Prost sweetens Heer's tenant offer

Hundreds of local businesses recently received a direct-mail piece from Prost Management Co. – owned by developer Vaughn Prost ¬– promising six months free rent and a moving allowance of $3 per rentable square foot for tenants who sign by Nov. 15.

Prost said he’s been entertaining the incentive package for a couple of months as a way to lock in tenants for at least 14,000 square feet of unleased commercial office space.

“This is one of the benchmarks we’re trying to meet early on,” he said, noting that three potential tenants would do the trick if ongoing negotiations result in signed leases.

Available office floor plans in the former department store range from 19,000 to 27,000 square feet, according to the mailer. And the lease rate is $13.25 triple net, which includes tenant improvements at cost.

“This is quite an offer,” said Larry Grover, a leasing agent with CJR Commercial Realtors.

Grover and fellow CJR agent Skip Liebman have been recruiting Heer’s tenants for more than two years, and Prost recently added a third agent, Galen Pellham with Pellham Commercial Realtors.

“We’ve got two pretty secure restaurants and an architectural firm and a law firm I think … will sign leases,” Grover said. “We still are looking for people we consider Class A office, some retail and maybe one more restaurant.”

Prost hopes the incentives combined with the building’s amenities – covered parking, high-speed fiber optics and a card-access security system – are enough to tip the scales for local businesses considering a move to Heer’s.

Securing tenants has been a hard-fought battle since Prost bought the dilapidated seven-story building for $2.2 million from Warren Davis Properties in 2004. After Prost missed a series of financing deadlines this year, the city began soliciting other developers to take over the project, and City Council voted last month to purchase his loan from Great Southern Bank. The city closed on the loan Oct. 18.

Lost leases

Uncertainty surrounding the gargantuan redevelopment project led some businesses to back out of leases they negotiated months ago. Two downtown businesses, Black Lantern Studios Inc. and eSBe Salon LLC, had plans to move into Heer’s from the McDaniel Building, but both changed their minds as the project lagged.

“They both got their deposits back, and there were no hard feelings,” Grover said. “They both wanted to be in the Heer’s building and were disappointed they weren’t. To be honest with you, we had to delay and they had to go.”

Black Lantern, a local startup company that develops video game software, artwork and music for second-party publishers, signed a letter of intent in April to lease about 6,000 square feet in Heer’s, said CEO Richard Woods.

Woods said the company expected to move into the new space in January 2007, but quickly realized the building wouldn’t be finished in time. Black Lantern backed out of its five-year lease in mid-June and began looking for a new spot. On Sept. 1, the company moved into a building at Boonville Avenue and Water Street, Woods said.

“We ended up in a place we’re very happy with,” he said, adding that Grover assisted the company in its search for new office space. “I hope the Heer’s building fulfills the promise. … It’s a shame the delays have gotten in the way.”

In spring 2005, eSBe co-owners Becca Wessley and Sarah Kersting signed a letter of intent to lease 1,600 square feet on the mezzanine level of Heer’s. But after about nine months, Wessley said she contacted Grover about voiding the three-year lease, and he agreed to refund the salon’s deposit.

“It sounded like a real great opportunity,” Wessley said. “It sounds like ¬– if it ever gets done – it’s going to be a really cool place.”

Grover indicated there were other tenants who agreed to lease Heer’s space and later backed out, but he declined to provide details. News reports about Prost’s financing problems and the city’s efforts to bring on a new developer “just puts doubt in people’s minds,” he added.

Prost acknowledged that his leasing team has encountered a “doubting Thomas attitude” among potential tenants. That’s problematic from a financing standpoint, which is why Prost said he decided to offer the incentives.

“This is a one-time kind of a thing,” he said. “Once it’s over, we’ll go back to the standard rates.”[[In-content Ad]]