When a New York real estate company with a portfolio of trophy properties bought Harborplace and The Village of Cross Keys in 2012, many in Baltimore hoped it would restore those premier retail centers’ lost luster.
Seven years later, that hope has given way to empty storefronts, dissatisfied tenants and worry about the centers’ futures. The owner, Ashkenazy Acquisitions Corp., is in danger of defaulting on tens of millions in loans for the two properties.
“You can’t find what we have here anywhere else” in Baltimore, said Betty Cooke, the 94-year-old owner of The Store Ltd, a longtime tenant among a dwindling group of boutiques, galleries and national retailers in Cross Keys.
“To let it go down this far, I think is a disgrace,” she said.
Both Cross Keys and Harborplace hold a special place in the city: Cross Keys was part of an experimental planned community by The Rouse Co. in 1965 and has a loyal local following in North Baltimore. Harborplace, also developed by Rouse, has served as a focal point for visitors to the Inner Harbor since it was built in the 1980s.
But both properties face high vacancy and appear to be in dire financial straits with Ashkenazy’s loans for each just one step away from default, according to the real estate research firm Trepp LLC.
While Cross Keys retains national anchors, including Williams Sonoma and Talbots, a steady stream of tenants departed in recent years, leaving it feeling half empty. Departures include the Red Door Salon & Spa, the Jean Pool denim boutique, Samuel Parker Clothier, Jones & Jones women’s boutique, Chico’s and Donna’s Cafe. The clothing shops Ruth Shaw and J. Jill moved to the Shops at Kenilworth in Towson.
As long-delayed renovations to modernize Harborplace’s appearance dragged on, such tenants as Urban Outfitters, Five Guys, Noodles & Co., La Tasca, Edo Sushi, Lenny’s, Fire & Ice and The Fudgery closed, resulting in many boarded-up storefronts. With that work recently completed on the Pratt Street pavilion, new leases have been signed with Build-a-Bear, Mason’s Famous Lobster Rolls and Banana Republic, which moved from the Gallery mall across the street.
Vacancies crimp the cash flow needed to make payments on Ashkenazy’s commercial mortgages for both properties. It owes $67 million on Harborplace and $21 million for Cross Keys.
Both loans have been placed with special servicers, according to Trepp. Special servicers, whose job is to protect the interests of the note holder, often institutional investors that bought the loans, can negotiate new terms for the loan with the borrower or move to foreclose on the property.
Officials with Ashkenazy did not respond to multiple requests for comment.
The privately held New York company owns a $12 billion global portfolio of more than 100 buildings, many well known in New York, Boston and other big cities, according to its website.
The company has struggled elsewhere, losing several properties in recent years after failing to make debt payments, according to media accounts and a Trepp analysis. It lost retail centers in Milwaukee and Tampa, Fla., in 2010. Those troubles sparked resistance from merchants in Boston’s Faneuil Hall Marketplace to Ashkenazy taking over management, which it did in 2011.
In 2013, Ashkenazy walked away from a proposed mixed-use development in Ventura County, Calif., after a local redevelopment agency said the company wasn’t performing per an agreement. Two years later, Ashkenazy closed a money-losing mall in the suburbs of Detroit, and soon after a second Ashkenazy-owned mall there was foreclosed on and sold at auction.
Retail observers say Ashkenazy is not the only retail property owner with some troubles. Amid competition from online retailers, many stores that failed to anticipate evolving consumer interests are closing, and regional malls and neighborhood shopping centers have fallen out of favor.
The Downtown Partnership, a Baltimore business development group, released a report recently that found retail sales within a mile of the intersection of Pratt and Light streets plunged 10 percent last year to $1.12 billion.
Some of that might be attributed to retail vacancies at Harborplace, but also likely to the Orioles’ woeful attendance, crime fears and shifting retail trends.
“Harborplace is incredibly important,” said Kirby Fowler, the Downtown Partnership’s president.
He said he’s been in contact with Ashkenazy, whose officials wanted data for promotion to potential tenants.
“My contacts with them make me feel positive about the prospects for leasing,” Fowler said. “They know we’re concerned about Harborplace and want to help out any way we can. And we’re pleased with the improvements to the Pratt Street pavilion.”
Susan Yum, spokeswoman for the Baltimore Development Corp., the city’s development agency, also said officials there are in “frequent contact” with Ashkenazy.
