Project Category: Substantial Improvement Property
Adaptive Reuse. 35,000SF Mixed-Use Commercial Office and Retail redevelopment. Cannon Hill is a 2.1 acre historic complex in Downtown Frederick, MD. Originally the Farmer’s Cooperative, the sponsor has entitlements to renovate existing buildings into a Food Hall, Farmer’s Market, Cowork Office Complex, Event Space and Micro-Retail opportunities in a Qualified Opportunity Zone property.
Project Qualification: Substantial Improvement PropertyReal Estate:
Total Capital Required: $6,000,000Equity Required: $3,000,000Project Control: We have agreement on terms to acquire the key propertyTimeline: 30-90 daysAddress: 43 E South St Frederick Maryland 21701 United States
Cannon Hill is a mixed use historic complex located within the Hub and Opportunity Zones in Frederick, MD. The 2.1 acre site is comprised of 4 mixed-use warehouse and office buildings with approximately 30,000SF under roof. It is zoned Downtown Business and sits within walking distance of the heart of downtown Frederick, including a public parking garage, breweries, restaurants, bars, shops, Carroll Creek Promenade, the public library and many cultural event locations.
Francis Deehan Projects, Inc. is in contract to purchase two buildings (condo Units 4 & 5) totalling 14,000SF for a purchase price of $1,167,500 with a closing date of July 31, 2019, and have an option to purchase the other two (Condo Units 2 & 3) for a purchase price of $2,580,000 with a closing date of January 31, 2020. Unit 2 has one commercial tenant leased until October 31, 2019. Units 3, 4 & 5 are owner occupied. Upon closing all owner occupied Units will be vacated within 90-180 days. The buildings are governed by a land condominium with a total of 6 units. After purchase of Unit 2 the Sponsor will have majority control of the condominium regime.
Phase 1 of the redevelopment plan is to convert Units 4 & 5 into commercial office for a cowork tenant committed to a 10-year lease, with a combination of small private offices and potential build-to-suit larger suites. The property is fully entitled for this use. This would occupy approximately 11,000 of the 14,000 SF under roof in these two Units. The remaining 3,000SF would be reserved for the potential build-to-suit offices, event space, flex-space for coworking members, and other add-on services. Construction budget for Phase 1 is estimated to be $850,000. FD Projects plans to capitalize this with $200,000 in cash, $600,000 in debt from a local bank and the balance with limited equity partners. We are seeking opportunity zone funds up to $1.5M for Phase 1.
Phase II of the development plan is to convert Units 2 & 3 into a food market hall, farmer’s market, retail and event space. The property is fully entitled for this use. Unit 2 has 17,000 SF under roof, with current use as warehouse storage. Unit 3 has 4,800 SF under roof and is currently a 3,200 SF residence (owner occupied) and 1,600 commercial office (leased). Construction budget for Phase II is $1.3M.