Former Boscov's stores head to auction

Sept. 13 sale date set for Baltimore-area properties

August 30, 2010|By Jamie Smith Hopkins and Andrea K. Walker, The Baltimore Sun

Three mall storefronts that have remained vacant since Boscov's department store exited the Baltimore market under a cloud of bankruptcy nearly two years ago are headed to the auction block next month.

Alex Cooper Auctioneers is set to auction off the former department store buildings at White Marsh Mall and Owings Mills Mall in Baltimore County and Marley Station in Glen Bernie on Sept. 13 in a foreclosure sale. Towson Commons, an office and retail complex, also is scheduled to be sold by auctioneers next month.

The auctions signal that the retail real estate market remains sluggish, and that larger spaces are especially difficult to fill as stores are reluctant to expand in this economy. Many department store spaces have been empty for years, and the vacancy rate for Baltimore area commercial space was 6.8 percent in the second quarter, compared with 4.3 percent just before the recession began.

Nonetheless, there have been some market improvements, retail brokers and analysts said. Good leasing deals still abound for retailers in the position to take advantage of cheap real estate. And the Commerce Department reported on Monday that consumer spending rose slightly in July — a key factor in reviving the retail sector.

"It is still taking a longer time to get anything done," said Rene Daniel, a principal with retail brokerage Trout, Daniel & Associates. "But attitudes are more positive than a year ago. Retailers are at least willing to talk; last year they didn't even want to do that."

Teen clothing retailer Forever 21 is still scheduled to move into the White Marsh building once home to Boscov's early next year. It is currently located elsewhere at the mall, and an auction won't change its planned move, said Larry Meyer, an executive vice president with the company.

The auction of the properties could open the door for new owners to come in and improve the properties and find tenants. The current owners could also decide the bids aren't high enough and scrap the sale.

A national rise in retail vacancies in recent years seems to be slowing, according to RIES Inc. analyst Ryan Severino. He also wrote in a research note that the decline in asking rents is easing, which means that landlords "are not under as much distress as last year."

And there are other signs that the retail picture isn't completely gloomy.

Safeway recently moved to a shopping center on York Road in Towson that had been left vacant when CompUsa, Linens & Things and electronics chain Tweeter shuttered their doors as they fell victim to the weak economy.

Tasti D-Lite, a new chain of retail stores featuring low-calorie frozen desserts made entirely of skim milk, announced on Monday that it plans to open more than a dozen stores in Washington, Maryland and Virginia beginning later this year.

The first will be a 2,100-square-foot space at Park Plaza on Ritchie Highway in Anne Arundel County. The location will also serve as the local headquarters and operations center for the Tasti-D-Lite mid-Atlantic franchisee and will house management, administrative and trainee staff.

And Swedish retailer H&M is working to move into General Growth property Harborplace in Baltimore's Inner Harbor. Designs for the store are to be presented at a meeting for the city's urban design and architecture review panel on Sept. 9, according to a meeting agenda.

The former Boscov's stores might be harder to lease because they are so large. The consolidation of the department store industry has left few retailers to fill anchor spaces at regional malls. In some markets, the spaces have been taken over by big box and warehouse stores such as Costco or Target.

The two-story White Marsh Boscov's store is nearly 220,000 square feet. Both the Owings Mills and Marley Station buildings are three stories with more than 270,000 square feet.

The White Marsh and Owings Mills store aren't owned by General Growth Properties, the owner of the two malls, according to land records. The former Boscov's at Marley Station Mall is owned by the entities Marley Station Department Investors LLC and BDS Marley Station Portfolio LP, records show. Marley Station is owned by Simon Property Group.

Jones Lang LaSalle was named the court-appointed receiver for the former Boscov's properties in Maryland and four others in Pennsylvania last year, charged with finding firms to manage, lease or sell the buildings. Boscov's continues to operate stores in five states, including three in Maryland: Westminster, Frederick and Salisbury.

Based in Reading, Pa., Boscov's was mostly a regional chain until 2006 when it expanded aggressively into other markets, including the Baltimore area. It took advantage of properties left vacant when Federated Department Stores bought May Co. for $12 billion.

But the housing collapse and recession hit just as the new stores began to ramp up. Consumers stopped spending, hurting sales at the department store. The new Maryland stores never turned a profit.

Cooper said he wasn't seeing much retail space coming to auction six months ago, but that's changing. Towson Commons, the 384,000-square-foot complex that includes a 10-story office tower, three levels of stores and a movie theater is set for auction Sept. 21. The lenders who backed the struggling mall filed to foreclose on the property in July.

jamie.smith.hopkins@baltsun.com, andrea.walker@baltsun.com

http://twitter.com/realestatewonk, http://twitter.com/ankwalker

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