Blighted and Vacated Spaces are Rare Exceptions in the City of Frederick, but Exceptionally Visible
Two years after opening his fledgling rock and gem shop in a 12-foot-wide storefront on North Market Street in Downtown Frederick, geologist Richard Bailey started looking around for a new location. He wanted more space so customers at Earthly Elements wouldn’t feel hemmed in. He wanted big glass windows where passersby could peek inside and wonder at all the fossils and crystals. For cheaper rent, he could have moved to a strip center farther out, or even to a mall. But that was never a consideration. Having watched the ebb and flow of Downtown shoppers over those two years, Bailey knew exactly where he needed to be.
“We waited for eight months for a location between La Paz and Brewer’s Alley,” says Bailey, referring to the restaurant and the brewpub that bookend the busy stretch of Market Street between Carroll Creek and 2nd Street. “I knew we had to be in those three blocks to make it.”
Bailey’s hunt for a prime Downtown location is hardly novel. Street-level rental properties in the most trodden areas are often scooped up well before they reach a leasing agent. When word got out last spring that The Dancing Bear toy store was moving from its 13-year storefront on North Market Street around the corner to East Patrick Street, prospective renters literally lined up to take over the space. They all left disappointed to learn the toy store’s owners, Tom and Marlene England, were keeping the space for a new venture, the Curious Iguana book and gift shop.
England attributes the enthusiasm of prospective merchants to a “great vibe.” “Everybody wants to be Downtown,” he says. And recent figures on retail vacancy rates help bear that out. Costar, a real estate information company that tracks such things, shows that Frederick’s central business district had a vacancy rate of just 5.6 percent in the second quarter of this year. Nationally, the retail vacancy rate that includes malls and shopping strips was also promising, at 4.4 percent earlier this year.
Those figures, along with the underlying enthusiasm of successful merchants, belie an issue that continues to confound officials, business owners and residents alike: the long shadow cast by vacant or blighted properties. Across the county, expansive low-slung office parks built on spec during the last decade’s real estate boom sit disproportionally vacant, in some cases hollowed out by companies that relocated or trimmed employees. Properties on vaunted avenues like the Golden Mile and the northerly reaches of Market Street sit empty, laid low by economic forces or abject neglect.
Officials know that even the best vacancy rates don’t mean much if what people notice are the dark and dilapidated spaces. “The vast majority of commercial space in the city is occupied and doing very well,” says Richard Griffin, director of economic development for the City of Frederick. “What stands out, though, is vacancies are notable and they are prominent and your attention is drawn to them because they are such notable large buildings in many cases.” Perhaps most notable have been the city’s Frederick Towne Mall, which closed early this year after a long, slow decline, and a concentration of vacant—even condemned— properties on North Market Street that signal for many shoppers a good place to end their exploration and turn around.
Those are just two examples. In the city, there were enough problem properties to warrant the creation last year of a 15-person ad hoc group of city officials and residents charged with identifying the most egregious vacant and blighted properties and recommending ways to ameliorate the problem, including building a database to track and follow cases and stepped up code enforcement. Griffin says most comply, but not all.
“You only have a very, very small few who are willing to just sit and do nothing and forgo potential revenue and [suffer] the embarrassment of having a property that’s the focus of everyone being upset and just leave it vacant despite all the obvious benefits of doing something else with it,” Griffin says.
Indeed, several of the most notable downtown properties on the 2012 Blighted and Vacant Property Recommendations Report belong to a single landowner named Duk Hee Ro, who has been cited for scores of code violations dating as far back as 1999. Ro has said in published reports that she has tried to comply with city codes and to work with difficult renters. (Numerous attempts to contact Ro to comment for this story were unsuccessful.) But public records and published accounts portray a landlord who has done very little to keep up her properties, whether they are occupied or not.
In one case, a nearby merchant tired of seeing “a revolving door for vagrants” at a condemned property Ro owns—the former home of That Cuban Place restaurant at 300 N. Market St.—resorted to recording the goings on to report to police. He says as bad as things might look on the outside, it’s worse inside. “What people don’t see from the street is
the condition of the vacancies,” says Ned Bond, co-owner of Da Black Cat.
Beyond the obvious safety issues, Bond and other merchants see vacancies and blight as deterrents to foot traffic that might otherwise come their way. “People don’t refuse to come into my store because they see an empty store up the street,” he says. “But I would certainly do better with an open business in the area.”
