Vacancy

by Becky Gillette

Published: March 19,2001

OCEAN SPRINGS — What might be called “the Super Wal-Marting of Ocean Springs” has left unattractive blight in the heart of town. Since the new Wal-Mart Supercenter opened on the outskirts of east Ocean Springs, the old Wal-Mart on U.S. 90 is empty as is the former Jitney-Jungle next door, the K-Mart across the street and the old K-Mart (more recently housing Heilig-Meyers Furniture) farther west on U.S. 90.

The large number of vacant stores and parking lots is a real concern. Besides giving the shopping centers the feel of a ghost town, a snowball effect is feared that could cause more business closings in the centers. Some of the smaller businesses have already gone out of business.

Other cities on the Coast and elsewhere in the state face similar issues, although not as many vacancies per capita as seen in Ocean Springs.

Margaret Miller, executive vice president of the Ocean Springs Chamber of Commerce, said the vacancies are hard to fill because of the massive square footage.

“It is a very difficult situation because of the size of the buildings and the properties,” Miller said. “These vacancies are a critical concern. We’re pursued the more traditional retail that would locate in those size buildings, but I think at this point we are trying to look at it and be more inventive about the reuse of the buildings.”

Some possibilities include attracting a telemarketing business, or renovating the buildings into city office spaces or hospital annex services. Three of the vacant buildings are located near the Ocean Springs Hospital. The sites are listed on the Mississippi Development Authority (MDA) Web site.

Barbara Stewart, owner/broker, Commercial Realty Associates, Gulfport, agrees being creative about using the large spaces can be helpful. For example, a huge old manufacturing building on the corner of Hewes Avenue and Pass Road has been redone and is occupied. And the Food World building on U.S. 49 in Gulfport is being renovated to house a new concept to this area. Bobby Culbertson’s car dealership will have a large indoor car display area in the building, along with a number of smaller businesses inside such as food services and a hair and nail salon.

“This is very cutting edge for the automobile industry,” she said. “Big open spaces are very adaptable to different uses. There is a big building up on Highway 49, the former Associated Foods building, that is now occupied by government offices. Another example is the Service Merchandise building on Pass Road that was empty for a long time, and is now occupied with America’s Thrift Store.”

Stewart said that she is encouraged by the number of such spaces that have been filled in the past six months, and believes there is a good chance that the remaining vacancies will be filled sometime in the near future. “You always see peaks in activity, and then it will level off,” Stewart said. “That may be what is happening now. But all of these things have happened in the past six months. The vacant stores in Ocean Springs are a shame because it’s such a lovely town.”

Gray Slay, owner/broker of Gray Slay Realty, Biloxi, agrees that some kind of tax abatement would inspire re-investment in the properties.

“That’s very important because most of the owners of these properties when negotiating a lease are used to doing a triple net or absolute lease which places the burden on the tenant or leasee to pay all costs and expenses of the property which include taxes, insurance, maintenance, upkeep, and repair of the property,” Slay said. “So when you go to make a proposal to a new tenant of the property, the owner can say, ‘We can get you a very good tax abatement for period of years to get you into the property’.”

Slay said another possibility for sites such as those available in Ocean Springs include conversion to smaller grocery companies. He said many of the major grocery store chains have smaller subsidiaries with a different marketing approach.

“Look to the larger companies because they normally will have smaller subsidiary companies that will fit into the older style of store,” Slay said. “Some of the larger spaces that we have access to right now in the range of 45,000 square feet are being hampered by obsolescence of design. They have low ceiling heights, and limited loading door ingress and egress.”

Slay said with outdated buildings one way to fill the space is to reach an agreement with owners to upgrade the facilities with rent credits versus cash improvement costs based on some agreeable formula. That gives the tenant the ability to convert the property to meet their needs and, at same time, get break on lease or purchase prices.

“Most of your bigger companies that will use that kind of space want a modern, state-of-the-art building with very good ceiling heights for storage,” Slay said. “The mechanical, heating and air conditioning systems in older stores are a big problem, and you have the question of maintenance and upgrading. All of those factors enter into negotiating a lease or sale for the property. We’ve been lucky. We have been able to find tenants for most of the buildings we’ve had available.”

One reason that many of these buildings stay empty for so long is that owners are still being paid rents under prior lease agreements. If that is the case, the owner has less incentive to work hard to attract another tenant. There are also some tax advantages that can reduce incentives to re-lease.

Contact MBJ staff writer Becky Gillette at mullein@datasync.com or (228) 872-3457.

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