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Sales down for some key tenants at Baltimore’s Harborplace, where nearly a third of spaces are vacant

Nearly a third of Baltimore’s Harborplace was vacant as of June and some of its retailers have struggled with declining sales for years, a report by the court-ordered receiver for the Inner Harbor attraction shows.

IVL Group LLC also said the property needs maintenance and repairs in its first report to Baltimore City Circuit Court since being appointed May 30 to manage and lease the waterfront festival marketplace.

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The report offered a glimpse into the problems faced by what was a centerpiece of Baltimore’s downtown renaissance in the early 1980s. In recent years, Harborplace has been beset with vacancies and management problems and its owner, Ashkenazy Acquisitions Corp., defaulted on its loan for the property.

“Receiver is discussing a leasing and marketing plan with servicer,” said the report, which covered June and was filed Thursday. The servicer is the company that manages the mortgage loan.

The report offered no details about future leasing plans. Receiver Ian V. Lagowitz, president of IVL Group LLC, said Tuesday that he had no comment on the filing.

By putting the property at East Pratt and Light streets into receivership, the court took control of it away from Ashkenazy, a New York real estate company that bought it in 2012. IVL is managing the center on behalf of Deutsche Bank Trust Co. Americas, the trustee for mortgage holder UBS-Barclays Commercial Mortgage Trust.

The report depicts declining sales for some key tenants during a period when an Ashkenazy-led renovation stalled and retailers moved out.

Sales results have been mixed over the past several years, according to a comparative sales analysis. Overall, sales are projected to be up 8.8 percent to $31.1 million this year compared with last year.

But some tenants have seen continued declines, including Bubba Gump Shrimp Co. restaurant, where annual sales dropped from $5.3 million in 2016 to $3.96 million last year and are projected to drop again to $3.5 million this year. H&M, an apparel retailer that opened there in 2011, expects a nearly 23 percent drop in sales this year to $2.8 million, a sharp decrease from $6.5 million annual sales in 2015.

Sales are projected to be down nearly 14 percent for Icy Island and nearly 7 percent for Ripley’s Believe It Or Not. Sales at Uno Chicago Bar & Grill have been down each year since 2016, but are projected to level off this year.

But others have fared better. Banana Republic, which moved from the Gallery across the street into Harborplace in May 2018, is projecting a 40 percent boost in annual sales, to $1.1 million this year. Sales at Cheesecake Factory, an anchor at the center since 1996, had been down each year since reaching $8.4 million in 2016, but are projected to rise this year.

“It wasn’t surprising that some of the major tenants are not doing as well as they had been,” said Laurie Schwartz, president of the Waterfront Partnership of Baltimore, a nonprofit that oversees the waterfront business improvement district. “Unfortunately, it’s not surprising when you have a property that’s less than 70 percent occupied that tenants are having difficulty. You need a fully functioning retail property and marketing and advertising and events to draw people.”

“At the same time, I’m encouraged by the receiver starting to right the ship, tending to some of the basics, paying the bills, collecting rents, putting light bulbs in.”

A spokeswoman for the Baltimore Development Corp, the city’s economic development arm, said the agency has requested a copy of the report but has not yet seen it and had no comment.

Deutsche Bank Trust filed an emergency petition in April to appoint a receiver, saying Ashkenazy defaulted on its $76 million loan by missing a payment due March 6 and by failing to pay a judgment against it in a 2018 lawsuit. In that case, tenant Bubba Gump alleged that Ashkenazy failed to maintain common areas of the Light Street Pavilion and protect the shopping center. It won a $1.2 million judgment in Baltimore Circuit Court. On March 28, Deutsche Bank notified Ashkenazy that it was in default.

As of June 30 Harborplace was more than 31 percent vacant, with the 68 percent leased portion bringing in $6.78 million in annual base rent and other tenant charges, according to Jones Lang LaSalle rent rolls included in the filing.

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Tenants such as Urban Outfitters, Five Guys, Noodles & Co., La Tasca, Edo Sushi, Lenny’s Fire & Ice and The Fudgery have closed in recent years as long-sought renovations to modernize Harborplace were delayed. But others moved in, including Build-a-Bear and Mason’s Famous Lobster Rolls.

The receiver described Harborplace as in “operable condition.” IVL said it has not yet embarked on capital improvements but has hired a landscaper to install summer annuals in flowerpots and is working with contractors to improve lighting, repair doors and restrooms, and maintain common areas.

“The receiver is reviewing property conditions with the various trades servicing the property and will identify recommendations,” the report said.

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