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The Hopewell Distribution Center, in Harford County, is the largest industrial facility being built on speculation in the Baltimore region. (Submitted illustration)

Real Estate Insider: Spec Industrial building becomes the norm

What a difference a year makes.

The land-constrained industrial market along the Baltimore metro market portion of the Interstate 95 corridor performed extremely well last year, driven in large part by demand from “e-commerce” and the need for distribution centers.
But a recent chart released by Jones Lang LaSalle, a commercial real estate services firm, shows just how much the industrial market is heating up.

During the first quarter of last year only 7 percent of the industrial market pipeline in the Baltimore metro market was being built on speculation. But in the first quarter of 2015 that number has exploded. A full 72 percent of industrial building in the market is being done on speculation. Developers’ willingness to build without a tenant lined up is a good measure of their belief that demand is still outstripping supply in a given market.

“As available large blocks of availability have dwindled, developers have moved much more aggressively on warehouse/distribution buildings without a tenant,” according to Jones Lang LaSalle.

Currently the top speculative project in the market is the Hopewell Farm Distribution Center, a 571,000-square-foot warehouse distribution facility in Harford County. Chesapeake Real Estate Group LLC and financial partner USAA Real Estate Co. announced the project in October along with the purchase of nearly 50 acres of land.

David Donato

Vice President – Commercial Division,
Continental Realty Corporation


BA – Dartmouth College, Hanover, New Hampshire
MBA – Loyola University, Baltimore, Maryland

David Donato (Submitted photo)

David Donato (Submitted photo)

How did you end up in commercial real estate? Dumb luck. From 1995 to 1997, I was an English teacher at Patterson High School, a Baltimore City Public School. I figured out quickly that teaching was not my gift. I circulated my résumé to anyone and everyone, and got picked up by Crown Central Petroleum, in their Environmental Compliance Department. Getting on board with Crown was my lucky break. I worked hard and eventually they moved me into their Property Disposition Division, selling off closed gas stations. With that experience under my belt, I moved into leasing at Continental in 2000.

What is the most important part of being successful in your field? Relationships. We have long-term relationships with countless national and regional tenants. We have worked with local tenants, to help cultivate second locations. We work hard to make the Continental Realty brand known to brokers (both leasing brokers and asset sales brokers) in all the markets where we do business. We want to be known as reasonable people to do business with – people who live up to our commitments. It is one of Continental’s five stated core values – Relationships Matter and Reputation in Important – and we all take it seriously.

Biggest transaction in the past year? The purchase of Towne Square Shopping Center, a 127,000-square-foot. center in Ocoee, Florida. This is our second retail project in the Greater Orlando market and brings our total in Florida to nine retail and two multifamily projects. This asset purchase placed the last slug of capital for CRC Fund III, just in time for Continental Realty Fund IV to begin ramping up. Exciting times!

Favorite restaurant: This is an impossible question. My girlfriend and I eat out basically every night, and so we go to many, many different restaurants. We really enjoy Ouzo Bay for seafood, 13.5 percent for wine, and Verde for pizza. But if forced to pick the best overall restaurant, I would have to go with La Scala — such excellent food and service without fail.

Recommend a vacation spot: Cinque Terre, on the Ligurian Coast of Italy. Jared Meier of StreetSense and Ryan Minnehan of KLNB both highly recommended it. I finally went in 2013, and it lived up to all expectations. Magical place.
Spec industrial building becomes the norm

Evolution in eating

Phil Ruxton, principal at KLNB Retail, identified what he called the “polished casual” restaurant category as the next trend in retail space. He made his comments during a Lerch, Early & Brewer “Hot Topics in Retail Leasing” seminar at the Kenwood Golf and Country Club in Bethesda. Examples of eateries that would fall under this category are places such as Seasons 52, Founding Farmers and The Silver Diner. “Think of fast-casual being pumped up a notch across all elements, including food quality and pricing with an emphasis on fresh and healthy ingredients,” according to a news release. “The consumption of liquor plays a role in this segment, in addition to the recognition that consumers are willing to pay more to receive a higher-quality meal.”

BECO gets Insurance

Insurance Inc. has signed a lease with BECO Management Inc. for 10,921 square feet of office space at the 12-story BECO Tower II in Owings Mills. Insurance, Inc. will be relocating its headquarters and about 40 employees from its current offices in Owings Mills by early this summer. Gary Applestein of Colliers International represented the landlord and Matt Mueller of MacKenzie Commercial Real Estate Services represented the tenant in this transaction.

Hogan Cos. sells Middletown commercial space

Annapolis-based Hogan Cos. have announced it has sold seven acres of commercially zoned land in Middletown that is set to become an upscale shopping center. Middletown Valley Investment Partners purchased the land for an undisclosed amount, and had previously secured approvals for the project. The site, in the 200 block of Middletown Parkway, is approved for several retail buildings. A 10,800-square-foot building will be the first completed and two additional pad sites will accommodate a 4,500-square-foot and a 7,000-square-foot structure.