Post #278: The former Sandy Spring Bank location

At the last Town Council public hearing on 380 Maple West (39 condos plus retail at Maple and Wade Hampton), one of the pro-MAC speakers brought up the empty space at the Leslie’s Pool building. It seems to have been vacant for an unusual length of time, and it abuts what appear to be a couple of thriving restaurants.  That’s a little economic puzzle, and I thought I’d try to figure that out.

The answer is that the space is occupied — by the ghost of the former tenant, Sandy Spring Bank.  Near as I can tell, a) Sandy Spring Bank continues to pay the rent on its lease, b) that bank is trying to sublet the space, but c) the lease specifies sub-standard parking for the Sandy Spring side of the building, and d) in all likelihood, Sandy Spring Bank has minimal flexibility in how they sublet the space.

In other words, the space is empty as a result of the ongoing aftermath of an unsuccessful business decision by Sandy Spring Bank.   The property owner is being paid and so probably doesn’t care that the space is empty.  And Sandy Spring Bank likely can do little to sublet the space, other than advertise it as it stands:  $60/sq ft/year in total costs, and just ten parking spaces.

To be clear, it’s not an indication of decay on Maple Avenue.  It’s an indication that, sometimes, business decisions go wrong.  And that if you have deep pockets, and you sign a commercial lease, one way or the other, you are stuck paying for that property for the duration of the lease.

Detail follows.

First, let me be clear that the retail vacancy rate on Maple Avenue as a whole appears to be about normal by local area standards. There is no crisis of retail on Maple.  For some reason, the vacancy rate on the north side of the road is vastly higher than on the south side.  You can see these postings for details (this post, for the vacancy estimate, followed by Post #201 and Post #208).

For this space in particular, the details are as follows:

First, $60/sq ft/year rent, based on this real estate listing. That’s listed as $50 in rent, plus roughly another ten in taxes, insurance, and building maintenance.  (A so-called “triple-net” lease, where the occupant must pay those additional costs). This is the level where, at a prior Town Council meeting, the owner of Vienna Vintner said that small businesses can’t make a go of it on Maple.  This also matches the rent being asked for (e.g.) space in Danor Plaza just up Maple.

Second, only ten parking places, based on this other real estate listing.  The lack of parking prevents using this space as a restaurant.  In fact, that’s less than the Town requires for stand-alone retail (one space for every 200 square feet).  Presumably, the building as a whole has adequate parking, but most of it is allocated to Leslie’s Pool.  So this space comes with somewhat skimpy parking.

Third, this is a sublet by the former tenant, Sandy Spring Bank.  That may explain the skimpy parking, if the bank didn’t think they’d need it.  But now the property as a whole appears to be locked into that arrangement for the duration of a ten-year lease.

Separately, because this was set up to be a bank, there places formerly occupied by ATMs or night deposit boxes have been bricked in, on the front wall, just beside the entrance to the space.  The brick front of the building has permanent and prominent scars on it from having once been a bank.  I think you could cover that up with signs, if the Town allowed that, but as-is, it is a flaw in the face of the building.

In all likelihood, the property owner continues to be paid by Sandy Spring Bank.  So there’s no pressure on the owner to change anything to get the space rented.  As far as they are concerned, it IS rented.

But why doesn’t Sandy Spring Bank reduce what they are asking, in order to get the space rented? One plausible answer is that they may be barred from doing that by their lease. As it turns out, commercial rental contracts frequently bar the lessor from discounting the rate on any sublet.  Or, at the least, advertising any discounted rate.  As you can read here or here.  Obviously, I can’t know the details of the lease, but a clause against discounting the sub-lease is common enough that a cursory Google search on subletting commercial property reveals that in the first few hits.

Conclusion:  The best way to put this is that the space is rented  — by the ghost of Sandy Spring Bank. I.e., that bank continues to pay the rent, you just can’t see it.  And in all likelihood, that building as a whole (the empty space, plus Leslie’s Pool) is locked into the terms of Sandy Spring’s lease, both for the parking and for the rental rate.  The death of this bank branch left two big scars in the front brick wall of the building.  All of that probably makes subletting difficult.  The owner of the building is being paid, so there’s no reason for the owner to do anything to change this situation.  This could plausibly remain empty until the end of Sandy Spring’s lease.