The South Carolina developer that bought the Lakeforest Mall property in Gaithersburg nearly three years ago has acquired the four anchor store properties – clearing a major hurdle for redeveloping the site.
WRS Inc. bought the mall in 2019, but not the four anchor properties: Lord & Taylor, J.C. Penney, Sears and Macy’s. Three of the stores have closed; only Macy’s remains open.
The stores’ parent companies had maintained control of the anchor properties after the stores closed. WRS had to acquire all four properties under a 1970s reciprocal easement agreement before it could make any changes to the property.
In the years since buying the core of the mall, WRS tried unsuccessfully to buy the anchor properties. Finally, the purchases happened on Monday, Executive Vice President Kevin Rogers told Bethesda Beat on Wednesday. He did not disclose the terms of the sale.
Gaithersburg Mayor Jud Ashman, reached by phone Wednesday, told Bethesda Beat that Rogers has notified him by text message about the acquisition, but they haven’t talked further.
Ashman told Bethesda Beat last year that even when a developer acquired all of the Lakeforest properties, it could still take six to nine months to go through the city’s approval process, followed by years of demolition and construction.
Rogers said the COVID-19 pandemic created many challenges during the last two years in getting the transaction completed.
“In the course of arranging the financing, we had the headwinds that the entire world had for 20 months, and a lot of these department stores had their own headwinds,” he said.
WRS opposed the Gaithersburg City Council’s one-year development moratorium imposed in August 2020, prior to the implementation of the master plan a year later. Rogers said he thinks the moratorium also was a factor in the delay of acquiring the properties.
“That was not a phase or a moment in time where a financing institution or a lender would have been terribly comfortable loaning money, knowing that the local municipal government had effectively put a stop work order on anything new occurring there,” he said.
“They look at that, and it’s not a scary exercise, but it’s an exercise they don’t understand in terms of being a financial institution. So, we had to kind of get through that.”
The subscription-based real estate newsletter Montgomery Newsletter previously reported on the Lakeforest deal on Tuesday.
WRS previously drafted a conceptual plan for the mall property in October 2020 calling for:
- 500 to 600 townhomes
- 120 to 150 condominiums
- 175 to 250 multifamily apartment units
- 400,000 to 500,000 square feet of retail space
- 1,000 surface parking lot spaces
Rogers said on Tuesday that WRS revised its plan to conform with the city’s master plan for Lakeforest. Aspects of the plan it is keeping in mind include requirements for including different types of housing (townhomes, multi-family, single-family), and that a certain percentage of the housing is affordable.
Rogers said WRS had to revise the plan to conform with a rule in the master plan that no freestanding retail building can be more than 30,000 square feet unless it’s part of a mixed-use complex. Additionally, he said, WRS’ plan now satisfies the city’s requirement of having at least 35% of the development be green, or open space.
“We think what we’ve come up with is probably more than 35% of the site,” he said.
When asked what tenants might come to the site, Rogers said a surgical center and biotech company are possible. Additionally, he said, WRS is talking with a couple of grocers, one of which is “very serious” about coming to Gaithersburg.
Rogers said WRS is putting together detailed renderings of the revised plan, and hopes to present it to community groups in Gaithersburg in four to six weeks.
“We want to make sure that they are aware and not caught off guard,” he said.
In six to eight weeks, WRS could submit a plan to the city, Rogers said.
“There’s a long, deep bench of users and home demand folks that have a sincere yearning to be here. So, we’re incentivized to hustle up,” he said.
Dan Schere can be reached at daniel.schere@moco360.media