A couple of months ago, this column touched on the long, slow demise of Sears and K-Mart. I wrote that maybe when the K-Mart store on Rodney Parham closed there might be a newsworthy redevelopment forthcoming. Well, K-Mart is closing, and one of the owners of the shopping center told me that, between the remaining term of the current lease agreement and options that K-Mart can exercise, K-Mart can control that location and sublease it for two more decades. Another path could be for K-Mart to excise a lease termination (go away) payment from the owners, from a new tenant, or even as part of a sale of the property. There are parties, yes plural, that are interested in purchasing that property. The key is to get the wrong tenant out and get the right tenant(s) in.
Sometimes a property doesn’t have the wrong tenants, it has the wrong owners. Different property types require different abilities and relationships. What may work fine for office properties may not translate to retail properties. In my opinion, that is what happened to the Bowman Curve shopping centers. True that the one-two punch of losing Buffalo Grill and Faded Rose as an after-shock of the Great Recession was something that would steal the wind from the sails of any owner. However, the properties lagged many for other reasons. There’s been talk in some circles for at least a couple of years of a possible sale of the property. A couple of people told me that they had inquired about buying the property only to be rebuffed by a contact of the managing partner in Rogers. Finally, it has sold! The reported sales price was $7,100,000. That works out to be approximately $87 per square foot, which is considerably less than replacement cost, probably about half or so. Based on market rents in the area, that price leaves room to make overdue updates to the property and invest in renovations for new tenants. That is if the buyer has, and will part with, the ready capital needed to do those things. Here’s hoping that for the first time in a decade the property has the right owner and the right leasing team to bring some tenants with pizazz to the vacancies.
Sometimes capital doesn’t get deployed efficiently due to outside influences. Nationwide, especially in some western states, there has been a slew of lawsuits against commercial property owners for alleged violations of the Americans with Disabilities Act (ADA). Let’s be clear, ADA regulations are important! These rules serve an important role in recognizing a variety of conditions affecting a large portion of the American population. These regulations, rules and laws are intended to help those people. They are NOT intended to enrich a small group of attorneys with questionable ethics. Records show that the same attorneys are filing cut-and-paste lawsuits for the same plaintiff over and over and over, against hundreds of property owners. They literally file the same lawsuit dozens and dozens of times with only a change to the name of the property owner being sued. These lawsuits are being filed against properties that the plaintiffs never even visited, let alone had troubles with! The attorneys have researchers drive by properties and note possible technical ADA violations. These lawsuits have been deemed “drive-by” lawsuits (not the same as the drive-bys all over the evening news lately). These lawyers are betting that the property owners will pay a settlement of several thousand dollars rather than risk much more by going to court. The money spent by the property owners doesn’t go to fixing the purported technical violation. That money goes in the pockets of the lawyers. Think about it. File 1,000 frivolous lawsuits a year for ten or twenty thousand dollars or so each, settle for half or so, pay the “plaintiff” a cut of each one and take home close to ten million dollars, just for knowing how to exploit rules meant to help Americans with disabilities. I don’t know what you call it; I call it wrong. Write your representative and ask them to support H.R. 620 The ADA Education and Reform Act. It will reduce these lawsuits that benefit only the attorneys by establishing a cure period, in addition to providing more education about ADA specifications to property owners. The property owners can invest in ADA-compliant improvements instead of lining the pockets of attorneys with questionable ethics. I was in Washington D.C. last month on this issue and some others. I tell you, these guys will listen. Let them hear from you.
Let’s go back to Bowman Road. I don’t often name names in this column. The reasons are mine, not so much the Daily Record’s. However, this month I’m calling someone out. Well, no, not really “calling” them out. Actually, this is a shout out. On the Little Rock Planning Commission and on the Little Rock Board of Adjustment, I heard people wail about so much of the investment in Little Rock being in the River Market area or out at Chenal Parkway & Highway 10. This refrain has been in the newspapers, on television, on social media (especially the roundabout whiners on social media), etc. Here’s the deal whiners: investment happens when people are willing to risk their money, willing to pledge their good name to repay money and willing to invest their name and reputation to raise money for investment. So, this is a shout out to Keith Richardson for nearly single-handedly causing a shift in investment from “west” to “west central.” Keith’s investments, and continuing investments, of hundreds of millions of dollars on South Bowman have caused ripple effects benefitting the whole area. This is also a shout out to Little Rock City Director Doris Wright; she has stepped up and furthered investment in the west central area by creating ball fields and recreation facilities where they were needed, and tirelessly advocating for others to also step up and invest. As a small token of my appreciation of the efforts of both Director Wright and Mr. Richardson, I am contributing to Habitat for Humanity of Central Arkansas in the name of each. Keep up the good work!
On July 20, the Arkansas CCIM chapter and Little Rock REALTORS will host another Quarterly Commercial Real Estate Lunch. Rex Nelson will talk about economic development in a presentation titled “The Two States of Arkansas.” Rex has had a long and storied career in Arkansas that can’t be recounted in the space here. If you read this column, then you will want to come hear what Rex has to say. Call the Little Rock REALTORS Association, visit their website, visit the Arkansas CCIM website