The Best Buy Co. Inc. has contracted to purchase a Ramada Inn in the Woodlawn section of Baltimore County as part of the discount consumer electronics retailer's push into the metropolitan area.
The Minnesota-based chain recently received initial approval from the county for its development plan for a 60,000-square-foot store, which would involve razing the eight-story hotel.
Best Buy is expected to complete the purchase of the 3-acre site with owner Alex. Brown Realty Inc. in the first quarter of next year. Development of the new store would begin shortly thereafter, with completion set for October 1995.
"It's a perfect location for us," Sean Skelley, a Best Buy regional manager, said yesterday. "It's a destination spot for us, one of the few areas that can be seen from Interstate 695. It's a postcard location, no question, and would be very similar to our Columbia and Glen Burnie stores."
In all, Best Buy is expected to invest $7 million to acquire the hotel, raze it and build its new store.
The Ramada Inn contract also illustrates the lengths to which retailers are going to capture quality locations. Although redevelopment of older sites has occurred for decades, the policy has gained favor lately, as more and more retailers compete for a shrinking inventory of new sites.
And in the case of Best Buy's proposed 1701 Belmont Ave. store, its quest for a high-traffic location, factoring in demolition, will cost no more than development in a new center.
"Prototype dimensions are very important to discount retailers," said Adam Miller, a KLNB Inc. principal representing Best Buy. "So they typically choose not to fit their operations into someone else's store.
"There's also an economic issue: To retrofit and make a site work is often more expensive than tearing a store down and starting over."
Wal-Mart Stores Inc. and Home Depot Inc. also elected to tear down existing stores and alter sites in the Catonsville section of Baltimore County, to increase efficiency and gain highway proximity and visibility.
Mr. Skelley added that the Woodlawn location wouldn't be the first time Best Buy has razed a structure to make way for a store. In developing its Gaithersburg site, the company demolished a six-story office building.
The 205-room Ramada Inn across from the Security Square Mall opened in 1972, and its occupancy has hovered around 60 percent, slightly under the area average.
The hotel was purchased in December 1992 by Alex. Brown Realty, a private affiliate of the Baltimore investment house, from a First National Bank of Maryland entity that had seized it through foreclosure.
Alex. Brown Realty President John Prugh declined comment on the Best Buy transaction.
Since its formation in 1971, Alex. Brown Realty has spent more than $700 million to acquire properties on behalf of its clients.
Best Buy, the nation's No. 3 electronics discounter, operates 176 stores in 22 states and intends to open as many as 14 new stores in the Baltimore region by the end of 1995.
It already operates stores in Columbia, Laurel and Gaithersburg. A Glen Burnie store will open later this month, and Best Buy is considering sites in Bel Air, Towson and White Marsh, sources said.
To fund its aggressive expansion plans, Best Buy recently filed a $200 million convertible preferred offering.
In the first half of its 1995 fiscal year, ended Aug. 27, Best Buy reported net earnings of $11.8 million, on revenues of $1.78 billion.
The net income figure was a 30 percent increase from the year before.
In September, total sales for Best Buy increased 65 percent to $438 million from the year before, and same-store figures rose 18 percent.