Seller says Metrocenter in black, offers buyers huge upside at $6.5M
» Mall’s 40 percent occupancy pays the bills, leaving remaining space as profit generators. Overby Co. says
After foreclosing on the 35-year-old Metrocenter Mall last year, First Credit Bank of Los Angeles bankrolled a cleanup and fix up of Metrocenter’s 548,000 square-foot interior and put the space on the market for $6.5 million.
Jackson commercial real estate firm the Overby Company got the listing and reclamation challenge. But the job hardly made principal Scott Overby’s list of things he’d like to do, especially after taking a look at the costly mistakes left behind by former owner Texas-based Jackson Metrocenter Mall, Ltd.
“We walked through the mall,” Overby said. “My first response was ‘no.’”
Today, though, Overby says he thinks he has a marketable property on his hands that will go at a bargain price.
The 60 tenants in the 40 percent occupied interior provide the Metrocenter a positive cash flow and operating costs have reached a largely fixed level, he said. “The money we are spending is mainly on deferred maintenance.
“Considering the cash flow we have, that $6.5 million is a good value. And 60 percent of the mall is still vacant. The costs won’t go up that much. Someone who buys it has all the upside.”
Empty space now totals 331,000 square feet. Each floor has about 278,000 square feet.
Current lease rates vary, according to Overby, with some spaces running $20 a square foot. Larger spaces get the best rates, he said.
Some spaces go rent free in exchange for a percentage of sales revenue, he added.
Food court operators get an especially good deal, Overby said. “They share the seating and end up paying only for the spaces behind their counters.”
The 60 businesses are seeing monthly customer traffic of between 120,000 and 130,000, according to counts provided by Overby.
“March of this year was higher than March of the previous year when Sears was still open,” Overby said, referring to the loss of the department store anchor and traffic generator.
Customers are counted electronically upon entry and exit through the mall’s interior doors. Some of the customer counts are lost because the counters only count one customer when two or three may enter or leave through the same door together, Overby noted.
The count is made by dividing the total traffic by two, a method that accounts for both entrances and exits.
Anchor retail tenant Burlington Coat Factory has helped increase customer traffic by 10,000 to 15,000 monthly by opening its entrance into the mall, a move Overby credits to an agreement with Burlington for the mall to put a security guard at the entrance.
Security has been central to the mall revival effort, Overby said, and noted that along with security cameras and security officers on duty 24 hours a day seven days a week, Jackson has a police precinct on the premises with 78 squad cars and the Mississippi State Patrol has a driver license testing office open throughout the week on the lower level.
Hinds Sheriff Tyrone Lewis has agreed to put a sub-station on 4,000 square feet the mall will donate, according to Overby, who said Lewis is awaiting permission from Hinds County supervisors to set up the station.
Out of the Darkness
The former owners had the “hair-brained idea of shutting down the lower floor and told the tenants to go upstairs or move out,” Overby said.
Some of the tenants the owner put out had been paying five-digit rents. “The nationals just picked up and moved,” he said.
Among the national stores that departed: Footlocker, which had leased 9,000 square feet.
With the ground floor cleared out, the owners unscrewed all the light fixtures and waited in vain for their electricity bills to drop, according to Overby. “The $50,000 power bill remained,” he said, as the owners also apparently did not take into account that the centrally produced air conditioning and heating would still cover the ground level.
“It was nasty. The escalator was closed. The first thing we did was order a deep cleaning. We have spent tens of thousands just on light bulbs getting it all lit back up.”
Workers fixed the bathroom doors and other fixtures in bathrooms throughout the mall. “We’re spending $10,000 a month just on janitorial. The carpets are clean. When you walk into the mall now it smells good.”
The cleanup led to a reopening of the north end of the lower level two months ago.
Next up is a “la plaza” that will feature restaurants, apparel stores and other shops that cater to Hispanic customers and others who have a fondness for Latin food and culture, Overby said.
He said he would like a large Latin grocery store as well as office space users such as immigration attorneys and cultural attaches from Latin American embassies in New Orleans.
About 40,000 square feet has been allocated for the plaza, though Overby says it can be expanded to 60,000 if needed.
A ground floor “metro events center” is also planned and will provide space for groups to hold auction fundraisers and other events. He also envisions the space hosting job fairs and meetings of trade associations and government groups such as the Hinds County Development Authority..
Meanwhile, Overby is especially proud of the center court and its 50-foot high skylight and the palm trees that accompany it. “We’ve dropped $70,000 on the center court,” he said.
“We’ve got our makeup on and are looking good. We’re ready to go out and start dating.”
An immediate task, Overby said, is getting back some of the tenants that departed under the former owner.
“We’re mending relationships.”
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