MCB Real Estate Nears Completion of Leasing for Redevelopment and Repositioning of 42 Pad Sites

MCB Real Estate is nearing the completion of their investment thesis on 42 separate pad sites acquired from the Silver Companies and contained within the Maryland and Virginia region. The Baltimore-based institutional investment and development firm, in partnership with Artemis Real Estate Partners, acquired the assets in 2015 and immediately embarked on a redevelopment and repositioning strategy to derive maximum value for its investor groups. With two leases recently completed at Central Park, a super-regional power center located in Fredericksburg, Virginia, nine pad sites now remain in the portfolio with two available for lease.

Our program to drive value in the 42 net lease parcels over our hold period remains on target,” explained MCB Real Estate Principal Drew Gorman. “The MCB Real Estate team employed an extremely deliberate and carefully mapped out approach to each site, with the goal of identifying ideal end-users to complement the existing tenant mixes and introduce under-served categories to the local community. In certain instances, these tactics involved demolishing and repositioning assets, a strategy which was essential to achieve our overarching objectives.”

Recent activity in central Virginia

Last year MCB Real Estate leased two pad sites to regional restaurant group Silver Diner and financial institution Chase Bank, the consumer and banking business operation of JPMorgan Chase & Co. (NYSE: JPM), with both uses beginning operations in late 2024 at Central Park, the 2.5 million square foot regional power center anchored by Walmart, Best Buy, Lowe’s, Target Stores, and Kohl’s and featuring more than 200 stores and restaurants.

In this instance, and after considering many different lease and sale scenarios, MCB Real Estate made the strategic decision to demolish and redevelop both existing buildings to attract best-in-class retailers, at this key “front door” location. In addition, a nearby site in Stafford, Virginia  has already been torn down to make way for the eventual new tenant, Starbucks Coffee, and a potential future co-tenant.

According to Silver Diner, the restaurant’s opening late last year generated among the highest performances in the history of the chain, which maintains locations in Maryland, Virginia, New Jersey, and the District of Columbia. “Our team has executed six consecutive successful openings over the past two years, and when considering the overall quality of the construction, timing of delivery, and overwhelming response from the local community, this is our finest hour,” said Bob Giaimo, co-founder of the Silver Diner restaurant group.

“In the case of Central Park, we have attracted two strong brands that leverage its placement among the most dominant power centers on the East Coast,” Gorman added. “This revitalization has helped transform this area into a thriving retail hub, and reflects not just the comeback of the retail and restaurant categories, but its importance to the local community. Our vision for reshaping these pad sites by following a challenging development path has reaped undeniable and impressive results.”

Transforming underutilized properties into high-performing assets

“Multiple categories, including restaurants, financial institutions, automotive-related, daycare and healthcare providers, continue to value strategically-positioned pad sites, especially those shadow-anchored by major shopping venues and equipped with drive-thru lanes,” Gorman said. Outparcels at Central Park also benefitted from access to major highways, outstanding roadside visibility, and reusability aspects. In most cases, there is a direct correlation between the success of adjacent shopping center venues and the complementary pad sites, and the interest in sites containing 3,000 to 5,000 square feet of space is gaining momentum.

“The use of pad sites has evolved over the years, especially recently, with the trend among on-the-go consumers to access food and services without leaving the comforts and privacy of their vehicle,” Gorman added. “The right end-user can dramatically impact the dynamics of a center. The parcelization of this portfolio maximized its value and is another testament to our capabilities as experienced retail investors and operators who can decisively act upon emerging opportunities.”

For more insights regarding the current retail investing outlook, read MCB Real Estate’s “The Shopping Center Opportunity” White Paper.