Thursday, April 26, 2012

Mutual Interests

Whole Foods Markets isn’t the only tenant that Howard Hughes has been trying to entice into the former Rouse Company headquarters building. Not long after John DeWolf showed up on the scene, his team focused on the Columbia Association as a logical prospect. They were already a tenant of the company in the Teachers Building next door and their lease was coming to an end soon.

It seemed like a nice fit on paper. In addition to more room for the association’s offices and board room, they would conceivably take over the operation of the Spear Center too. A Town Center fitness facility was even envisioned for the ground floor.

CA had other ideas. They’ve decided that it is time to be owners of their own Town Center offices instead of continuing as renters. The problem is that there are few if any good opportunities to own or build in Town Center. Most of the prime land for development in the core is owned by either General Growth Properties or Howard Hughes and neither of them is selling. In fact, Howard Hughes could conceivably be considered a buyer if the right opportunity presented itself, perhaps the same opportunity that CA is looking for.

As CA headed off in a different direction, Howard Hughes moved on. They still liked the idea of a fitness club in the lakefront building. It would serve the residents of the 800 plus new housing units they are developing around the Mall. If CA wasn’t interested, perhaps LA Fitness, Lifetime or some other national chain could be convinced to come there.

Is that a missed opportunity for CA?

 At least one current CA board member seems to think so. In this post today on HoCo Rising, Tom Coale suggests that Columbia is on the “precipice of big change” centered around this development opportunity.

“If Howard Hughes finds a financially beneficial long-term agreement with Bally's, Lifetime Fitness, or Gold's Gym, the Columbia Association is in serious trouble.  That's not intended to simplify this $60 million organization into a gym membership, but CA holds a privileged position in Columbia, mostly unencumbered by any significant competition.  This allows for programs like the low-income discount and capital improvements that are not predicted to turn a positive return.  I often wonder how much the dynamic would change if we lost that privileged position.”

I can understand CA wanting to own their headquarters. At the same time, the availability of this iconic Columbia building at the same time the association is in the market is incredibly fortuitous and an opportunity that should not be so easily dismissed.

It would be good for Howard Hughes too. If the Columbia Association is up to challenge it could be a powerful marketing angle in luring prospective residents and businesses to Columbia’s “downtown.”

As far as I know, it may already be too late. I hope not.
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