Large Shopping Center In Gambrills Is Sold

Waugh Chapel Deal Is One Of Biggest In Area Since Recession Started

February 04, 2010|By Lorraine Mirabella | Lorraine Mirabella,lorraine.mirabella@baltsun.com

In one of the biggest retail real estate deals in the Baltimore-Washington area since the start of the recession, a team of investors has purchased a large Main Street-style center in Gambrills.

The sale of The Village at Waugh Chapel, a grocery-anchored shopping center with big-box stores such as Marshalls and Home Goods, indicates an upswing for the retail sector, real estate experts said Wednesday. The buyers, a team of Chevy Chase investors, closed the sale on Tuesday but did not disclose the sale price.

"In this environment we're in, large commercial property sales have been rare because lenders have not been active in lending on large deals," said R. William Kent, an executive vice president of CB Richard Ellis who oversees retail investment sales in the Mid-Atlantic for the commercial real estate firm. The firm represented Waugh Chapel's seller, Prudential Real Estate Investors.

"This shows some confidence in the market by both investors and lenders for ... retail assets," Kent added. "There's a sense that issues in the economy have bottomed out and people are looking toward the future."

Investors have reason to feel confident in the Baltimore-Washington market because a relatively stable job market has spurred consumer spending, allowing the area to weather the recession better than many other major U.S. markets, he said.

The 390,000-square-foot center at Route 3/Crain Highway and Waugh Chapel Road in Anne Arundel County has been a successful mix of stores and is 96 percent leased to more than 60 tenants, among them Safeway, Marshalls, L.A. Fitness, Home Goods and 15 restaurants.

The center, which opened in 2002, was developed by Owings Mills-based Greenberg Gibbons, the developer of Hunt Valley Towne Centre and Annapolis Towne Centre at Parole. Greenberg had a minority stake in Waugh Chapel.

The new owners - JBG Rosenfeld Retail of Chevy Chase and affiliates and Buvermo Investments of Bethesda - said the shopping center fits well with their portfolio of more than 20 retail centers in Maryland, Virginia and Washington, D.C. The acquisition is one of the largest for JBG Rosenfeld in the past several years, said Carter Davis, a vice president at the company.

The buyers said their financing came from Northwestern Mutual Life Insurance Co. Financing came through at a time when financing markets are "starting to loosen up a little bit," Davis said. "We think it's a good sign of things to come."

Davis said lenders were attracted to finance the deal for the same reason the buyers wanted to acquire the center.

"It should be a good long-term asset to own and be an investor in," he said.

The center is located in a growing area, 15 miles from Annapolis and six miles from Fort Meade, where federal base restructuring is bringing thousands of new jobs and residents.

While some national retail chains have filed for bankruptcy and shuttered stores in the area, other retailers have thrived in the Baltimore-Washington market.

"It's hard to compare this market to anywhere else in the U.S.," said Thomas Maddux, president of retail brokerage KLNB Retail. "We never got overbuilt, and always had steady employment and high incomes."

Still, sales of large shopping centers have been rare during the recession because values have decreased. Only two comparable sales have been logged in the last two years in Anne Arundel County, according to CoStar Group Inc. Burwood Village Center, a 105,800-square-foot center, sold for $13 million in September, while Ordnance Plaza, a 154,661-square-foot center, sold for $26.5 million in March 2008, CoStar said.

More than a year ago, Chicago-based General Growth Properties put Harborplace & The Gallery, the shopping and entertainment development that helped spur Baltimore's downtown renaissance, on the market, hoping to raise cash to avoid bankruptcy. The centers were never sold. In April, General Growth filed for bankruptcy.

Simon Property Group, the nation's largest owner of malls, has said it is looking to buy malls from General Growth, which owns several malls in the Baltimore area, including Mondawmin Mall, White Marsh Mall, Owings Mills Mall, Towson Town Center and The Mall in Columbia. No deals have been announced.

"There has not been a lot of product on the market, and what product there is [is] difficult to pick up without financing," Maddux said. "Clearly, there's a better tone in the market today than there was a year ago."

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