More News

Giant Food's former three-building headquarters in Landover sold at a steep discount for $3.3 million after the lender foreclosed, according to NAI KLNB, which brokered the deal.

Alliance Business Capital Group of Rockville acquired the complex and is offering space for lease at $16 per square foot, which represents slightly more than half the going rate for comparable office properties in the Prince George's County marketplace. The firm's marketing brochure advertises the space as the cheapest in the greater Washington area.

The office and warehouse project, now called Gateway Plaza, was previously owned by Preferred Real Estate Investments Inc. of Conshohocken, Pa. The company paid Royal Hold, Giant's Dutch corporate parent, $45 million for its 104-acre campus in 2006, when the grocery chain moved to new 53,556-square-foot headquarters in Metro East office park in Landover.

"Our simple formula is to buy other people's mistakes, improve upon the property using our market knowledge and introduce it back into the market in a manner that it becomes profitable for us," Nisso Bedolach, of ABCG, said in a press release.

The firm has generated interest from a potential buyer to purchase one building at the former Giant Food headquarters, representing about 115,000 square feet of space.

When Giant moved, it left behind a recently renovated Class A office building that had served as its headquarters since 1957. But Preferred's investment came just as the real estate market started to tank, and the property was listed for a courthouse sale in July.

"The primary strength of Bedolach and his team is their identification of projects with tremendous upsides, many of which are bank-owned that are being offered for pennies on the dollar," said Chris Kubler of NAI KLNB. "This acquisition represents an interesting case study in how foreclosure sales of empty buildings will very likely create further downward pressure on rental rates across the region. We anticipate a great deal of interest on the part of end-users and the brokerage community because of the value proposition here."

To help find tenants for the 350,000-square-foot campus, the firm is offering a 5-percent commission to cooperating real estate brokers, which is about 70 percent higher than the current market rate. ABCG's acquisition of the Giant property is consistent with the firm's practice of making bargain investments.

"We are careful ... to take advantage of a marketplace that occurs every thirty years or so," Bedolach said in the statement. "The most important thing to have right now is available capital. The second is patience. We have plenty of both."

He said the complex offers an alternative to companies seeking space who suffer "sticker shock" at the prospect of paying much higher rent in Washington.

"This is one of the highest quality office projects in Prince George's County," Kubler said. "We believe this pricing strategy will ultimately allow us to make a major impact in the county by attracting price-sensitive government entities and private sector office space users to the development who are interested in slashing their rental expense in half."

Hhgregg signs lease

for Brandywine space

Retailer Hhgregg has signed a 393,440-square-foot lease at 14301 Mattawoman Drive in Brandywine.

The single-story, Class B industrial building was built in 1998 and is in the Brandywine/Prince George's County South Industrial submarket. The building, formerly a Circuit City distribution center, is on a 28.45-acre lot, has 49 loading docks and a 27-foot clear height.

Hhgregg is one of the nation's leading retailers of home appliances and consumer electronics. The company will use the space as its new central distribution center and has plans for a move in the first quarter of 2010, according to information from Baltimore real estate services company Cushman & Wakefield.

Green upgrade planned for renewals in Bethesda

TIAA-CREF, owner of the Air Rights Center in Bethesda, plans a major green renovation of the complex after two major tenants renewed their leases, according to CB Richard Ellis, which represented the landlord in the deals.

Ending a two-year search for new space, the Calvert Group Ltd. and Acacia Life Insurance signed extensions on a combined 95,436 square feet of space at 7315 Wisconsin Ave. and 4550 Montgomery Ave. in downtown Bethesda. The two companies plan an extensive renovation that includes steps to incorporate both sustainable design and operational practices.

"We concluded that staying in the current space was best for our company and our associates," said Barbara J. Krumsiek, Calvert's president and CEO. "Calvert has successfully grown its business here and remains committed to the community. Among the factors influencing our decision is a commitment from the landlord to go green."

TIAA-CREF, the giant teachers' retirement and insurance fund group based in New York, plans upgrades to comply with U.S. Green Building Council certification for the property's North Tower, establish a dedicated area for recycling, and install high-efficiency light bulbs and photocells or motion sensors in the building's hallways and offices.

"The companies ultimately decided that their current amenity-rich location was the best option," said Roberta Liss, CB Richard Ellis executive vice president.

TIAA-CREF bought the 700,000-square-foot, three-building Air Rights Center in 2002 for $144.2 million, according to CoStar, the Bethesda real estate information service. The new centerpiece of the mixed-use complex is a 130,000-square-foot Hilton Garden Hotel, completed by Donohoe Construction last month.

Commercial real estate news items may be mailed to: Steve Monroe, The Business Gazette, 9030 Comprint Court, Gaithersburg, MD 20877; e-mailed to smonroe@gazette.net; or faxed to 301-670-7183.