Sales fell in June and July for most shops and restaurants at the twin pavilions on Pratt and Light streets. And vacancies rose to nearly a third of the center, according to a recently filed report for August by court-appointed receiver IVL Group LLC.
The court appointed IVL on May 30 to manage and lease the festival marketplace after owner Ashkenazy Acquisitions Corp., a New York-based real estate company, defaulted on its loan for the property.
The latest report, filed in Baltimore City Circuit Court, shows the center’s problems continuing. Apparel retailer Banana Republic, one of the larger tenants in the Pratt Street pavilion, became the latest in a string of departures, closing in August. IVL listed a more than 31 percent vacancy rate as of the end of that month. And there appears to be little progress, at least publicly, on leasing and marketing.
“The receiver is discussing a leasing and marketing plan with servicer,” the company that manages the mortgage loan, said the August report, echoing comments it made in its June report.
Ian V. Lagowitz, president of IVL Group, declined to comment on the latest report or status of the center.
“It’s not surprising to see that the vacancy level is increasing and sales are down,” said Laurie Schwartz, president of the Waterfront Partnership of Baltimore, a nonprofit that oversees the waterfront business improvement district. “There’s no marketing of the property right now, and it’s struggling.”
Sales results through July show declines in June and July for Bubba Gump Shrimp Co., Build-A-Bear, Crabby Jack’s General Store, Crystal Cove, H&M, It’s Sugar and other tenants, according to a sales analysis. Sales decreased 27% at Build-A-Bear in July, and 36% at Crabby Jack’s in June.
Restaurants Tir Na NÓg Bar & Grill and Uno Chicago Bar & Grill both posted lower sales in the summer through July. And sales fell both in June and July for burger and shakes restaurant Johnny Rockets.
“This summer was the slowest summer we’ve ever had,” said Ben Saba, owner of the Harborplace Johnny Rockets franchise since 2012.
His business suffered, he said, as tenants left, foot traffic dwindled and the once-bustling food court area near his restaurant has been reduced to a few tables and limited seating under Ashkenazy. Departing tenants in recent years — some amid the oft-delayed renovation of the center — included Urban Outfitters, Five Guys, Noodles & Co., La Tasca, Edo Sushi, Lenny’s Fire & Ice and The Fudgery.
“If business stays like this ... we have no choice but to close,” Saba said.
He said he expects to make a decision in the next couple of months. In the meantime, he has been trying, so far unsuccessfully, to renegotiate rent that has continued to rise.
While many tenants find themselves in Saba’s situation, others fared better over the summer.
At The Cheesecake Factory, located in the Pratt Street Pavilion, sales were down in June but up in July. For Hooters, a restaurant in the Light Street Pavilion, sales rose in June and were off only slightly in July.
While sales for all tenants were down in June and July, they were up 11% for the year through July.
Even a high vacancy rate could be a positive in the long run, Schwartz said, if the property ends up in the hands of a local and successful new owner. Receivership shifted control of the center from Ashkenazy to IVL, which is managing it on behalf of Deutsche Bank Trust Co. Americas, the trustee for mortgage holder UBS-Barclays Commercial Mortgage Trust.
“For some developers, it may be more appealing if there are more opportunities ... to bring in his own tenants and own tenant mix,” Schwartz said. “It may be better in the long run to have a property in the condition where the developer can put his own imprint on it."
Ultimately, Schwartz believes receivership could prove positive for the pavilions, the centerpiece of the city’s downtown renaissance in the early 1980s.