Strange real-estate arrangement holds back lease opportunities at Hancock, Big Lots location

A contractual quirk may be to blame for difficulties in leasing commercial property on South Silver Springs Road in Cape Girardeau, according to individuals familiar with the situation.

The property is well-situated for retail, but uncertainty surrounding its ownership and future have turned away potential tenants.

The properties at 201 and 210 S. Silver Springs Road, which sit on a single parcel of land and together house Toys R Us and the now-closed Big Lots and Hancock Fabrics, are in a high-traffic, high-visibility spot, said Cape Girardeau Area Chamber of Commerce president and CEO John Mehner.

“Across the street from West Park Mall ... it is certainly a desirable location,” he said in a phone interview Wednesday. “I mean, Walmart was there for years.”

And while Walmart — which opened at that location in the mid-1980s, according to Southeast Missourian archives — moved out of that retail space in the mid-1990s, it retained its long-term lease, Mehner said, electing to sublease to other retailers in the meantime.

Lorimont Place Ltd. Commercial Real Estate broker and president Tom Kelsey said subleasing to other retailers in this manner is a common practice for Walmart stores in general, but he also said the situation surrounding this particular address is unlike anything he’s seen before.

Walmart’s lease, Kelsey said, only allows it to offer a sublease through the end of December 2020.

To a retailer looking to lease space, he said, that short of a lease is an uncomfortably vague prospect.

“It’s a really unusual situation that you have a space that is being offered, and you can’t offer any long-term [lease options],” he said.

The costs for a retailer to move in are significant enough, Kelsey said, and they typically aren’t interested in anything shorter than a five-year lease.

“In retail, it’s often a minimum — minimum — of five years, and a lot of times, that will bump up to seven or 10 years,” he said.

But as it stands, Walmart only can offer three.

Kelsey never has listed this property nor had a contractual arrangement with Walmart regarding it but contacted the company after Big Lots and Hancock Fabrics closed, he said.

“People recognize when they come into town that there’s some viable lease space there that is going unleased and wonder why at that prime location,” he said.

The property is owned by USF&G Fidelity Retail A.S., according to records filed with the Cape Girardeau County Assessor’s Office.

That entity is a real-estate trust, Kelsey said.

“Traditionally, what that would mean is that it is some company which has multiple income properties. They may be all over the country depending on how big they are,” he said.

Kelsey said his business so far has been unsuccessful in attempts to contact the trust.

He said that adds another question mark to an already murky equation for prospective retailers.

The company may decide to just find a new long-term lease, or they may take the opportunity to appraise the aging buildings, knock them down and start fresh.

“We just don’t know these things,” Kelsey said. “It’s just a market unknown.”

In the meantime, Mehner said the Chamber of Commerce and Magnet has been working to connect potential tenants seeking shorter-term leases with the Walmart real-estate team.

Then again, he said, it may just take time.

“When it can be marketed for a longer term, there will not be a problem in filling that space back up,” Mehner said. “Or something may change tomorrow.”

Attempts to reach a real-estate manager associated with the property through Walmart Realty on Wednesday were unsuccessful, as was a request for comment submitted to the company’s corporate media department.

tgraef@semissourian.com

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