While making ambitious plans to convert Jackson’s Landmark Center to a mix of apartments, offices and retail, the building’s new owners want to recruit office tenants for the four floors situated below the two top floors designated for apartments.
Each floor has about 50,000 square feet. A Cushman & Wakefield study in 2011 put leasing rates at $14 a square foot.
The study, commissioned by then-Gov. Haley Barbour and the Mississippi Department of Finance & Administration, ranked the Landmark as the first choice to be the new headquarters of the state Department of Revenue, which in July relocated to Clinton’s SouthPointe Business Park.
Today, despite the top ranking by the international real estate firm, the Landmark can expect some difficulty attracting state offices as tenants, according to Rep. Tom Weathersby, a Florence Republican who chairs the House Property Committee.
Weathersby has prevented a vote the past two years on legislation introduced by Senate Property Chairman David Blount to consolidate state offices downtown — a move a study by Millsaps University’s School of Business says would eventually save the state around $5 million a year.
Blount plans to bring the bill back in 2015. Weathersby is not saying he’ll block the bill again but hardly endorsed it in an interview last week. “I’m not looking back at last year. I’m looking to this year,” he said.
And he’s watching out for state workers, he added.
“We have to look at our state employees. We have to make sure that wherever we put them, they are put in a safe place and that they can get to and from their jobs easily.”
Saving money is important, Weathersby said, but the decision on placing state offices must entail more than weighing the per square foot costs of a particular location.
Weathersby may not have fully made up his mind on Blount’s bill, but he has on the Landmark, vacated two years by BellSouth/AT&T.
“You know we’ve looked at that site,” Weathersby said. “We even looked at it this summer to see if there was anything we could find that might be useful for state property. It didn’t seem like the building would fit the needs for what state agencies might need.”
He said “lots of things” put the 366,000-square-foot structure at a disadvantage as a candidate for state offices, including “the way it is built.”
He declined to go into further specifics on the shortcomings he sees with the building, but stressed that parking for state workers and visitors to state offices is a major concern. “Parking downtown, as you know, is one of the biggest problems that we have.”
Under the proposal that would have put the DOR headquarters in the Landmark, employees and visitors would have parked across Capitol Street at One Jackson Place.
An investment partnership headed by Israeli attorney Zeev Yocheimen bought the glass-enclosed seven-story Landmark Center at auction in late July for slightly more than $2 million.
The ownership’s local broker, Brian Estes, said in an interview last Friday that the building at 175 East Capitol Street is headed for a mixed-use conversion and some over-due maintenance work. But the preference is to begin leasing office space right away, he said.
Estes said he is hoping Blount’s office consolidation bill, which has received unanimous Senate approval the past two years, gets an affirmative vote by both houses in the 2015 session. “In all candor, it should happen,” he said, as a way to revitalize Jackson as the state’s capital city.
The Landmark, he said, “is definitely suited for governmental uses” and noted previous owner BellSouth/AT&T “was similar to most governmental agencies in that they have a higher employee-to-square- foot ratio due to cubicle requirements.”
Open spaces are on most of the floors and can accommodate cubicles, according to Estes.
Previous brokers have cited the extensive data and telecom capacity created by the BellSouth/AT&T.
Estes conceded “parking has been an issue with the building,” but said with multiple parking garages in downtown Jackson, parking should be available to all users of the Landmark and other buildings.
He said he and the owners “will work hard to resolve any obstacles or issues in creating a win/win relationship for both the owner and tenant.”
One lease for a small user has already been signed, he said.
Some thought has gone into converting the building – or perhaps a portion of it – into a hotel. But time is not on the ownership’s side, Estes noted. “I don’t think the owner is in a position to wait for a hotel conversion… I also believe a hotel conversion may be too expensive.”
The plan is to start by getting some “solid office tenants in there” and follow that with retail tenants, he said.
BankPlus once had a branch on the ground floor of the Landmark. The vault it used is still in place.
A bank is “one of the users we’re looking for,” he said.
The buildings location at Capitol and Lamar streets puts it “literally at Main and Main” and should make it a strong draw for a bank and retail tenants, Estes added.
Estes acknowledged the building is overdue for maintenance, a circumstance created by Bell South/AT&T’s reluctance to spend significantly on maintenance knowing it would be vacating.
Jim Ingram, Hertz Investment Group senior vice president and chief investment officer, said when Hertz had an option on the building the company concluded the roof would have to be replaced. The commercial real estate company considered that expense when it put a bid on the building of below $2 million, Ingram said in an interview in August.
Estes said the new owners are awaiting inspection reports to determine whether a new roof is needed.
To convert the top couple floors to 80 or so residential units, plumbing and electric must be reworked, Estes said, though he added the work should not interfere with office tenants.
“We’re still getting our cost estimates for residential and what are efficiencies will be,” he said.