frederick,” Holbrook said in a statement. “In addition, our tenants more closely align themselves with the Westview area, which is widely recognized as the ideal place to work, conduct business and shop.”
Staff Writers Lindsey Robbins and Holly Nunn contributed to this report.
Commercial real estate news items may be mailed to Robert Rand, The Business Gazette, 9030 Comprint Court, Gaithersburg, MD 20877; emailed to firstname.lastname@example.org; or faxed to 301-670-7183.