Catonsville Plaza, Catonsville, Maryland
By admin July 10, 2017
Case Study: Property Acquisition/Investment
Capitalizing on Market Potential of Vacant Suburban Baltimore Shopping Center
Focused on Fundamentals
A key element of a successful Tri-Land acquisition is to always look beyond a property’s current physical condition and apparent disadvantages, and recognize its true investment potential for tenants, partners and the surrounding community
Property Profile
This 279,585-square-foot suburban Baltimore retail property is located at the heart of a dynamic, diverse retail trade area bordering Baltimore National Pike U.S. Route 40, St. Agnes Road and Interstate 695. Great visibility and traffic, a dense population and strong demographics draw high volume retailers to the market and attract exceptionally large numbers of destination shoppers.
Situation Analysis
Since the early 1980s, Catonsville Plaza had an 84 percent vacancy rate, was full of asbestos and was in general disrepair. A succession of owners failed to revitalize the plaza until 1987 when a lending institution called on Tri-Land’s expertise to take a look and offer a strategy.
Based on their research and redevelopment experience, Tri-Land realized there was more to Catonsville Plaza than empty stores and neglect. The center still had a superior location just off a major highway and limited competition nearby. It also had something that others might perceive as shortcoming – a changing demographic. The emerging population was middle-class minorities moving from Baltimore’s west side. This new demographic was projected to raise average household incomes from $33,000 to $42,000 in just five years. Tri-Land understood that this new group would be value-oriented shoppers looking for a convenient place to shop. The principals also foresaw the advantages of a nearby Social Security Administration office that would attract a sizeable community of local residents – and shoppers – to the area.
Strategic Plan
Tri-Land presented a comprehensive redevelopment plan and was hired to renovate, lease and manage the center. After partially improving the center and quickly attracting anchors Zayre and Basic Foods, Tri-Land expanded its development/leasing strategy and decided to purchase the center in order to accomplish their vision for Catonsville Plaza and capitalize on the market shift and pending improvements.
A co-partnership helped finance a Phase Two renovation in 1989 making improvements to the second level, expanding tenant spaces and constructing an outlot building bringing Blockbuster Video, Kmart and other key merchants to the center. When a third phase was needed to reconfigure the Kmart space and further enhance the property, recapitalization was required. However, the investor group declined to participate, and Tri-Land purchased the center from the partnership in 2000. Shortly thereafter, occupancy increased even further to 94 percent. Having built lasting value into the property, Tri-Land eventually sold the property five years later.
Resulting Impact
Despite Catonsville Plaza’s past difficulties and the twists and turns it experienced over subsequent years, Tri-Land’s ability to identify and adapt to a changing market and allowed them seize an investment opportunity others overlooked. Occupancy rates continually climbed and reached 100 percent. In fact, 53 percent of the property’s occupants have in been in place for more than 10 years. Investor returns were significant and, upon its sale, Tri-Land achieved an initial return rate of 42.5 percent. A lingering eyesore was transformed into a thriving destination center prompting Catonsville residents to write letters expressing gratitude for revitalizing the community on so many levels.
Market Stats (as of 2000)
Average household income: $45,000
Customer base: 428,000 residents
Daily traffic counts: 60,000 cars
Before
With a retailer’s perspective, Tri-Land identified Catonsville Plaza in Catonsville, Maryland, as a idle property in an important, underserved market.
After
Tri-Land mobilized retailers and the community, attracted key anchors and transformed the look of the entire center from façade to landscaping. Now the center is a vibrant destination.
“Catonsville Plaza helped energize the entire area. This is a great market; many people didn’t realize it at the time. We saw Catonsville Plaza as an ideal opportunity to do what we do best; return property to a productive state.” – Rich Dube, President