Out of the $109 million in transfer in the second quarter of 2019, over 47% of that volume was sold for a second time within the last 5 years.
As the saying goes “When You’re Hot You’re Hot!” And with the way the weather in this month of July has gone here in Frederick County, it seems appropriate to use that phrase. But this post is not about the weather! It’s about the commercial real estate market of the last 3 months.
Once again CRE sales volume from March 1st through the end of June showed very healthy volume in total sales, as well as in transactions – 39 closed deals yielded $109 million. Compare that to last quarter’s 35 closings for $94.4 million … a nice bump!
Digging into the details of those periods, the standout of the 1st quarter was that 50% of the entire sales volume was gobbled up in just one transaction – a sale of the 206-unit luxury apartment complex known as the Retreat at Market Square for $47 million near Clemson Corner and Wegman’s, etc. This time it wasn’t the typical multifamily mega-deal that took the lead, but a $17 million retail property in the same general area.
Bottomline: a healthier disbursement of transaction values.
Looking at in another way, the average transaction under $10 million in Q1 was $605,000, compared to Q2’s $1.3 million.
The big highlight of in Q2 was that a whopping 47% of that $109 mil came from properties that were re-traded within the last five years! All of them were in the top 8 transactions:
Re-Trade Number 1 – At Home Again:
Just about a year ago to the day, the former Walmart (a 135,800 square foot structure) located at 1811 Monocacy Boulevard transferred at a price of $7,650,000 with the national retailer At Home as a new tenant in town. With At Home established now, the same property traded again for $17.2 million! Talk about Flip This House! That’s a return any Flipper could only dream of!!
Re-Trade Number 2 – Front and Center:
In 1987 downtown Frederick’s first modern office building was constructed at 30 West Patrick Street, known as the Patrick Center was sold to a well known and long established Silver Spring Development/Investment firm – Lee Development Group. LDG acquired the property last May for $15.9 million. Back in 2014, the 71,200 SF building traded for $11.5 million.
Re-Trades Numbers 3 and 4 – Whose Making Money on Medical?
Finishing out the top re-trades of last quarter were two medical office properties that Marvin Ausherman sold in August of 2015 to CNL Healthcare Properties, a real estate investment trust (REIT) headquarter out of Orlando, Florida. The Patriot Center and the Liberty Professional building totaling over 81,000 SF are situated on either end of Thomas Johnson Drive (aka Frederick’s Medical Row) and at the time sold for a total of $24 million.
CNL sold the two properties last month as part of a $1.25 billion – 55 high-quality medical office property transfer to Welltower Inc. (NYSE: WELL), an S&P 500 company headquartered in Toledo, Ohio. The designated values for the two former Ausherman buildings were established at $18.4 million. I’m sure that CNL made up for the nearly $6 million negative margin somewhere in the other properties in that sale … or maybe Marvin craftily got CNL to overpay back then.
Anyone want to wager that it was the latter versus the former?
All in all, a very good quarter in Frederick County, Maryland Commercial Real Estate sales!
The Big Question that looms is that with over $200 million in CRE sales at the mid-point of 2019, will that trend continue and bring local CRE transfer volume to finally set a new annual record topping $400 million?
Stay tuned!!
Rocky Mackintosh, President of MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland, has been an active member of the Frederick community for over four decades. He has served as chairman of the board of Frederick Memorial Hospital and as a member of the Frederick County Charter Board from 2010 to 2012. He currently serves as chairman of the board of Frederick Mutual Insurance Company. Established in 1843, it is one of the longest enduring businesses in Frederick County.