Wednesday, April 11, 2007

Developer looking for investors

At the same time, businesses say they are suffering from repair work on Town Square roads

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Chris Rossi⁄The Gazette
Starbucks was the first retail shop to open in Town Square. Some of the newer shops are saying the repairs to Maryland Avenue and Gibbs Street are hurting business.
A downturn in condominium sales has driven a Town Square developer to look for investors as more than three-quarters of the residential units designated for condominium sales are shifted to rentals.

Scott Ross, managing partner of RD Rockville LLC, confirmed last week his company is seeking capital to pay down debt incurred while building 644 residential units in Town Square.

At one point, all of the units were slated for sale, but the project came on line as the residential real estate market began bottoming out regionally.

RD Rockville is not looking to get out of the project, Ross said, but for the past two months has been looking for investors.

Both Ross and city officials admit the market slowdown is a setback, but predict the long-term success of the $352 million residential and retail development being finished in the heart of Rockville.

Dozens of retail shops, the Arts and Innovation Center, and the new Rockville Library should attract buyers to the development, located a few minutes walk from the Rockville Metro station, they say.

While residential sales slump, city officials point to strong retail occupancy levels. But problems with failing sections of Maryland Avenue and Gibbs Street have slowed foot traffic as retail stores begin opening.

Business was better than expected when Toy Kingdom opened on March 10, store proprietor Carlos Aulestia said. But then the city closed the part of Maryland Avenue that his store faces, rendering the new business almost invisible while workers and machines repair the road’s buckled pavers.

Since then, foot traffic has fallen off dramatically, he said, forcing him to lay off personnel, reduce his summer inventory purchases and take out a loan to cover his losses.

Other proprietors that have already opened say they also have felt a drop in business.

‘‘It couldn’t have come at a worse time,” said James Duffy, manager of Robeks Fruit Smoothies and Healthy Eats located near the trouble section of Maryland Avenue.

The store opened the same day the city closed the portion of the road, visibly cutting foot traffic and leaving potential customers confused about redirected parking access, store owner Greg Calvitt said.

The business has had to cut some store hours, but only a couple on Saturdays, he said.

Good sales times are ‘‘limited to afternoon traffic” visiting the library, he added.

Federal Realty Investment Trust (FRIT), the company leasing retail space in Town Square but not involved in the road construction, is negotiating rent relief with some retail owners.

‘‘As a landlord, we’re sympathetic to the impact this is having with the retailers that are already open in Town Square,” Vikki Kane, FRIT spokeswoman, said. ‘‘We are working with the tenants that are already open to provide support during the reconstruction process.”

FRIT has asked a couple businesses in Town Square, to delay their openings planned for the next week or so, until repairs to the street can be completed, Kane said. The businesses should be able to open in mid-May, she said, when the road repairs are done.

City officials have not issued a completion date for resurfacing the two sections of roadway and the adjoining Town Square plaza that is also buckling after heavy precipitation hit the area weeks ago.

While an engineering report expected to fix blame for the road troubles has not yet been released, repairs are continuing, City Manger Scott Ullery said.

The development’s grand opening, originally scheduled for May 26, has been delayed, probably by one to two months, he said.

‘‘I think everyone got way too ambitions on an opening date, even without the paver situation,” Ullery said. ‘‘A grand opening should allow some time for all the kinks to be worked out.”