Bethesda Shopping Centers Up for Sale

Lack of Information Leaves Tenants Anxious

Negotiations are underway for the sale of the Westwood shopping centers in Bethesda and up to 37 acres surrounding them as part of a deal that could dramatically transform the neighborhood, according to tenants in the shopping centers, local real estate brokers and others who are familiar with the plans.

Capital Properties Associates LP of New York recently sent letters to tenants at both Westwood centers, saying it intends to purchase the land and verifying the tenants' leases. Richard D. Cohen, head of Capital Properties, did not return repeated phone calls seeking comment. Neither did the current owner of the shopping centers, a real estate company associated with the late Laszlo N. Tauber, a developer who died in 2002.

The deal is expected to involve Westwood Shopping Center on Westbard Avenue and its sister property, Westwood II Shopping Center, at River and Ridgefield roads, a block away. Other parcels on Ridgefield Road and Westbard Avenue, including a Citgo gas station and the Westwood Towers apartment building, are also apparently part of the deal, according to tenants and managers in those buildings. All have received similar notices from Capital Properties asking about their leases.

It is unclear what the potential new owner is planning. But local real estate brokers said the area is ripe for redevelopment. The four-decade-old Westwood Shopping Center, for example, has an large parking lot, a Giant Food store and a hodgepodge of neighborhood shops -- a barber who has been there for 44 years, a children's clothing boutique, a combined toy and pool supply store.

"That site has endless opportunities," said Larry Hoffman, a principal at H&R Retail, a real estate firm that has developed 6 million square feet of retail property in the D.C. area. "It has density. It's close-in. And the incomes around it are through the roof.

"It's one of the last sites left close-in for development. You could build a town-center-like concept of office, retail and residential [there]."

The Westwood property was developed by Tauber, a Hungarian surgeon and Holocaust survivor. He lived in Potomac and acquired an extensive portfolio of Montgomery County and D.C. real estate. Among his properties were the Parklawn Building in Rockville and the former offices of the FBI at Buzzard's Point. He was once one of the largest landlords to the federal government.

Since his death, however, his son and daughter, who live in Boston and San Francisco, respectively, have sold off some of his properties, according to land records in Montgomery County. Last year, Tauber Realty sold $365 million worth of property in the D.C. region, according to the real estate firm of Cassidy & Pinkard.

The Westwood parcels are among the last major pieces of land that the estate owns in Montgomery County, according to local land records and other developers in the area.

The shopping centers have been abuzz since the letters from Capital Properties were distributed, and rumors about the possible sale spread after a news report last week on WRC-TV (Channel 4). Many of the tenants are family-run businesses and complain that they've heard little from their landlord about what might happen to their long-term leases, many of which don't expire for several years.

"Ever since Dr. Tauber died everybody's been saying the place is going to be sold," said Soli Darvish, who has a 6,500-square-foot store that sells toys and pool supplies near the Giant. "First the rumor was that Giant was going to buy it, then it was going to be a major developer.

"It's all rumors, but we do know that the kids don't seem to have any interest in running his real estate," he said.

Some of the tenants said they are worried that once the property is sold and redeveloped, the cost of rent, which averages about $25 a square foot at the Westwood malls, will rise, and they will have to move to cheaper space or go out of business.

"This is my livelihood," said Jeanne Smith, the owner of a children's shoe store at Westwood II. Her shop has been there since 1986, four years after the center opened.