Deal near for Port Covington

Development: The 52-acre retail site could be sold next month.

February 24, 2005|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

A deal is in the works for commercial property at Port Covington that has struggled for years to become a bustling waterfront retail complex.

Starwood Ceruzzi Inc. of Fairfield, Conn., is in negotiations with Bethesda-based Finmarc Management Inc. and Kodiak Properties, of Oklahoma City, to sell the 52-acre development, according to Finmarc. Starwood didn't return repeated phone calls, but a partner at Finmarc said the deal is expected to close next month.

"It is under contract," Marc Solomon, a partner with Finmarc, said in the past week. "We plan to complete the project and build it out as a nice retail shopping center."

Starwood wasn't able to fulfill plans it announced in 2001 to redevelop Port Covington as a strip shopping center with 10 to 15 tenants, in addition to Wal-Mart and Sam's Club stores that were built.

"Sometimes you need to change the plan to make things work," said John Meyer, a principal and real estate broker for KLNB Retail, which represents Wal-Mart in the Baltimore market.

Economic development officials consider the Port Covington site ripe for development. Struever Bros. Eccles & Rouse, a Baltimore development company, has preliminary plans to build a townhouse and condominium development adjacent to the Wal-Mart site. The company is in the design stage and hopes to start construction by the spring of next year.

"It has incredible access to Interstate 95, immediate access to downtown, and it's on the waterfront," said Josh Neiman, a senior development officer for Struever. "We're excited about the residential opportunity."

Susan B. Anderson, a retail real estate broker and vice president with H&R Retail Inc., had a client with a lease for 10,000 square feet in the planned strip shopping center.

Starwood initially might have been hurt by the aftermath of the terrorist attacks of Sept. 11, 2001, when the economy soured and retailers cut back on new stores. The development company had trouble attracting tenants, including a grocery store that it hoped would anchor the strip center, economic development officials said.

Starwood also sold property at Hunt Valley Mall after an unsuccessful attempt to remake that shopping center in Baltimore County. It sold the Hunt Valley property to Owings Mills-based Greenberg Commercial Corp. New stores opened this month at the site, now a Main Street-style shopping complex called Hunt Valley Towne Centre.

The Port Covington site presents added challenges for retailers. A former rail yard, it is out of the way in an industrial area, went unused for more than a decade and had to be scrubbed clean of arsenic and petroleum contamination.

Wal-Mart has had less foot traffic than expected since it opened in April 2002. A spokesman for the Bentonville, Ark.-based chain said at the time that it expected to benefit from additional shoppers visiting the strip center.

A regional Wal-Mart spokeswoman didn't return phone calls, but KLNB's Meyer said activity there has improved as the location has become better known.

"They knew there would be a slower ramp-up," Meyer said. "It's an urban location and off the beaten track."

When it opened, the Port Covington Wal-Mart was one of the retailer's first city stores in the Northeast. Only recently has the retail giant moved to expand into cities, where rents are higher and suitable locations harder to come by.

Meyer said Wal-Mart is looking to open other stores in Baltimore in the near future.

"It's really a very positive site," said Nan Rohrer, director of retail development for the Downtown Partnership of Baltimore Inc., a local business group. "I think it's been a good thing for the city. It's really a matter now of how it grows from here and what face it takes."

Solomon said the Port Covington area is ready for retail development as the nearby downtown gains more residential units. The number of people living downtown is expected to reach 10,000 this year. Finmarc plans to add 135,000 square feet of retail to the site.

"We just feel now is the time with the revitalization of downtown and all of the residential development," Solomon said. "There is a need for more retail."

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