Willco drops Silver Spring office plan for residences -- Gazette.Net


This story was corrected on Oct. 12 and 16, 2012. Explanations follow the story.

Willco Cos. has scrapped plans for an office building in favor of residential space in downtown Silver Spring, marking the latest delay to add commercial space to the Georgia Avenue corridor.

The Potomac developer has filed an amendment application with the Montgomery County Planning Board to build a 292-unit residential building at 8621 Georgia Ave. The 1-acre site — currently a surface parking lot — has a long history of commercial use, including 34 years as the first home of the Johns Hopkins University Applied Physics Laboratory, which moved to Howard County in 1976.

Willco won approval for a 190,000-square-foot office building in 2009 and had planned to begin construction once it lined up a major tenant. But faced with weak demand for new office space in downtown Silver Spring, the company applied this month for a residential amendment to its project and site plans.

“It’s basically the same building envelope being used as the office building,” said Brian Donnelly, an engineer with Macris, Hendricks, & Glascock, a civil engineering and land planning firm working for Willco.

Willco’s change of plans marks the latest in a series of delays of filling in development gaps in downtown Silver Spring north of Colesville Road.

The property is 75 feet north of Colesville Road, next to land owned by Lee Development Group, which won approval in 2008 for a class A office building and hotel adjacent to the Fillmore music hall the company completed last year.

“There is no market right now for more office space,” Bruce H. Lee, president of Lee Development, said in a recent interview.

Lee can afford to wait for tenants to come calling because the company lined up an unprecedented and controversial 15-year development window when the Montgomery County Council approved the Fillmore project in 2008.

But Willco decided to jump on strong demand for residential space in Silver Spring instead of letting the clock run out on its seven-year development approval window.

That was the same thinking behind the decision by Guardian Realty Investors of Bethesda last year to abandon plans for a 13-story office building one block north of the Willco property on another surface parking lot at 8711 Georgia Ave. Construction started this summer on a 160-unit apartment building.

Guardian seemed to reach the conclusion that more residential space will spur demand for more office space.

"The amended project will introduce more residential housing into downtown Silver Spring, thus energizing the core and increasing the demand for employment and retail services within the downtown area,” the company said in its site plan amendment request.

Even the county planning department was forced to drop plans to redevelop its own office building one block north of the Guardian property. In 2008, the planning board approved development of SilverPlace, a public-private venture for a two-building project at 8787 Georgia Ave. that would have included 158,000 square feet of office space and 300 residential units. But the County Council balked at its $69 million price tag in 2009 and now the plan is dormant because the council approved plans this year to move 400 planning and other county workers from several locations to Wheaton.

Florida firm pays $140M for Bethesda Westwood complex

Equity One of North Miami Beach, Fla., announced that it agreed to buy the Westwood mixed-use complex in Bethesda for $140 million.

The 22-acre property includes 214,767 square feet of retail space anchored by a Giant Food store, a 211,020-square-foot apartment building and a 62-unit assisted living facility. The seller was Capital Properties of New York, which acquired the complex in 2005 as part of a sale of River Road assets by the estate of developer Laszlo N. Tauber.

The property, which Equity said has “significant retail opportunities for redevelopment and expansion,” is southeast of downtown Bethesda, an area that has seen only limited recent growth in commercial space.

The Westwood Tower apartment building is leased to the Montgomery County Housing Opportunities Commission, which is expected to buy the property under a purchase right in 2017. The assisted living facility is leased to Manor Care Health Services through 2015 with no term remaining.

The transaction is initially structured as a $95 million mortgage loan, which has been funded. The deal will be completed as an outright purchase of the property for $140 million with an anticipated closing prior to January 2014.

The main retail center, within the Westwood Complex, has been anchored by a Giant Food supermarket since the center opened in 1959. The Giant lease expires in 2019 with no term remaining.

Building starts on Columbia medical office complex

Kinsley Properties and Reval announced the start of construction of Waterloo Crossing, a 66,000-square-foot, two-building medical office project in Columbia.

Leasing for the complex, at 5890 and 5900 Waterloo Road, will be handled by Colliers International in Baltimore.

Located near the intersection of Md. 100 and Snowden River Parkway, the project will include a two-story, 52,000-square-foot building and a 14,000-square-foot building. Designed to meet U.S. Green Building Council standards, the complex will offer class A medical space with features designed for medical practices and patients, according to Colliers information.

Delivery is expected by next summer.

Crown Farm project breaks ground in Gaithersburg

Developers broke ground Thursday on the retail component of the Crown Farm planned community, a 180-acre office, retail and residential project in Gaithersburg.

Ground was broken for the first phase of construction on Downtown Crown, which includes nearly 260,000 square feet of retail space and 538 apartment homes. Phase one also includes 140 townhomes in Crown West, a residential neighborhood. JBG Rosenfeld Retail already has signed up a Harris Teeter grocery, LA Fitness gym and several restaurants.

