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Harborplace sold to New York real estate firm

General Growth, owner since 2004, has sold to Ashkenazy Acquisition Corp.

October 23, 2012|By Steve Kilar and Lorraine Mirabella, The Baltimore Sun

The investment firm took over Boston's Faneuil Hall, another retail outlet developed by Rouse, from General Growth in the fall of 2011. It spent $136 million for lease rights at the popular Boston tourist spot, which is owned by the city, according to news reports.

Ashkenazy hired a Boston architecture firm to "guide design plans for improvements to the outdoor shopping center," according to a June article in The Boston Globe.

Some city officials and Faneuil Hall tenants were becoming frustrated with General Growth, the Globe reported, "because of concerns that [General Growth] was not making needed upgrades and it was alienating local shop owners."

This year, according to city records, 93 percent of the nearly 150,000 square feet of leasable space in the two Harborplace pavilions was occupied. In the past few months, McCormick and Co.'s World of Flavors and Bubba Gump restaurant opened in the Light Street Pavilion along with Ripley's.

But those new additions and a refurbished food court appear to have had little effect on business in the Pratt Street pavilion, said Brian Needel, a co-owner of Lenny's Delicatessen, which opened in there in spring 2011.

Things have changed, he said, since "Harborplace opened and people would go out of their way to come downtown." Now, merchants rely on special events to bring more people downtown, Needel said.

"The biggest problem we have is affordable parking. People don't come to Harborplace like they used to because it's expensive to park," he said.

General Growth has kept the center well maintained and provides good security — but structurally, he said, "things need to be done. The building is 30 years old and a dinosaur in a lot of areas."

The city's lease for the site won't change regardless of the operator.

In September, Baltimore's Board of Estimates agreed to amend the lease, extending it by 33 years through 2087 in exchange for increased annual payments.

It now will be paid $262,000 each year until mid-2022, when the rent is set to increase. In each of the past five years, the city was paid an average of $102,000, according to the board's records. General Growth paid base rent of 67 cents per leasable square foot plus 25 percent of the mall's net cash flow, which never materialized.

As part of the new lease deal, General Growth agreed to replace the exterior awnings, improve the interior and exterior lighting, repair the sidewalks and pedestrian bridge, and landscape the street side of the mall.

Kaliope Parthemos, the city's deputy chief of economic and neighborhood development, said that the new lease was written to be binding on Harborplace's new owners and those capital improvements still will be made.

Branden Freiner, a tourist from St. Louis, said he and a friend had been driving to their hotel when the cluster of waterfront shops and restaurants drew them in.

"Every city needs a place like this," he said.

steve.kilar@baltsun.com

lorraine.mirabella@baltsun.com

History of Harborplace

April 1974: Construction begins on the Inner Harbor promenade.

July 1976: Seven tall ships and six military vessels from around the world sail into Baltimore's Inner Harbor to celebrate the nation's bicentennial, revealing the potential of the Inner Harbor as a tourist destination.

November 1978: Voters approve referendum permitting the use of 3.2 acres of public parkland to be developed by the Rouse Co. for Harborplace as long as 26 acres remain public parkland.

January 1979: Ground broken for Harborplace.

July 2, 1980: Grand opening of Harborplace.

1981: Developer James Rouse featured on the cover of Time magazine.

September 1987: Opening of the retail section of the Gallery at Harborplace.

April 9, 1996: James Rouse, founder of the Rouse Co., dies.

January 1998: Will Smith and Jada Pinkett Smith break ground for a Planet Hollywood restaurant in the Pratt Street pavilion of Harborplace. It closed in September 2001.

November 2004: General Growth Properties of Chicago purchases the Rouse Co. for $12.6 billion.

April 2009: Unable to refinance debt acquired during its rapid expansion, Harborplace owner General Growth files one of the biggest Chapter 11 bankruptcy cases in U.S. history.

May 2010: Federal judge approves Harborplace owner General Growth's plan to emerge from bankruptcy, which it plans to do by year's end.

July 2010: For Harborplace's 30th anniversary, General Growth announces a strategy to appeal more to nearby residents and office workers as well as tourists and conventioneers.

June 2012: The 32nd Ripley's Believe It or Not Odditorium opens in the Light Street Pavilion.

September 2012: McCormick World of Flavors, the only retail venture by the Hunt Valley-based spice company, opens in the Light Street Pavilion.

October 2012: City Hall announces that Ashkenazy Acquisition Corp. purchased Harborplace from General Growth for an undisclosed sum.

Source: Baltimore Sun research

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