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Frederick’s Top Five Commercial Real Estate Deals of Third Quarter 2013

Commercial real estate sales in Frederick are up more than 40% year-to-date over 2012 as the market continues a slow but steady improvement.

Wonder BookThere is Christmas music wafting on the airwaves again, which means either we are back-to-school shopping in Costco or it’s that time of year to review the third quarter performance of Frederick’s commercial real estate market.

Miles & Stockbridge hosted a real estate forum at Dutch’s Daughter last week, and invited everybody’s favorite real estate economist – Anirban Basu – to give an overview of global and national economic health.

So here it is, in a nutshell:  at a projected GDP growth of 1.6% for the year, the United States is “among the least worst” of the advanced economies.  If U.S. economic growth isn’t stalled again by congressional budget issues early next year, Basu predicts that the U.S. economy will continue to grow a rate between 1.6-2% during 2014.

(Looking for a booming market to invest in?  Try the continent of Africa, where economies are not so much emerging as they are catapulting.  The GDP of the East Sudan, for instance, is targeted to grow at a 24% clip this year.)

If you’ve never heard the pleasure of hearing Mr. Basu speak, you are missing out, because his keynote speeches have more one-liners than a Seinfeld episode.  For instance:

“Throughout much of the United States, farmers are revered for being forthright, honorable, hard-working, and integral to society.  What do we call them in Maryland?  Polluters.”

I paraphrased the first sentence a bit, but the essence of his point  remains.  A perfect joke is funny, sad, and true all at the same time–and Basu nailed that one.

That topic alone is another blog post, so I’ll move on to the local commercial real estate market.

Year-to-date, sales of commercial properties in Frederick rose 43% over the first three quarters of 2012, totaling over $205 million.  Quarterly sales dropped from $77 million during the third quarter of 2012 to $47 million during the third quarter of 2013, not unexpected given that during the time many of the Q3 2013 sales were being generated there was mounting anxiety about the possible effects of sequestration on the economy.

Most segments of the commercial market were well represented in the 3rd quarter sales statistics, with the exception of warehouse and industrial properties, of which not much inventory remains on the Frederick market.

Following are the top five commercial real estate sales in Frederick for the third quarter of 2013, ranked by sales price:

1.  $12,350,000   Hampton Inn – 5311 Buckeystown Pike

Prince William Hospitality Investors, LLC sold the Hampton Inn to RockBridge Capital, LLC in a debt assumption deal in September.  The hotel, which is nearly 90,000 square feet, sold for $76,708 per room.

2.  $4,250,000   Prospect Hall – 889 Butterfly Lane

St. John’s Literary Institution sold Prospect Hall and the surrounding 31.7 acres to the Matan Companies in August.  Matan will be developing the land into a 13-building garden apartment complex totaling 376 units.  Prospect Hall will remain intact on the property.

3.   $4,240,000   USPS Distribution Facility – 1550 Tilco Drive

Chuck Roberts of Wonder Book purchased the former USPS distribution facility on Tilco Drive.  The building totals 109,350 square feet in size and sits on nearly 14 acres; it sold for $37.19/SF, or $303,943/acre.  Wonder Book will be expanding its warehouse book business at the site. Chris Kline of Kline Scott Visco brought the purchaser to the table.

4.   $4,050,000   Dairy Maid Dairy – 201 East Seventh Street

Dairy Farmers of America purchased the Dairy Maid Dairy operations and facility in September.  The real estate transaction totaled over $4 million and included about 120,000 square feet of buildings and a little over 13 acres of land.  The facility will continue to operate as a Dairy with the existing staff in place.

5.  $3,900,000   Columbia Bank – 5211 Presidents Court

Frall Developers purchased Columbia Bank in the Westview Corner Shopping Center from JCR Companies (a regional developer headquartered in Virginia) in September.  The building is 3,631 square feet in size and sits on 1.27 acres.  The sale netted a 6.87% cap rate, or $1,074.08/SF.

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The author:  Kathy Krach is a commercial sales and leasing agent with MacRo.


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