MIE buying J.C. Penney building at revived Security Square Mall

$2.2 million is price for lone unoccupied anchor site in complex

May 31, 2002|By Liz Steinberg | Liz Steinberg,SUN STAFF

MIE Properties Inc. said yesterday that it has a contract to purchase the J.C. Penney building at Security Square Mall for $2.2 million.

The two-story, 177,000-square-foot building is the one unoccupied anchor slot at the Woodlawn mall and is visible from Interstate 70, the Baltimore Beltway and Security Boulevard. It has been empty since J.C. Penney closed its outlet store in August.

"It's excellent real estate; the building's in great shape," said Jerry Wit, MIE's vice president of marketing. "The opportunity to buy [a property of this size and location] doesn't come along every day."

MIE agreed to purchase the property from J.C. Penney Co. Inc. for $2.2 million, Wit said.

Baltimore-based MIE owns 9 million square feet of space nationwide, mostly rented as offices or warehouses. Local properties include the BWI Commerce and Technology parks, Annapolis Corporate Center, Glen Burnie Business Center and Patapsco Business Center.

The Penney building will increase MIE's retail real estate portfolio by about 30 percent to about 800,000 square feet, Wit said.

Security Square, which will turn 30 in August, has adapted to meet the changing market, said NAI KLNB Inc. President Tom Maddux, whose commercial real estate brokerage company has represented MIE.

Security Square has full small-store occupancy, said mall general manager Deirdre Moore, giving it one of the highest rates in the region.

The Mall in Columbia has 96 percent small-store occupancy. Owings Mills Mall, which also has two empty anchor slots, has 91 percent small-store occupancy.

The mall was less viable several years ago - when Capitol Investment Associates purchased it in 1997, it had a small-store occupancy percentage in the mid-80s, Moore said - but it has reinvented itself, adding Old Navy, Burlington Coat Factory and International Furniture Liquidators while keeping the older department stores Sears and Hecht's, Maddux said.

The mall's sixth anchor is AMC Theatres.

MIE is investigating possible uses for the space, which is zoned for uses including retail, offices and call centers, said Wit. The company, which usually rents to smaller tenants, sent a release to real estate brokers advertising the property as "great space for retail, university, education, self-storage, telemarketing, etc., etc."

Mark Millman, president of the Lutherville-based Millman Search Group retail consulting firm, said he thinks it likely that MIE will break up the J.C. Penney property to rent to smaller and medium-size businesses.

"That's probably the best format based on the retail market right now," said Millman. "Big boxes are a dying breed."

Millman noted that Owings Mills has been unable to lease its two empty anchor slots to large retailers.

MIE might have an example in Security Wards LLC, which bought the 143,252-square-foot former Montgomery Wards building for $2.1 million in December and has leased 77 percent of the building to International Furniture Liquidators, which opened a week ahead of schedule April 19.

"It has influenced us in our decision-making that [Security Wards] scored such a big hit so quickly," said Wit.

"When the opportunity presented itself to MIE, we went after it."

Michael B. Glick, Security Wards' owner, said his company has designed the remaining space facing Security Boulevard to suit four or five smaller retailers.

The company has been pursuing tenants for the space for about a month and has proposals in the works, Glick said.

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