Former Hecht Co. store sold

January 24, 1995|By Edward Gunts and Jay Hancock | Edward Gunts and Jay Hancock,Sun Staff Writers

Baltimore's former downtown Hecht Co. department store, largely vacant since 1989, was sold last week to the Rite Aid Corp., which intends to redevelop it in a way that will bring new life to the struggling Howard Street corridor.

Rite Aid acquired the eight-story building at the southwest corner of Howard and Lexington streets for an undisclosed sum from the May Co., the St. Louis-based retail giant that closed the Howard Street Hecht's six years ago this month.

Rite Aid plans to open a 10,000- to 12,000-square-foot drugstore at street level to replace one it operates on the southeast corner of the same intersection, according to Mark Shapiro, vice president of Struever Bros. Eccles & Rouse Brokerage Services.

The new owner is exploring plans to convert the upper levels of the 225,000-square-foot building to accommodate a mixture of uses, including offices and additional retail space, said Mr. Shapiro, who represented Rite Aid in the transaction.

Struever Bros. will handle leasing and serve as development manager for the project on behalf of Rite Aid, which is based in Camp Hill, Pa.

Possible office tenants, Mr. Shapiro said, include nonprofit organizations and government agencies seeking affordable office space.

Rite Aid also hopes to tap the interest in center cities shown recently by certain "category killer" retailers that have traditionally avoided urban centers, such as Kmart, Bradlee's and Toys 'R' Us. Another option, Mr. Shapiro said, is to turn some of the upper-level space to a mini-mall of boutiques.

"There are some people who have written off this section of Howard Street, but we haven't and Rite Aid hasn't," Mr. Shapiro said yesterday. "We still believe urban centers are viable commercial areas."

Alan Hochman, Rite Aid's director of real estate for Maryland, said the company will determine a plan for the upper floors over the next several months.

"There are eight floors of potentially good office space, or it could be a mixed-use development, or anything, really."

Honora Freeman, head of the Baltimore Development Corp., said her agency is eager to work with Rite Aid as its plans evolve.

"This kind of adaptive reuse of the former Hecht Co. building can serve as a new southern anchor for a revitalized Howard Street," she said. "It's a good sign."

Rite Aid does not typically develop large properties for lease to others, although it has done so in the past.

In this case, Mr. Shapiro said, Rite Aid believes the location is such a valuable corner for its own business that it was willing to take on the challenge of developing the upper levels as well. He added that the company is in a "unique situation" to lease the building at "below market rents" because it is not seeking to make a profit on its tenants.

He said the company expects to earn enough from its own operation at street level that it will be able to cover the bulk of the acquisition costs. As a result, he said, all it wants to do on the upper levels is charge enough revenue to cover its operating costs.

"They could mothball the building and occupy just the first floor, but they're not doing that," he said. "They want to develop the building in a way that will help Howard Street. They want to see some interesting uses."

Constructed in 1925, Rite Aid's building is one of the largest and most prominent on Howard Street.

Mr. Hochman said the company was attracted by the location near the City Crescent office building, the light rail and Metro lines, Lexington Mall and UniversityCenter.

In 1992, the Schmoke administration explored the idea of converting the Hecht building to a new police headquarters. But the next year the city decided instead to expand the Police Department's current headquarters on Baltimore Street.

In the early 1980s, the building's upper three floors were converted to office space and leased to the city for 12 years, but the city did not renew the lease when it expired last year. Mr. Shapiro said the vacant space requires little investment to prepare for new tenants. "It's practically in move-in condition."

Floors two through five are still fitted out for retail use, just as they were when Hecht's closed, and could easily be subdivided for new merchants," he said.

Rite Aid plans to move into its new store within six months and lease additional street-level space to other retailers.

A Payless Shoe store rents space on the mezzanine level and will remain, Mr. Hochman said.

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