Crown, with its Downtown Crown mixed-use core, will feature up to 2,250 residential units and 320,000 square feet of retail and commercial space

In addition to shopping and dining, Downtown Crown will also be home to the Cadence, a $110 million multifamily development by Bozzuto with 538 units above the retail offering a wide range of amenities including five courtyards, three outdoor kitchens, a fitness center and yoga studio, a pool and media theater.

The property is on the former Crown Farm next to the mixed-use Washingtonian Center in the middle of Montgomery County’s science corridor.

$47M loan lined up for Atrium at Rock Spring Park

Meritage Properties and GTIS Partners have lined up a $47 million non-recourse floating rate loan for their Atrium at Rock Spring Park office building in Bethesda, according to Cushman & Wakefield Equity, Debt and Structured Finance, which advised the joint venture.

The property, at 10401 Fernwood Road, is fully leased. In May, the General Services Administration announced the award of a 12-year, $37.3 million lease renewal totaling 99,583 square feet for the National Institute of Allergy and Infectious Diseases, which included an additional 55,000 square feet of expansion space.

The owners bought the property in 2006 for $58 million, when it was about 66 percent leased. Since then, occupancy has increased to 100 percent, with no near-term rollover and two-thirds of the space held by federal tenants.

“The repositioning strategy at ‘The Atrium’ exceeded even our most optimistic expectations,” Andrew Nathan, CEO of Meritage Properties, said in a news release.

Meritage completed the renovation of 57,000 square feet of first-floor vacancy with the modernization of the common corridor and installation of a new window line on the east side of the space.

The Atrium is near intersection of the Capital Beltway, I-270, and Democracy Boulevard. Other major tenants in Rock Spring Park include IBM, Marriot International and Lockheed Martin.

St. John Properties starts new office park

St. John Properties announced it started construction on BWI Technology Park II, a 44-acre mixed-use business park near Baltimore-Washington International Thurgood Marshall Airport in Anne Arundel County.

The project is designed to include about 270,000 square feet of office, flex and retail space suitable for the employment of nearly 1,500 workers.

The groundbreaking follows a nearly four-year reclamation project on the site in which the company removed more than 45,000 spent and discarded car and truck tires as part of Maryland’s scrap tire program. The new development, at the Baltimore Washington Parkway interchange with Nursery Road, complements the existing 600,000-square-foot BWI Tech Park business community.

“Our successful remediation turned a neglected eyesore and environmental liability into a significant opportunity that will create energy and momentum at the interchange, attract long-term jobs and add to Anne Arundel County’s tax base,” said Jerry Wit, senior vice president, marketing for St. John Properties. “Upon completion of our development strategy, we will have created three prominent office and retail parks on the four corners of this interchange, and it will serve as the virtual entrance to Anne Arundel County.”

The first property, at 809 Pinnacle Drive, is a single-story, 51,120-square-foot flex research and development building that is expected to be completed in the first quarter of 2013. The Baltimore developer intends to add six more buildings, including a 61,200-square-foot class A office building and three flex buildings offering an additional 145,000 square feet.

The business park also includes about 20,000 square feet of retail space to serve office tenants and surrounding residential neighborhoods.

The complex is the seventh business park developed by St. John in Anne Arundel County.

The final portion of this three-project development is the planned BWI Tech Park III, which is designed to support a four-story, 120,000-square-foot class A office building and a pad-site reserved for a free-standing restaurant. Construction activities for this third and final business community are expected to begin this year.

Two Baltimore County apartment properties change hands

Ruxton Township Apartments in Ruxton sold for $3 million and Keyway Apartments in Dundalk sold for $2.56 million, according to Colliers International in Baltimore, which represented the sellers.

Ruxton Township, at 1600 Ruxton Road, comprises 24 two-story townhouse units on 1.63 acres. The buyer, Ruxton Place LLC of Baltimore, will renovate and change the name of the property to Ruxton Place.

Keyway Apartments, at 123 Willow Spring Road and 113 and 122 Kinship Road, comprises 64 one-bedroom units in three two-story buildings. Keyway Apartments LLC of Baltimore County sold the property to investor Keyway Management of New York, which will renovate the apartments.

Commercial real estate news items may be mailed to Robert Rand, The Business Gazette, 9030 Comprint Court, Gaithersburg, Md. 20877; emailed to rrand@gazette.net; or faxed to 301-670-7183.

Explanation: The original version misstated the 2006 sale price of the Atrium at Rock Spring Park office building in Bethesda. Also, the original version misstated Montgomery County’s plan to shift workers to Wheaton; the plan involves moving 400 planning department and other workers from several locations.