Samuelson, Brown, and A&R Team up on 400 W. Baltimore Street Re-Development

Today's Maryland Daily Record features an article on the re-development of the 400 block of West Baltimore Street by a partnership comprised of the Samuelson family, who assembled most of the property over the years while operating several successful businesses from the location (including a retail jewelry store, diamond brokerage, and retail financial services company), David S. Brown Enterprises, and A&R Development.

According to the article, the project, when completed, will be six stories tall, with 130,000 square feet of commercial space, including two-story retail (the developer is in talks with PNC Bank, Five Guys, and Panera, among others) and Class-A office space.

In non-CRE news, Ron Samuelson, CEO of the family's jewelry operation, has been making waves in the highly traditional retail jewelry industry by pioneering the use of on-line viral advertising to promote his family's store and website, Samuelson'sDiamonds.com. The website was recently chosen as a "Best Of" finalist by National Jeweler in the category of online advertising content for its Facebook page, "Diamonds," which has close to 300,000 fans worldwide. Samuelson's blog, Ramble on Ron, and Tweet have also established significant followings.

ICSC Vegas

The 2009 International Council of Shopping Centers (ICSC) convention in fabulous Las Vegas, Nevada is now history. This was the fourth year in a row which I had the privilege of attending the premier annual gathering of commercial real estate's movers and shakers.

It was also the fourth year in which I had the wonderful good fortune to enjoy the gracious hospitality and meticulous planning of our good friends at Commercial Settlement Services, LLC and Residential Title & Escrow Company, who have taken on the responsibility of ensuring that the Maryland commercial real estate community enjoys an ICSC experience that is second to none.

The herculean efforts of Judy Borns, Morgan Gilligan, Howard Perlow, Tory Ricas, and the rest of their team, to (among other small miracles) book hundreds of rooms at the beautiful and always sold-out Wynn and Encore, secure hard to find show tickets, reserve dozens of prime tee times, and put on the amazing "Maryland Dinner" for over 700 guests, are truly incredible.

What is left to say, other then THANK YOU, and, of course, see you next year at ICSC 2010!

Closing Auto Dealerships; Opportunity for Retail Developers?

As I noted in a couple of earlier entries, a number of auto dealerships will be closing soon. GM alone will be closing 2,600 delaerships. Given the location of many dealerships on prime commercial locations, the closings will certainly present a land assemblage opportunity for developers.

Also, from CityBizList.com, here is a good article by Jerry Wit of St. John Properties on the benefits of efficient space planning.

DC vs. Baltimore Construction Contracts

McGraw-Hill Construction has reported on March contracts for future construction in the metropolitan statistical areas of (i) Baltimore-Towson [consisting of Anne Arundel, Baltimore, Carroll, Harford, Howard and Queen Annes in Maryland], and (ii) Washington-Arlington-Alexandria [consisting of Arlington, Calvert, Charles, Clarke, District of Columbia, Fairfax, Fauquier, Frederick, Jefferson, Loudoun, Montgomery, Prince Georges, Prince William, Spotsylvania, Stafford and Warren in Maryland, District of Columbia and Virginia.]

According to the Research and Analytics unit of McGraw-Hill Construction, March construction activity followed this pattern:

BALTIMORE-TOWSON:

Nonresidential
2009: $77,875,000
2008: $980,168,000
Down 92 percent

Residential
2009: $50,061,000
2008: $217,711,000
Down 77 percent

Total Building in March:
2009: $127,936,000
2008: $1,197,879,000
Down 89 percent

On a Year-to-Date (YTD) cumulative basis, the totals are:

Nonresidential
2009: $272,291,000
2008: $1,590,720,000
Down 83 percent

Residential
2009: $112,870,000
2008: $320,846,000
Down 65 percent

Total Building YTD
2009: $385,161,000
2008: $1,911,566,000
Down 80 percent

WASHINGTON-ARLINGTON-ALEXANDRIA

Nonresidential
2009: $437,320,000
2008: $247,532,000
Up 77 percent

Residential
2009: $164,057,000
2008: $356,501,000
Down 54 percent

Total Building in March
2009: $601,377,000
2008: $604,033,000
Statistically even

On a Year-to-Date (YTD) cumulative basis, the totals are:

Nonresidential
2009: $2,254,958,000
2008: $2,818,571,000
Down 20 percent

Residential
2009: $384,336,000
2008: $933,419,000
Down 59 percent

Total Building YTD
2009: $2,639,294,000
2008: $3,751,990,000
Down 30 percent

Nonresidential buildings include commercial, manufacturing, educational, religious, administrative, recreational, hotel, dormitory and other buildings. Residential buildings include one and two family houses and apartments.

TARP Funds Create Sublease Risk for Office Market

If you own Class A office space in Manhattan (or perhaps any major American city...and that includes Baltimore and DC), I highly recommend this fascinating/terrifying article by M. Myers Mermel, Chief Executive Officer of Tenantwise Incorporated.

Mr. Myers presents a compelling analysis of the potential unintended consequences of the TARP legislation on the New York City office market. In a nutshell, Mr. Myers' thesis is that:

(i) large blocks of prime New York office space are leased by financial institutions receiving TARP funds;

(ii) those financial institutions no longer need/can afford a great deal of that prime space; and

(iii) TARP subsidies will allow those financial institutions to offer surplus space on the sublease market at rental rates well below the rates required by building owners to maintain profitability. Further, this undercutting of the Class A rental market will have a spill over effect across all lower tier office markets as tenants take advantage of the bargain-priced Class A sublease space.

Of course, Manhattan may be unique in its density of both TARP recipients and huge blocks of Class A office space. The effect could be quite different in a market like Baltimore, with much less space, much lower rents, and a focus on back-office operations.

As always, I welcome your thoughts and insights.

University Physicians Inc. Renews Lease at 250 W. Pratt

In today's edition, The Daily Record reports that University Physicians Inc. will renew its 11,531-square foot lease in 250 W. Pratt, and will expand to occupy an additional 25,360 feet in the building.

GGP gets Harbor Place, Gallery Bids; Cordish in the Wings?

Today's Daily Record reports that General Growth Properties has received more than 10 offers, some as high as $400 million, for portfolios of its trophy properties, including Baltimore's Harborplace and Gallery shopping mall.

Due to the high profile of these properties in Baltimore, there will inevitably be a great deal of local speculation, hand-wringing, and political posturing over their future. Further, due to Harbor Place's history in particular as a catalyst for Baltimore's downtown renaissance in the late 1970's/early 1980's, there will also inevitably be a heightened level of nostalgia for the Rouse Company's original vision for the development. It remains to be seen whether governmental/public interest involvement will work to discourage the major investment of capital the properties (and in particular Harbor Place) so sorely need to operate successfully.

Of course, The Cordish Company has been cited (such as in this 3/1/09 Sun Paper article) as a potential buyer. Cordish certainly knows the market and understands Baltimore development and politics, and would have as good a shot as any developer to pull off a successful repositioning of the properties.