Julekha Dash, Contributor
Cited Source: Baltimore Business Journal
First place: Foreclosure auctions
Description: FRP Development Corp. bought the 82,000-square-foot Hollander 95 at a foreclosure auction after its previous owner defaulted on an $11.7 million construction loan.
Dollar value: $4.35 million
People involved: David H. deVilliers of FRP Development Corp.
Say what: FRP Development purchased a building at a desirable location for fraction of its original cost.
Like a lot of foreclosure deals, it started with an ad created by Alex Coopers Auctioneers Inc.
Developer David H. deVilliers saw the ad as an opportunity to get a massive business park in Baltimore City at a deep discount. Months later, his Sparks real estate company FRP Development Corp. bought the commercial building Hollander 95 at a foreclosure auction for $4.35 million.
Hollander Rock LLC, led by H&H Rock Cos. Of Elkridge, defaulted on an $11.7 million construction loan from M&T Bank to fund the project. The project was expected to bring nearly 500 jobs and millions of dollars to a former public housing site in East Baltimore.
The project stalled for 18 months because of the foreclosure, leaving the property idle and the city with an eyesore.
But given its location near major highways, Hollander 95 has the potential to transform into a thriving community of commercial and industrial users.
As a developer of warehouse business parks, FRP saw a chance to get a sizeable chunk of land at a discount in Baltimore City. The company has a presence in Anne Arundel and Harford Counties, but not in the city.
“We think Baltimore is a good place to be because of the port,” which makes it convenient for companies to send and receive cargo, deVilliers said.
And getting a chunk of land for an office park is tough in an older city like Baltimore. FRP struck a separate deal with M&T to purchase the land for $1.4 million.
“To amass that much acreage is difficult” in the city, deVilliers said.
The existing 82,000-square-foot building is half leased. Tenants include Sweet Sin Bakery, which supplies gluten-free desserts to area bakeries, and heating, ventilation and air conditioning equipment wholesaler T-Stats Supply Inc.
The site can accommodate up to 500,000 square feet of commercial space. DeVilliers doesn’t have a timetable for constructing new buildings on the site.
How soon the economy and real estate market recover will determine the size and timeline for constructing the next building, deVilliers said. The concept plan for the site shows nine buildings, but he could build more or less, depending on the market.The site could house research and development facilities, manufacturing and even a hotel.
Peter Dudley, a principal at real estate brokerage firm NAI KLNB, said ideal tenants include electrical, plumbing or building supply firms as the Route 40 corridor houses a slew of construction-related companies. The warehouse building can accommodate tenants between 5,000 and 41,000 square feet.
“We’re trying to be attractive to as many different users as possible,” Dudley said.
FRP is planning infrastructure upgrades, including adding sewer and water storm drains and a new sprinkler system, to be completed by summer. When the weather warms up, it will begin moving “hundreds of thousands” of cubic yards of dirt so the ground is level.
It also needs to get permits from the city.
“Any [city] department you can think of we will touch as we go through the process,” deVilliers said.
FRP could spend more than $8 million on site the site improvements, he said. Hollander 95 is close to Interstates 95 and 895 and off Route 40 near Rosedale.
“There are a number of cars that pass by that site,” giving companies good visibility from the road, deVilliers said.
The good road system also makes it easy to get to many other states within a day’s drive.
“One day, it’s going to be a great community and people are going to say, ‘gee, that was a great opportunity. I should have taken advantage of it,’ ” said Paul Cooper, vice president of Alex Cooper Auctioneers.