Hollander business park up for auction

Former public housing site's developers defaulted on loan

February 27, 2010|By Lorraine Mirabella | lorraine.mirabella@baltsun.com

One of the newest and biggest industrial parks being built in Baltimore is headed for a foreclosure auction Friday, a victim of weak tenant demand amid the recession.

Hollander 95 Business Park in Northeast Baltimore broke ground in fall 2007 with plans to generate 462 jobs. Developers Hollander Rock LLC, which bought the 51-acre site from the city for $4 million, had planned to build a warehouse, distribution and manufacturing center over three years.

Only the 82,000-square-foot warehouse has been completed, and tenants have moved into half of the building.

But the economy put a crimp in development plans, and the developers defaulted on an $11.7 million construction loan from M&T Bank. An auction is scheduled for Friday at the business park, said Paul Cooper of Alex Cooper Auctioneers Inc., which is running the sale on behalf of the lender.

The lead developer on the team, Mark Levy of H&H Rock Cos. in Elkridge, declined to comment on the project or auction, noting a confidentially agreement. A spokesman for M&T Bank, Philip Hosmer, said it is bank policy not to discuss individual customers.

On Friday, the head of the city's economic development agency defended the 2004 choice of development team and the city's vision for the former site of public housing. The site alongside Pulaski Highway near Interstate 95 will be well-suited for industrial use when the economy recovers and tenant demand rebounds, said M.J. "Jay" Brodie, president of the Baltimore Development Corp.

He said the developers invested heavily in grading and other site work and leasing the first warehouse, and had been in negotiations to build a small hotel and retail space.

"What happened was the recession happened," Brodie said. "Mr. Levy and his partners did the best they could. They ran into this economic downturn, which none of us could predict."

The BDC selected the developers from three finalists in 2004 to build the $32 million complex on the site of the demolished Hollander Ridge public housing development. Besides Levy, other team members included Dean Harrison, a city developer, and Mark Shapiro, a principal with the Shapiro Co.

Brodie said Levy met with him and other BDC officials about six months ago, saying that the recession was making it difficult to fill the building and make payments on the loan. He asked whether the city was interested in reacquiring the site, a right of the city under the land sale agreement in a case of default. The city decided it would not intervene.

Any future buyer will be required to abide by the conditions of the city's sale to Hollander Rock in terms of the planned use. Hollander Rock had proposed five buildings, totaling 511,500 square feet, on what was at the time one of the biggest remaining parcels for redevelopment in the city.

Despite the recession, the project attracted tenants who were new to the area within the past 18 months, said Peter Dudley, a principal with commercial brokerage firm KLNB, which handled leasing for Hollander 95.

"In my mind, the project was successful, given this economy," he said, adding that the park struggled because it was such a large undertaking. "If it was just a single building, as opposed to a 50-acre site, it would have been successful."

He said the site had begun to attract suppliers to building contractors, but that type of demand slowed with the recession.

Auctioneer Cooper said he could not recall another foreclosure locally of an industrial park under development. But he said foreclosures of developable land, for commercial or residential use, have been on the rise as demand has slowed.

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