Federal Realty Investment Trust announced that it paid $127 million for controlling interest in Montrose Crossing, a 357,000-square-foot retail center that sits at the most prominent intersection slated for intense redevelopment between and around the White Flint and Twinbrook Metrorail stops on Rockville Pike in Rockville.
The Rockville company acquired a 90 percent share from BVS Montrose, which paid $51.5 million for the 16.6-acre property in 2008. The complex, at the northeast intersection of Rockville Pike and Randolph Road, is fully leased and is anchored by a Giant Food grocery and big-box retailers including Old Navy, Marshall’s and Sports Authority.
The company said about 100,000 vehicles pass through the intersection on an average day.
Federal Realty has been eyeing Montrose Crossing for years and its addition gives the company control of 1.2 million square feet of existing retail space on Rockville Pike.
“Montrose Crossing has been a prime acquisition target of our firm for decades,” Don Wood, Federal Realty’s president and CEO, said in a news release. “It's a dominant shopping center with very productive tenant sales that has historically competed aggressively with our own Congressional Plaza, Federal Plaza and Mid-Pike Plaza. With the addition of Montrose Crossing, we now have a product on the Pike that will work in terms of focus and merchandising strategy for nearly every retailer.”
Montrose Crossing is being marketed for its new development potential. A brochure from broker KLNB retail touts Montrose Crossing Phase II, with available retail anchor spots ranging in size from 20,000 to 80,000 square feet. The property already has a separately owned 148,000-square-foot “shadow” anchor in Target. A new bank and restaurant site already have been approved for development.
Under current zoning, Montrose Crossing could be expanded with commercial and residential uses. Additional density could be granted as Montgomery County continues its efforts to attract mixed-use development around Metrorail stations. Tenants at the property produce strong sales with rents generally below market rates, Federal Realty said.
The center is on land that was a working farm until the early 1960s. Its most recent addition was a Bob's Furniture store last year, taking space previously held by a series of other home furnishing retailers. An AC Moore arts and crafts store is scheduled to open this year.
Montrose Crossing is immediately south of Federal Realty's Mid-Pike Plaza, which the company plans to begin transforming this year from a 271,000-square-foot retail strip into a 1.7 million-square-foot mixed-use center with retail and office space and more than 1,500 multifamily residential units.
Bethesda mall slated for new theater, renovations
Say goodbye to The Movies at Montgomery Mall.
The independently owned theater is to be converted to retail space as part of an expansion of Westfield Montgomery mall in Bethesda, said Jim Agliata, vice president of development for Westfield.
“The Maryland customer base is very loyal,” Agliata said. “We’re trying to do it right.”
Westfield is negotiating a lease with a national movie theater operator, he said. The theater would feature 15 or 16 screens — as opposed the three there now — and would have stadium seating and digital equipment.
It also would be moved to a new location above the food court, which is to be renovated and expanded. Shoppers can expect new food vendors, more upscale architecture and sit-down dining options. Cost estimates were not disclosed.
“It will be a dynamic space,” Agliata said. “You will be able to sit in the food court and look 60 feet up and see the lobby of the movie theater.”
Construction would start in the fall and be complete in time for the 2013 holiday shopping season. The food court and movie theater will remain open during construction.
Two years ago, the Movies at Montgomery Mall signed a five-year lease with the mall that gave Westfield the option to terminate after two years if it expanded the theater space, said Jon Goldstein, owner of Highlight Investments of Bloomfield Hills, Mich., which owns six theaters in Maryland, Michigan, Pennsylvania and New York.
His company refurbished the theater, fixing ceiling leaks and replacing screens and seats, he said.
Business was great, Goldstein said. “We doubled it.”
But he decided not to stay in the expanded space.
“The rent is very expensive at the mall and we leave that to the major companies,” he said. He also cited the movie industry’s increasingly “hypercomptetitive environment” in the area as a factor.
Westfield purchased the 1.1-million-square-foot mall in 1994 and has made renovations, Agliata said, adding that this would be the first substantial upgrade. The company won approval from the Montgomery County Planning Board in 2007 for 525,000 square feet of new retail space, but plans were delayed because of the stalled economy.
“That’s not unusual at all these days,” said Robert Kronenberg, a supervisor for the county planning department.
The proposal was to go before the Montgomery County Planning Board on Thursday. Westfield is seeking minor changes to its site plan. Staff recommended approval, according to planning department documents. The planning board has not received public comments on the amendments, department spokeswoman Valerie Berton said.
“It shouldn’t be a long process,” Kronenberg said. “This should have been approved a long time ago, but it hasn’t been.”
The mall will be expanded up to 525,000 additional square feet as the economy allows, Agliata said.
