After 18 months of negotiations, a Washington, D.C., developer has purchased the Parkway Co. and its two industrial parks near Baltimore-Washington International Airport for more than $50 million.
The Svatos Co. -- developer of industrial and warehouse projects -- announced yesterday that the purchase of the 25-year-old firm from founder Leslie Legum had been finalized.
The company, backed by investment adviser the Boston Co. Real Estate Counsel Inc., bought 15 buildings in the 66-acre Parkway Industrial Center and 90 acres of prime undeveloped land in the adjacent Parkway Corporate Center.
The Svatos Co. will act as property and leasing manager for the Boston Co. Real Estate Counsel in the Parkway Industrial Center, which has 927,000 square feet of space, 90 percent ofwhich is leased to such tenants as Westinghouse Electric Corp., General Electric Corp. and Weyerhaeuser Corp.
In a joint venture, Svatos and its partner will develop the Parkway Corporate Center into a light industrial and warehouse distribution center, building up to 1.2million square feet of warehouse space.
Robert A. Bianchetti, vice president of the Boston Co. Real Estate Counsel Inc., said the partnership chose the site because of its well-developed location near major highways.
The new owners will construct buildings to suit tenants, who must prove creditworthy and sign long-term leases.
A county Office of Economic Development report released last week showed that of 3.8 million square feet of warehouse space surveyed, 14.6 percent remains empty. Owners have been able to lease more than half of the 713,606 square feet of industrial space built in the county last year, the survey showed.
Company founder and President Joseph G. Svatos noted a need for warehouse space in the Baltimore-Washington corridor, especially for distributors requiring 150,000 to 250,000 squarefeet.
Most of the larger space built by the middle of last year has been filled, he said.
"The warehouse distribution market is notoverbuilt like the office market," he said, adding that he expects food or retail distributors among his tenants.
The Svatos Co. is negotiating with potential tenants, Svatos said. He expects to begin building sometime next year and to complete the park in five to seven years.
As part of the deal, the company has assumed existing mortgages on the buildings it purchased. It has hired eight former employees of the Parkway Co. and opened a branch at the Parkway Industrial Center.
Joseph Svatos formed his company in 1988 as an affiliate of the John Akridge Co., a Washington developer, to build warehouses in the Washington suburbs.
In 1989, he formed the joint venture partnership with the Boston Co. Real Estate Counsel Inc., a subsidiary of the Boston Co., which in turn, is a subsidiary of Shearson Lehman Bros. Inc., an American Express company. The joint venture manages a $40million fund to acquire land and develop warehouse projects in Maryland.
Svatos first approached Legum in fall of 1989, when Legum wastrying to sell the company.
Negotiations hit snags because of thenumber of players involved -- for instance, the various mortgage lenders for each building. In April, vandals destroyed an underground storage tank on Parkway property, causing a 5,300-gallon oil spill, requiring a massive cleanup and further delaying the sale.
Legum continues to operate as part of the Circle Cos., which is located at Cromwell Business Park, Svatos said. By the end of the year, the Svatos Co. plans to buy 75 acres at that park, just east of BWI, from Legum Cromwell Joint Venture.