The BDC “continues to provide technical assistance with the renovations at Harborplace. As they continue to make progress, we remain hopeful that it will lead to attracting high-quality tenants to Harborplace.”
Aides say Mayor Catherine Pugh is watching for Ashkenazy’s next moves at both centers.
“The mayor remains concerned about the conditions of these privately owned but critically important Baltimore assets,” said James Bentley, her spokesman. “We keep an open dialogue with Ashkenazy through BDC and hope they will continue to invest and improve their properties with urgency.”
Leasing might not be easy because of the troubles facing retail generally, said Michael Berne, president of MJB Consulting.
But he called the level of trouble in Baltimore curious. Other retailers have moved onto Pratt Street near Harborplace, including Shake Shack, Chick-Fil-A and Marshalls. More space is planned nearby.
“It begs the question: Why haven’t they been able to capitalize in quite the same way” on the large numbers of people living and working in the city or visiting, he said.
“Ashkenazy is known for being relatively low key as a company and I understand they haven’t exactly always been the best at communications,” he said. “But for an asset like this that does have symbolic importance to the city, you would hope they would be a little more engaged.”
Berne said he expects a company like Ashkenazy to lease to more national firms, with which the company has established relationships.
He said there is always a push for some local tenants but that’s not always possible, especially in more costly high-profile centers. That should be less an issue in Harborplace where tourists dominate traffic, “will take what is given to them” and don’t have a problem with national chains like Cheesecake Factory and Uno Pizzeria & Grill.
Berne said some chains that have left Harborplace were having their own financial troubles, such as Noodles & Co. Others, such as Five Guys, were not. Banana Republic making a bet on Harborplace is a significant show of confidence, he said.
The issues might be bigger for Cross Keys, long home to locally owned businesses like Cooke’s, which sells a mix of designer jewelry, accessories and other high-style items. Locals will want more local businesses, but likely won’t get them.
Ashkenazy doesn’t appear to have strong local relationships, which can take more communication and special accommodation, Berne said.
“It takes a certain kind of landlord to make that work,” he said.
Cooke said the shops in Cross Keys, clustered around an outdoor courtyard, are “sophisticated,” “quality,” “unique.” They are located in the retail portion of Rouse’s planned community.
Despite how changing shopping habits and the internet have upended retail, Cooke said she believes the center has untapped potential, if only the landlord would understand its history and place and invest in it.
Cooke’s shop was one of about 32 that opened with the center in 1965, a group that included a shoe store, peanut seller, antique shop and delicatessen. Parking lots were often full, and garden clubs decorated during holidays.
“It was never meant to be a big mall,” Cooke said. “It was before there were big malls, and it has a certain wonderful quality about it that a lot of people respect.”
The charm lured Rebecca Myers in 2016 to open a jewelry studio and workshop, Rebecca Myers Collection.
“During that first full year, this place was pretty well leased,” Myers recalled. “It had a nice feel about it, and some nice exclusive shops, which is what makes the place really special.”
But things have changed in her time. Vacancies have grown — some estimate about half the retail and office space is empty. And competing retail centers such as the Rotunda in Hampden and The Shops at Kenilworth in Towson have gotten major upgrades.
Cross Keys still has its loyal customers, though, such as Frances Keenan. She finds herself shopping or eating lunch there about once every two weeks. She eats lunch outside at the Village Square Cafe and frequents Williams Sonoma and The Pied Piper children’s store. She has bought jewelry, wedding gifts and clothing at Cooke’s shop for decades.
“It’s one of my favorite places to go,” said Keenan, a longtime Baltimore resident and an executive at the Abell Foundation. “Betty Cooke’s got this jewelry that a lot of the women in Baltimore absolutely adore. It’s one of the most unique stores I’ve ever been in.”
Keenan, who also had shopped at boutiques that left, called the vacancies “troubling.”
“It would really be a shame if the center shut down. It is a real landmark for people who shop there,” she said. “It’s very convenient and has a different feel to it than the big malls.”
Winnie Borden moved to a townhouse in Cross Keys in 2010, attracted partly by the shops.
“I’ve shopped at many of them, and at some of the ones that closed also,” Borden said. “It makes the community more than just a housing development. It makes it more like a little village.”
She laments what’s gone.
“Now, when you walk in, it looks like a ghost town,” she said.
Cooke is holding out hope for new ownership, eventually.