Merchandise Mart To Sell Showrooms To Vendors
Written by Susan Stabley on January 8, 2004
By Susan Stabley
The owner of Miami Radisson Mart Hotel and Convention Center says he will spend $9.5 million to renovate the facility and convert showrooms at the attached Miami International Merchandise Mart into units for sale.
"I am giving my tenants the option to own his own showroom," said George Zaczac Sr.
It’s a concept that may be unique to merchandise marts – wholesale centers where tenants sell their goods to retailers or other wholesalers.
Mr. Zaczac Sr. said he knows of no other mart that has shared ownership or sold off showrooms. Officials at other merchandise marts in the US, including Denver, Dallas, Chicago, and Atlanta, said they only lease space to wholesalers and were unaware of any national marts that are partly owned by exhibitors.
"I don’t think the idea has been attempted in the US," said Robbin Wells, senior vice president of leasing for the Dallas Market Center, which boasts 6.9 million square feet and 2,220 showrooms plus an additional 1 million feet in exhibition space. Asked about the concept, Ms. Wells said she asked her CEO and was told that the ownership of mart space by tenants has been met with "questionable success" in Europe.
Leases allow for greater flexibility, Ms. Wells said, and in trade it’s vital to keep product offerings fresh.
"The concept of selling a showroom… has never occurred to us," she said. Ranked by the Guinness Book of World Records as the largest wholesale merchandise stop in the world, The Dallas Market Center was founded in 1957 by real estate developer Trammell Crow. No tenants remain from the center’s beginnings, though some have held showrooms for as long as 35 years, she said.
Since 1968, the Miami International Merchandise Mart has offered year-round more than 300-plus showrooms south of State Road 836 near Miami International Airport where buyers come looking for the latest in fashion apparel, shoes, swimwear, accessories, gifts and home furnishings. Tenants include Calvin Klein and BCBG. The 286,000-square-foot trade center and wholesale mart is typically closed to the public.
Mr. Zaczac, owner of South Florida Hotel Inc., bought the property at 777 NW 72nd Ave. in October 1997 for $36 million, according to Miami-Dade County property records.
On Dec. 24 he closed on a $36.2 million refinancing loan from SunTrust Bank, said Andrew Elfmont of Elfmont Associates in Coral Gables, who arranged the financing with Greenberg Traurig attorney Juan Loumiet.
Mr. Elfmont and associate Ian Tacher also put together $20 million in loans for tenants to buy showrooms, which will soon close.
The conversion at the merchandise mart follows the trend in the marketplace of office spaces and apartments turning away from leasing into ownership, thanks largely to low interest rates, Mr. Elfmont said.
The refinancing was required to convert the facility, said Mr. Tacher, because the original loan prevented Mr. Zaczac from selling the mart in pieces. The new loan will be applied to the remainder of Mr. Zaczac’s mortgage, a $1 million prepayment penalty and a $2.4 million mezzanine loan, Mr. Tacher said.
Not all of the showrooms in the wholesale merchandise mart will be for sale, said Mr. Zaczac. Eighty-six have been sold and 10 or 11 are still on the market, he said.
One tenant buying a showroom is Roberto Guerra of Domani Krizzia, seller of Italian costume jewelry, accessories and novelty items. Mr. Guerra has been at the mart 17 years and sells to buyers from Latin America, the Caribbean and Europe.
"I see this as an opportunity for the future," he said, adding that he would use his stake in the ownership to push for more advertising for the mart.
Becky Medina of Medina’s Collection, a wholesaler of handbags and jewelry, has been at the mart 14 years. She said she sees the purchase of her showroom as an investment.
"It’s a good change for us," she said.
Physical changes to the building are also on the way. Mr. Zaczac said he would invest $1.5 million in the mart and $8 million in the adjacent 334-room hotel and convention center.
Work is to begin this week on the hotel, he said, starting with replacement of old furniture, "new carpets, new drapes, no wallpaper, new beds."