An apartment project, a major medical office building and the resale of an office park, all in Frederick County gobbled up an 82% share of the sales volume last quarter, leaving the remaining 25 transactions to fight over the left-overs!
The months of July through September will be known as the turn-around quarter of 2016 for CRE activity in Frederick County, Maryland, which showed a nearly 90% increase in sales volume over the same period in 2015 – $119.9 million over just $63.0 million.
But just looking at general numbers can be deceiving. Third quarter 2016 was made up of 28 CRE sale transactions, three of which totaled $98.2 million, leaving the remaining $21,500,000 to only average a mere $860,000 per closed deal. While this is a higher figure than has been averaged year to date, when the same formula is applied to the four quarters of last year, the average deal is 70% less.
The number of transactions in the third quarter of 2016 bettered that of Q3 2015 by a factor of two, but when looking at comparative YTD numbers, this year is running about 12% behind – 93 deals vs. 82 this year.
Sector-by-sector comparisons show that there were nine transactions out of the 26 that exceeded one million dollars versus 6 in Q2 of this year, but we will focus on the top 3.
This was a weak sector this quarter compared to that of 2015. With only 2 deals averaging $312,500, it barely reached 4% of the volume in last year’s comparable quarter of $15.7 million.
Mixed Use Commercial/Residential Real Estate
There were 8 transactions of mostly downtown Frederick properties that averaged $306,000, compared to 6 deals in Q3 of 2015 that averaged $175,000.
Two of the quarter’s major sales occurred among the 7 closings totaling $37+million in sales in the Office sector.
The first was the sale of 7211 Bank Court Drive, which is the home of Frederick Regional Health System’s Crestwood facility. The 2-story, 65,000 square foot building sold for $24,250,000 on October 21, 2016 to Monocacy Medical Properties, LLC based out of King of Prussia, Pennsylvania.
The other significant transaction was a Ruppert Properties purchase of 5310, 5330, 5320, 5340 and 5350 Spectrum Drive in the 270 Tech Park near the Francis Scott Key Mall, which consists of 158,650 square feet of a mostly office flex product. This sale took place on July 21, 2016 for $12,950,000.
Retail Real Estate
It was really quiet on the retail real estate sales front in Q3 2016. There was only one closing for $675,000 at 43A S Market Street in downtown Frederick. This time last year there were 4 closings totaling over $15 million.
The multifamily sector blew the doors off of 2015 Q3 with three deals totaling $1.46 million across only two closings. But it was the $61 million sale of the 297 unit Century Clearbrook Apartments – located at 6450 Mercantile Drive – that topped the charts when it closed on July 18th of this year. Not a bad deal at $205,387/unit.
We don’t always have a hotel or motel sale each quarter, but the Super 8 Motel located at 300 Tippin Drive in Thurmont changed hands this past August for $1,648,000.
Specialty Use Properties
2 E Main Street in Middletown could also fall under a mixed use commercial property, but we threw it into the specialty category this quarter. The 2,477 square foot building sold in July for $420,000.
There were six commercial/industrial land sales last quarter totaling 37 acres which averaged out at just over $400,000 per for a total of $14.875 million.
Rocky Mackintosh, President, MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He has been an active member of the Frederick, Maryland 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.