IN THE PRESS
Lakritz Adler, Grosvenor to redevelop Silver Spring church site into apartments, retail
Article Published in Washington Business Journal - June 21, 2013 [view]
by Daniel J. Sernovitz June 21, 2013
A prime corner in downtown Silver Spring is being primed for redevelopment. Lakritz Adler Real Estate Investments and Grosvenor Americas have reached a deal to replace the First Baptist Church at Fenton Street and Wayne Avenue with a new retail-and-residential building.
Lakritz Adler and Grosvenor recently formed a joint-venture partnership to buy and redevelop the church property at 8415 Fenton St. into a 259-unit apartment building with 19,000 square feet of retail space. As part of the deal, which was arranged by MAC Realty Advisors LLC, the partners will build a new church for First Baptist on an adjacent site. The project is projected to cost about $80 million.
"We're excited about urban living. We're excited about the vibrancy that downtown Silver Spring brings. And it just meets everything that makes Grosvenor tick," Grosvenor Senior Vice President Don Capobres said. "We're very excited to be moving forward with this."
The church project is just one of several redevelopments taking place in Silver Spring and follows news that Washington Property Co. is planning to redevelop the Bethel World Outreach Ministries International site on Georgia Avenue as a mixed-use development.
MAC Realty Executive Director Andrew McAllister believes the recent activity highlights Silver Spring's emergence as one of the region's hottest submarkets. He likened it to Arlington's Rosslyn-Ballston corridor because both have an increasing concentration of young professionals and interest from retailers that want to build off that changing demographic.
"On the eastern side of the Red Line, in terms of a lifestyle choice, Silver Spring is the only Metro stop that has the feel of the Rosslyn-Ballston corridor," said McAllister, who led the marketing effort for MAC Realty along with Executive Director Bruce Levin and and Senior Director Ben Lazarus. "Silver Spring's evolving not dissimilar to what you saw in Clarendon and Court House."
He said the project also highlights a growing realization among religious institutions like First Baptist and Bethel World Outreach that their properties have risen in value as demand has increased for transit-oriented urban redevelopment sites.
"Urban infill, transit-oriented sites are an incredible premium. There just aren't that many of them available," McAllister said. "As times change, they realize they are sitting on their best asset."
Lakritz Adler has been working for roughly two years on a deal for the site and reached out to MAC Realty to help it find a joint-venture partner for the redevelopment. MAC Realty brought Grosvenor to the table because of the developer's track record, interest in urban redevelopment projects and desire to expand its portfolio in Greater Washington, Lazarus said.
The project is already entitled, and Grosvenor and Lakritz Adler hope to be in position to start tearing down First Baptist's current church by the end of the year or in early 2014 at the latest. The project would be completed by the fourth quarter of 2015 based on that timeline. The developers have retained SK&I Architectural Design Group LLC for the project.
First Baptist has wanted to move from its current home for several years because of the costs tied to the building's age and upkeep. It won a key victory in that effort when Montgomery County's historic preservation commission decided in March 2011 that the church's longtime home should not be designated a historic site, which would have protected it from redevelopment.
As proposed, the church will sell part of its 2.47-acre property to Grosvenor and Lakritz Adler to develop as a mixed-use project. It will retain another portion on which Lakritz Adler and Grosvenor will build a new church for First Baptist. Terms of the deal were not disclosed.
Capobres said he views the First Baptist site as one of the best locations for development in Silver Spring. It is just a block away from the Silver Spring Whole Foods and a short walk from the Silver Spring Metro station at Colesville Road and East-West Highway.
"We think we've landed, for sure, the best site in Silver Spring," he said.
Grosvenor also is planning to build a mixed-use project near Nationals Park. It recently sold the District apartments it partnered with The JBG Cos. to build at 14th and S streets NW to JPMorgan Chase & Co. for $76 million.
Grosvenor has not been an active developer in the D.C. area in the past, but Capobres said, "That's something that my team hopes to change in the near future."