In Deal With Merritt, Warehouser Returns To County

Michel Transaction Area's Largest In '91

August 04, 1991|By Erik Nelson | Erik Nelson,Staff writer

In the Baltimore area's largest commercial real estate deal this year, Baltimore County developer Merritt has leased 177,600 square feet of its space in Savage to bring expanding Michel Warehousing Corp. back into Howard County.

The warehouser had moved out of the county in June 1990. It plans to employ about 60 people in the Savage warehouse, which it began moving into last week, and a nearby facility of about 108,000 square feet it hopes to lease within 30 days, said ChrisMichel, senior vice president of Woodlawn-based Michel.

"I'm very pleased they're coming back," said County Executive Charles I. Ecker, saying the move should help build the county's economic base.

Even more pleased were executives of Merritt and leasing agents for Kayne-Levin-Neilson-Bavar of Baltimore, who are working on the deal.

"It'll be nice . . . to get some of the excess space offthe market," said Bob Clements, an agent who has been working with KLNB partner Bill Miller for about four months to get Michel situated.

Merritt owner Leroy Merritt said the space was rented at the "going rate for the market in the (Baltimore-Washington) corridor," but he would not reveal the actual price.

Located across U.S. 1 from the defunct Freestate Raceway, the two facilities will handle storage and shipping operations for two grocery concerns, which Michel would not name. A third contract warehousing facility, of 150,000 square feet, is being developed in Eldersburg in Carroll County, Michel said.

The Eldersburg facility is targeted as a headquarters for the company, Michel added.

The company's expansion is built on a shift frompublic warehousing, which is run on short-term contracts, to long-term "contract" warehousing.

Michel has been exclusively a public warehouser for 25 years, trusting the luck of 30-day contracts. But in the last year it branched out into contract warehousing for the security of three- to five-year contracts.

"The theory behind public warehousing," Michel said, "is that when somebody cancels out on you, then somebody is right there to come in behind them." That doesn't always hold true in today's uncertain economy, he added, and doesn't reassure lenders in a teetering financial market.

As an example, Michel cited the company's previous experience in Savage, which forced its departure from Howard County. "We had a customer on a 30-day contract, and he walked on us. That whole deal cost us about a million dollars, so you kind of change your whole way of thinking."

Contract warehousing "is a brand-new part of our business and has quickly become the largest part of our business," Michel said. He estimated the current 60-40 mix will shift to 80-20 once the company completes its expansion plans.

Michel does warehousing and shipping for about 4,000 customers. Facilities are mainly in the Mid-Atlantic region and Ohio, with plans to expand to Madison, Wis. Michel's larger clients include Procter and Gamble, Noxell Corp. and the makers of Glad and Arm &Hammer products.

Joseph Cronyn, a senior associate at Legg Mason Realty Group

in Baltimore, who tracks commercial real estate activity, said Michel's 177,600 square-foot lease is the biggest deal in the Baltimore area in 1991.

He said it is the biggest in Howard County since French tire giant Michelin leased more than 330,000 square feet in Jessup last summer from Crystal Hill Investments Inc. of Columbia and Winchester Commercial of Beltsville.

"You don't lease that kind of space every day," Cronyn said of the Michel lease. "That's over four acres under one roof."

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