Pair of Howard industrial buildings sells for $42.5M
Industrial Income Trust of Denver bought two Hanover industrial buildings totaling 507,350 square feet for $42.5 million, according to state records.
The buildings at 7481 and 7451 Coca Cola Drive traded for $36.5 million and $6 million, respectively. They are part of the Patapsco Valley Business Park, which is midway between the Capital Beltway and the Baltimore Beltway, at the northwest interchange of the Baltimore-Washington Parkway and Route 100.
The sale of the two Class A properties demonstrates the continued strength of real estate demand in the Baltimore-Washington corridor, said CB Richard Ellis, which represented the seller, Crossroads Venture, a venture between Lincoln Property and Invesco Real Estate.
“With 25 offers representing more than $1 billion of interest on these high-quality, centrally located assets, we continue to see great depth of capital seeking core industrial product in the Mid-Atlantic,” Bo Cashman, senior vice president of CBRE, said in a statement.
Korth Construction buys portfolio
Korth Construction of Gaithersburg has acquired four industrial buildings totaling almost 200,000 square feet in Prince George’s and Anne Arundel counties, according to NAI KLNB, which brokered the sale of the Scott Group Industrial Portfolio.
The price was not disclosed but state records show that Korth paid a total of $6.7 million for the Prince George’s properties. No sales information was available for the fourth building, the 75,000-square-foot Crain Centre in Glen Burnie.
The buildings are cumulatively 83 percent leased and are occupied by tenants that value the small bays available at the properties, according to NAI KLNB.
“The new owner acquired an income-producing asset that, given its small bay configuration, significantly differentiates it from competing projects,” Christopher Kubler, of NAI KLNB, said in a statement. “Risk is well-diversified based on the existence of nearly 60 existing tenants, with each leasing approximately 2,400 square feet of space. In addition, the average rents for smaller-sized industrial tenants are typically higher than those of larger industrial users.”
The portfolio included the 54,400-square-foot Ritchie Business Center and 16,500-square-foot Dunmore Building, both in Capitol Heights, and the Rainswood Building, an almost 47,000-square-foot project in Landover.
All four properties are in strong submarkets with vacancy rates ranging from 4 percent to 8 percent. Each property is in close proximity to major highway systems including Interstates 495 and 97, and Routes 97 and 100.
Maines Paper & Food leases in Savage
Maines Paper & Food Service of Conklin, N.Y., signed for an additional 75,000 square feet of warehouse and distribution space in Savage, bringing the property to full occupancy, according to landlord Terreno Realty of San Francisco.
Maines now occupies the entire 98,745-square-foot building at 8730 Bollman Place, which Terreno bought last year for $7.5 million. Terreno recently completed a renovation of the facility, including new exterior building finish, new office entrance and an expanded and reconfigured truck court.
Oceaneering International Expands in Anne Arundel
Oceaneering International has signed a 68,000-square-foot industrial lease expansion at 6090 Dorsey Road, bringing the company's presence in Hanover to 260,000 square feet, according to Cushman & Wakefield, which represented the owner.
Oceaneering was represented by Paul Schweitzer of Studley's suburban Washington, D.C., office.
Oceaneering, of Houston, is an engineering products and services company working with the off-shore oil and gas, military, aerospace and entertainment industries.
“Two years ago, the company leased 46,000 square feet at 6090 Dorsey Road for expansion of its manufacturing and production facilities,” Cushman’s Michael Elardo said in a news release.
The 68,000-square-foot expansion at the 6090 Dorsey Road location is used by Oceaneering Advanced Technologies' OTECH division, which develops and operates unique marine systems for military and commercial customers. The division occupies 145,000 square feet just up the road at 7001 Dorsey Road for its regional headquarters.
Located two miles from Baltimore-Washington International Thurgood Marshall Airport, 6090 Dorsey Road is off Route 100, with access to I-95. The two-year-old class A industrial building, which totals 300,500 square feet on 27 acres, is part of a 1.1-million-square-foot portfolio.
Sephora leases 70,133 square feet in Harford County
Sephora has signed an industrial lease for 70,133 square feet at 4611 Mercedes Drive within Riverside Business Park in Belcamp, according to Cushman & Wakefield, which represented the firm.
Constructed in 1990, the 178,133-square-foot facility is fully leased. Owner DCT Industrial was represented in the transaction by Adam Weidner of CB Richard Ellis.
“We have been seeing an uptick in this industrial market,” Cushman’s Christopher Wright said in a news release. “The vacancy rate has dropped a bit, and some new product is coming online, including at least one spec building. This transaction is another indication of the improving industrial climate.”
Staff Writers Jessica Ablamsky and Robert Rand 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 email@example.com; or faxed to 301-670-7183.