Clipper Mill’s recent sale shows there’s plenty of institutional interest in Baltimore, particularly in mixed-use projects, according to Cris Abramson, executive managing director of NKF’s Capital Markets Group.
NKF’s Capital Markets Group facilitated the transaction for the development, which includes roughly 140,000 square feet of Class A apartments, restaurant and office space. The property sold to an affiliate of ValStone Partners, a Michigan-based private equity investment firm, for an undisclosed amount.
“Investors are searching for a … surety of yield,” Abramson said.
Urban mixed-use properties are the best way to ensure that yield, he said, because of the variety of ways for a property to provide revenue. The apartments, office space and tenants, such as Woodberry Kitchen, one of the city’s top restaurants, provide the diversity for ValStone.
Clipper Mill was only on the market for a matter of months, a relatively quick time period for a property of this size and type. The property, according to Abramson, attracted more than 12 credible offers. The property, set on the Jones Falls along Interstate 83, dates back to the 1800s and was transformed into a mixed-use development in the mid-2000s. It was the first of several old mill properties in that section of the city to be re-purposed.
The development was also attractive to investors because it offered opportunity beyond the existing portfolio. There are two parking lots on the property, Abramson said, that can still be developed.
The ability to add more buildings is attractive at this location because it’s in the city’s booming Hampden and Woodberry communities. In recent years several nearby former industrial buildings have been purchased and are in the process of being converted.
A nearby warehouse space at 1700 W. 41st St. is being converted into Union Collective through a joint effort by Union Craft Brewery and Seawall Development. That project involves transforming 87,000 square feet of warehouse space for tenants, such as the production facility for Charmery ice cream shop, Earth Treks Climbing and Fitness and Baltimore Whiskey Co. Union Craft Brewery will also operate out of an adjacent space in the 138,000-square-foot building.
Himmelrich & Associates has plans for a massive redevelopment of the former Pepsi Plant at 1650 Union Ave., which it purchased in November for $6.75 million. The developer has floated plans to surrounding community groups that include office, residential and retail, which could include a grocery store.
Abramson acknowledged that location played a role in the level of interest Clipper Mill drew from potential investors, and he acknowledged it may be the most attractive submarket outside of the waterfront.
“I think it all plays into the narrative that Hampden is this millennial-rich environment,” he said.