Until recently, there were very few tools for enforcement. And few politicians have an appetite for dropping the hammer on private landowners about what they can and can’t do with their properties. The leading recommendation from the vacant property committee was to empower the city with authority to put a property into receivership— in effect forcing a property into a better steward’s care. The Board of Aldermen voted unanimously last month to approve the new ordinance, which is modeled on a successful program in the City of Baltimore.
“Occasionally in a community you end up having an unfit property owner,” says Griffin, the city’s economic development director. “And when you have an unfit property owner you kind of overlook it for as long as you can and you try to work with them and try to help them and you try to do all you can. At some point, if they simply are unable to rehabilitate their property and get it into conformance and occupied, then you look and ask, hey, what are our next options? And that would be to hopefully force it into the hands of someone who would be more willing to rehabilitate and occupy it.”
More often than not, filling empty storefronts is driven by the prevailing winds of the market. There’s a lot of empty office space in Frederick County because developers overbuilt and companies pulled back. St. John Properties, one of the largest developers of flex space in Maryland, has about 500,000 square feet of empty office space in the county. When Bechtel moved 625 jobs to Virginia in 2011, it left a cavernous space behind. And when Experient moved from the Galaxy Building on North Patrick Street to another site south of the city, it left behind a massive building and 320 empty parking spaces. In Downtown Frederick, the past decade has seen one newspaper move and another simply cease to be.
Rocky Mackintosh, owner of MacRo Ltd, a commercial real estate firm in Frederick, says the ubiquitous For Lease signs plastered on buildings far and wide are a natural product of the economy’s hangover. “Businesses were getting a little overextended because they were planning for growth,” he says.
“And when the expansion didn’t happen they were still holding the bag with owing money. That’s the impact of what a recession does.”
Still other market forces, including shifting demographics and declining interest in malls, have been blamed for what may be the most visible vacancy on the Golden Mile. But even that may be short-lived now that officials tweaked the zoning of the land under the dead Frederick Towne Mall to make it friendly for a prospective Walmart. While there’s much debate about “the high cost of low prices,” the chain has a track record of foot traffic, which developers of shopping centers and prospective neighboring stores find alluring. Kathy Krach, a commercial sales broker at MacRo, points to the low vacancy rates at shopping centers where Walmart has already set up shop.
“If you look at what Walmart brought over by Clemson Corner [in the northern part of the city] and the development that happened after Walmart came there, and the development that happened here by Best Buy [south of the city], it’s hard to argue that it’s going to hurt Route 40,” she says.
Observers say economics and scale, more than anything else, will continue to drive the area’s vacancy rate. Outlying strip centers and business parks typically offer attractive rates, traffic and more flexibility for renters. Even in cases where a developer could swoop in like a white knight to renovate a blighted Downtown property, there’s little financial room to come out ahead because leasing rates aren’t high enough to recoup the investment. “The cost ….disincentives a developer to go in there and do it because he can’t charge $31 a square foot for rent in an office building Downtown,” Mackintosh says. “The pluses are that it’s a vibrant Downtown and a lot of people want to be down there.”
Kara Norman, executive director of the Downtown Frederick Partnership, which promotes Downtown’s vitality, says the disconnect between what renters can afford and what landlords want to charge can be a source of friction. “A lot of our property owners understand and get what an independent business can pay and how much that is as a portion of their profits,” says Norman, who served on the vacant properties committee.
Economically, Norman says, “Downtown is in a very healthy spot.” Four new businesses have opened on Patrick Street alone since July. And the businesses that have moved in over the past decade seem to be stronger and more experienced, she says. A survey of businesses last February showed most did “above average” last year and expected things to get even better.
Norman is keenly interested in how the issue of blighted properties, particularly on North Market Street, plays out. She imagines the area north of 3rd street evolving into a collection of shops, like the dry cleaner and car repair shop there now, that would primarily serve and be supported by local residents. “There’s only so far people are going to walk,” Norman says.
“So we know there’s a point where downtown is going to have to transition. We can’t be active retail all the way from South Street to 7th Street.”
Frequently cited studies say people will generally walk a quarter-mile for shopping or public transportation before opting to drive instead. Richard Bailey knew this when he relocated Earthly Elements gem shop to 33 N. Market St., a short stroll from parking garages that fill with tourists and commuters. He’s done everything in his power to make his six-year-old business thrive. But Bailey recognizes that his success depends as much—if not more—on his neighbors as it does on the ancient dinosaur eggs, mystic ornaments and colorful gems that surrounded him in his cozy store.
“People have got to have other reasons to come here besides the rock shop,” he says.