Sears leases Columbia warehouse Company to set up distribution center

December 22, 1992|By Timothy J. Mullaney and Adam Sachs | Timothy J. Mullaney and Adam Sachs,Staff Writers

In what could be the biggest commercial lease in Maryland history, Sears Logistics Services Inc. will create a distribution center in the old General Electric microwave and range warehouse in Columbia, leasing 945,000 square feet of space from the Rouse Co.

"It's obviously the biggest deal in many, many years," said Gary Dewey, head of the Baltimore office of CB Commercial Inc., a brokerage firm that represented both parties in the deal. "A million square feet here, a million square feet there, it begins to add up."

The center, which Mr. Ryan said will employ between 60 and 90 workers when it opens in February, is designed to speed delivery of appliances and garden equipment sold at the Brand Central outlets of Sears stores from Virginia to New England.

Sears' lease represents a major step in reviving the huge building that GE left in 1991. And the deal excited Howard County officials.

"This distribution center and others we've landed [including a recent deal for a Coca-Cola plant] put Howard County front and center," County Executive Charles Ecker said.

Sears officials looked at buildings in Pennsylvania, West Virginia and New Jersey before settling on Columbia, Mr. Dewey said.

CB Commercial initially showed Sears the Columbia building for another purpose, but Sears took that deal to New Jersey, only to come back to the Columbia building when it was looking for a distribution center site, he said.

"The location fit and the building fit," said Eugene V. Ryan, director of contract warehousing for Sears Logistics, which is based in suburban Chicago. "The building was compatible for what we were going to use it for" because of its high ceilings and because it was designed to store appliances, he said.

Currently, appliances that aren't in stock at Brand Central outlets in the northeast are shipped to customers' homes either from a distribution center in Columbus, Ohio or from the manufacturer, he said. "We'll have the ability to deliver to a customer's home in 48 hours. Today it's 72."

Mark Wasserman, Maryland's secretary of economic and employment development, said the state did not offer Sears any financial incentives to move here. But he and Mr. Ryan said a law created by the General Assembly last year, allowing companies to operate 53-foot double-trailer trucks on Maryland's roads, was essential to landing the Sears deal.

"We didn't really make that happen," Mr. Ryan said. "But Maryland finally passed the 53-foot law. The passage of the 53-foot law is what brought us into Maryland."

Neither Rouse nor Sears would divulge financial details of the deal, which Rouse said has a five-year term, with Sears having options to renew.

The U.S. General Services Administration leased 170,000 square feet of space from Rouse in the same complex in November on behalf of the Coast Guard. The Coast Guard lease calls for a rent of $5.77 a square foot for the first five years of the lease, GSA spokesman John Thompson said.

If Sears was paying that much per foot, the lease would be worth more than $5 million annually.

But Rouse said the Coast Guard's rent is higher than Sears'.

"That [the Coast Guard space] requires more extensive finishes for the tenant," Rouse executive vice president-development Douglas McGregor said.

Rouse will pay for a road connecting the complex to Snowden River Parkway, and will add as many as 30 new truck loading doors to the building, Mr. Ryan said.

Real estate community reaction to the deal was strongly positive.

"Good God," said Tim Jackson, who tracks market statistics for Casey & Associates in Baltimore. "That [the 945,000 square feet] is a good number. It's good news for the market, that's for sure."

County officials also were enthused about their latest major economic development coup.

Coke announced in October that it will build a 10-story, $125 million production and distribution plant and regional headquarters at Parkway Corporate Center near Dorsey. That facility is expected to employ 500 and pay $4 million annually in property taxes.

Ford Motor Credit opened a regional customer service office in Columbia in May.

"This has been a good year with Ford Motor Credit, Coke and now Sears coming here," said County Council chairman Paul R. Farragut, D-4th. "It makes the county easier to sell to other businesses."

General Electric once employed 2,800 people at its Appliance Park facility. But the company closed an air conditioner plant in 1974, a microwave plant in 1986 and the range operation in 1990. Rouse bought the property from GE late in 1990 and GE's last operations left the site in 1991, Rouse spokeswoman Cathy Lickteig said.

Rouse is also developing retail properties on the old GE property for BJ's Warehouse Club, Hechinger Home Project Center and Service Merchandise, Rouse chairman Mathias J. DeVito said. The stores are set to open in the spring.

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