A developer's plan to rebuild a large chunk of downtown Towson, adding office and retail space plus new residences and a hotel, won't swamp that suburban market with unneeded square footage, real estate insiders say.
Optimism abounds for Caves Valley Partners' $300 million Towson Row, a 1 million-square-foot mixed-use community off York Road near Towsontown Boulevard. There's demand for new construction and the walkable experience that the project aims to create, real estate experts say.
"I've been in this market 25 years. Towson really needs this," said Bill Whitty, a senior vice president and principal of MacKenzie Commercial Real Estate Services LLC.
Recent developments in the Towson real estate market show that the appetite is there for what Caves Valley has drawn up, said Whitty and others.
When Towson Row was announced last month with fanfare by Baltimore County Executive Kevin Kamenetz, the plans showed 200,000 square feet of offices, 350 luxury residential units, 300 student housing units, a 200-room hotel and more than 100,000 square feet set aside for retail, including restaurants and a grocery store. A parking garage with more than 1,000 spaces also is planned.
Arthur H. Adler, a Caves Valley partner, declined an interview request.
The five-acre Towson Row will require the demolition of existing buildings along Chesapeake, Susquehanna and Washington avenues, so Caves Valley doesn't expect to begin construction until 2015. As happens with many large mixed-use projects, the square footage of the components may change as tenant commitments evolve.
But, at the moment, those who know the market say Towson could use all of the proposed pieces. Residential, retail and office components will feed off one another's success, said Alex Montague, a vice president with Colliers International who specializes in retail real estate.
"A lot of those things take care of each other," Montague said. "If you put students and other residents on top … and a parking garage and really get a lot of people walking around, then it really starts to make sense."
Combined with two other major projects underway, 101 York and Towson Square, there will be a vibrant community of people living, working and relaxing in a small area south of downtown's traffic circle, he said.
DMS Development's $60 million project at 101 York Road will feature 200 apartments and 10,500 square feet of street-level retail along York Road just north of Burke Avenue. The Cordish Cos. and Heritage Properties are at work on Towson Square, a movie theater and dining complex a block east of York Road. All three new developments are within a half mile of each other.
"All of those things put together are really complementary and really transformational," Montague said.
There isn't much retail space, outside of Towson Town Center mall, available in the area right now and the new housing will drive demand for more services, like another grocery store, and entertainment, he said.
In addition to fulfilling a need for retail space, the Towson Row project will meet the needs of office tenants who cannot currently find the right space in Towson, Whitty said. MacKenzie's research shows that about 14.3 percent of Towson's office space sits vacant.
Right now, Towson's older office buildings primarily offer single-floor spaces that are too small to satisfy many companies, he said. Bigger operations need to go to Hunt Valley or White Marsh to find the floor plans they're looking for, he said.
"Brand new office space with big floor plates will be needed by the time they get this thing going," Whitty said.
He cited General Dynamics Information Technology Inc.'s recent lease extension and expansion at 1 W. Pennsylvania Ave. in the nearby Towson Commons as proof that there's demand for large office spaces in the town center. Last month, it was announced that General Dynamics, a defense contractor based in Fairfax, Va., signed on for almost 150,000 square feet at Towson Commons.
Towson Commons' office building has the largest floors among any existing building in Towson and gives it a competitive advantage, said James S. Wellschlager, a Cassidy Turley principal. Cassidy Turley on Monday confirmed the sale of Towson Commons, which had been lender-owned, to the New York-based Garrison Investment Group. The sales price was not disclosed.
More than 15 offers came in for Towson Commons, Wellschlager said. The interest in the property was driven by the commitment from General Dynamics, L.A. Fitness' recent takeover of the former AMC movie theater space and the abundance of open retail space, he said.
Although tenants have been wary of moving into a building that's in transition, now that a buyer is settled, Wellschlager said, the retail space should fill up quickly. The interest in Towson Commons bodes well for Towson Row, he said.
Towson Chamber of Commerce Executive Director Nancy Hafford, also a member of the county's Planning Board, said the members of her organization have provided "extremely positive feedback" on the Towson Row proposal.
"A lot of places around the country still haven't recovered, they'd give their right arm to have this kind of investment," Hafford said.
The planned housing is "absolutely" needed in Towson, she said. Units in the Palisades of Towson, a high-rise apartment that opened several years ago, have been in high demand, she said. There's surely more people — both students and non-students — who want to live near the action, she said.
"We need housing, that's all I know," Hafford said. Towson University is growing "by leaps and bounds" and will drive much of the demand for new housing, she predicted.
Whitty also sees the Palisades' success as a bellwether for Towson Row's residences and thinks the colleges and hospitals in the area will easily support another hotel.
Although current market factors point toward the success of Towson Row, another factor in the optimism for the project is real estate professionals' faith in Caves Valley, which turned the vacant Investment Building into the fully leased Towson City Center in about two years.
It's too soon to say whether Towson University, which leases space at Towson City Center, will occupy part of Towson Row, said Gay Pinder, a university spokeswoman.
"Caves Valley's too smart of a developer not to build something the right way," said Matt Mueller, a vice president with MacKenzie and president of the Greater Towson Committee. "They've got a strong track record."