AP NEWS

Aldi, warehouse breathe new life into abandoned spaces

February 15, 2019

Two vacant retail spaces are expected to soon be open for business again, one occupied by a new grocery store and the other with something entirely different.

Mark Fertitta, owner of Fertitta Realty and other development companies that hold property across the Golden Triangle, confirmed this week that the former Gander Mountain property off the Eastex Freeway in Beaumont could be an Aldi store as soon as this summer. The property is held by his family firm.

“Aldi is looking at the location and they have the contract, but they have an inspection period that isn’t up until April 8,” Fertitta said. “Then, their lease goes hard. They will probably do a four-month construction period.”

The German-based grocer will have until the end of the inspection period to have its construction plan and request for a certificate of occupancy approved by the city, he said.

Aldi declined to comment on its plans. But a profile from the International Council of Shopping Centers shows the grocery chain generally looks at areas with about 40,000 residents with household incomes of about $50,000 living within 3 miles.

Fertitta’s other project involves retooling the former Super Kmart in Groves into a mammoth climate-controlled warehouse and office space that can comfortably accommodate at least four tenants at a time.

The 170,000-plus-square-foot store was built in 1995 behind restaurants and businesses off Twin City Highway. It remained one of the largest retail spaces in Groves, even after Kmart vacated in 2004. The building was used briefly as office and warehouse space by Motiva. It has been vacant since 2008.

Work is mostly completed converting the mammoth retail space into a climate-controlled warehouse and office space designed to comfortably fit at least four tenants at a time. Fertitta said he expects to cater to the petrochemical industry as several local firms seek storage space during expansion and maintenance projects.

“Sure, I would want the longest-term lease I could get, but I’m trying to put together a facility that is a premium facility for someone that wants to come in and do short-term storage for turnarounds,” Fertitta said. “Every day some of the refineries are in a shutdown, they lose tens of millions of dollars. They want something close and accessible that can accommodate large projects.”

He thinks the facility could attract attention from companies between Baytown and Lake Charles. He said he has already inked a deal with Motiva to lease 47,000 square feet of warehouse space, leaving 5,200 square feet of office quarters and 117,000 square feet of warehouse space for other tenants.

Fertitta and several unnamed partners invested in the building and began updating the heating and air conditioning. Contractors replaced most of the wiring and pipes, which had been looted while the building was vacant.

Construction manager Kenny Rone said about four weeks of work remain.

“Everything has mostly stayed in the same space, besides diving out some of the rooms for fire doors,” Rone said. “It’s really just columns and beams once you move all the shelving out.”

Fertitta said that what the property lacks in architecture, it makes up for in accessibility, with more than 20 acres of paved parking that would appeal to companies looking to park their heavy equipment and access their storage quickly.

“You couldn’t realistically pave the amount of asphalt that is already there and offer the kind of rates I’m offering for a facility like this,” Fertitta said.

He said he is conscious of how visible the building is and is therefore investing in LED lighting for the parking lot and new paint jobs for the interior and exterior.

D.E. Sosa, Groves city manager and director of the city’s economic development corporation, said it that kind of cooperation made him and other city leaders relieved to see the hulking building finally occupied.

“It was used off and on for some purpose or other, but we are never going to see a big retailer in the store ever again,” Sosa said. “In our opinion, this is one of the best and most profitable uses. He is helping himself and his partners (with the project), but he is also helping our community.”

Sosa, wasn’t with the city when the Kmart was built, but he is familiar with the kind of challenges an empty behemoth can create.

Sosa and other city leaders had little luck working with prospective businesses to fill the building. He said most retail companies, even those that operated warehouses, couldn’t handle all the space.

“It wasn’t just a Kmart. It truly was a Super Kmart,” Sosa said. “It was always too big for whoever was looking at it, regardless of what their business was. I’m not seeing anyone left that could handle a property that size.”

According to the earliest online tax roll listing from the Jefferson County Appraisal District, the property was valued at around $4 million in 2005. Its taxable value steadily dropped to $1.3 million in 2016, where it remained until the last assessment.

During that empty period, Sosa said the building became an “attraction for nuisances.” Motiva put up a fence around the property during its stay, along with some other security measures, but Sosa said police still monitored it frequently. Trespassers found their way inside.

As Groves was dealing with the empty building, it was also missing out on nearly $300,000 in personal property tax the building netted the city from the inventory it held during Motiva’s three-year stay.

As shopping continues its shift toward online, more cities are finding themselves searching for the same solutions as Groves.

In 2017, a record closing of 6,700 physical stores in the U.S. added to the number of empty properties no longer generating tax incomes for their communities.

Some abandoned stores or malls have become lifestyle centers or even churches. Texas has become famous in some circles for box-store reuses. A 124,500-square-foot Walmart-turned-library made McAllen a sort of poster child for community investment in blighted retail property. The project cost the city $24 million.

As for Groves, Sosa said Fertitta and his company’s warehouse was one of the best solutions the city could hope for.

“If a subdivision went there, and it could, we would have to maintain streets, put in sewers —and we could— but as far as effort put out to gain property tax, this is the best use,” Sosa said. “The building is staying there, it is being maintained and is run by a local businessman with an interest in our community.”

jacob.dick@beaumontenterprise.com

twitter.com/jdickjournalsim

All contents © copyright 2019 The Associated Press.All rights reserved.