Public Service Announcement, well ... real estate industry announcement: October 12 is the Q3 Commercial Real Estate luncheon hosted by CCIM & LRRA. Everyone is invited. If you are reading this, you should come. Doors open at 11:30 a.m. on the 5th floor of Kirkpatrick Plaza. The topic again has to do with economic development. This time it is the importance of schools. Baker Kurrus is the guest speaker. You don’t want to miss this program!
One of the developments noted in this column a while back had an update in the past month. Bank of the Ozarks announced more about the plans for a new headquarters campus at The Ranch, on the north side of Arkansas Hwy. 10 in Little Rock. The updated information states that construction of a five-story, quarter-million square foot building will commence in 2017 and be completed in 2019. Future buildings are planned on the 44-acre campus possibly including locations for a hotel and restaurant.
As more businesses locate toward the west side of Little Rock and as more homes are built in that area, more development can be expected to follow. It would be out of character for that area to explode with growth. Chenal Valley, The Ranch, other developing areas on the west side of Little Rock first started about 40 years ago. It has taken that amount of time for what is there now to be built. In comparison to metropolitan areas with faster-increasing population, the growth on the west side has been modest in pace. However, if you spend more than about two minutes on any social media, you will learn that there are people who believe the area is already over-developed, ruined even, by profit-driven developers bulldozing trees, sometimes just for sport.
The no-development, save-every-tree, crowd has a new rallying point. Along Chenal Parkway, just before Wellington Hills Road there have been eight or nine acres cleared in September. This clearing is in conjunction with the construction of a retail building of approximately 8,000 square feet and the proposed sale or development of three other commercial lots. The property has been long-zoned commercial and is being developed in accordance with the City of Little Rock’s Future Land Use plan. Just west of this most recent clearing, a hotel is planned. That property fronts on Wellington Hills Road, across from & just north of Walgreens. Just east of the traffic signal in front of Walgreen’s, and on the south side of Chenal Parkway there is a mid-rise multi-unit housing property nearing completion. It too was developed on properly-zoned property consistent with the City’s Future Land Use plan. The thing I expect to set people’s veins to popping and lamenting that the end of the world is nigh, is the coming construction of a convenience store at the southeast corner of Chenal Parkway and Wellington Hills Road. Those that will be lambasting the City and the commercial property owners will have forgotten, or so recently moved to the area that they never knew, that the property slated for gas, beer and cigarette dispensing was originally a construction company with a yard full of trucks and equipment. So the property has been commercial for longer than the vast majority of area residents have been there. That won’t reduce the ire of those who oppose change and growth.
Other tree-removal activities around and in Chenal Valley include construction of The Church at Wellington, aptly located at the corner of Wellington Hills Road and Wellington Village Road, the expansion of St. Margaret’s Episcopal Church, planned construction of restaurants and retail buildings at the corner of Chenal Parkway and Rahling Road, the construction of a new dental office at Rahling Road and Kirk Road and another new neighborhood between Rahling Road and LaMarche Road just to name a few.
While new construction on the west side blossoms, other areas see more mixed results. Another new hotel is slated to join the downtown line up. This one on the east side of Interstate 30, between East 4th and East Capitol. This group is apparently not scared off by the looming disaster of the “30 Crossing” work. Further, according to the deed recorded with Pulaski County, the $1,055,000 paid for the property was for six city lots, or approximately 1.05 acres. That’s math that even I can do. It works out to be just over $1,000,000 per acre. Sales like this are good for pushing up the Assessor’s appraised values of downtown properties. However, not all downtown properties are thriving. There are significant office vacancies. Simmons Tower and Regions Center each have over 100,000 square feet of office space available for lease. Bank of America Plaza is not far behind with approximately 75,000 square feet of office space for lease. The percentages of space available for this trio are 17.65%, 24.85% and 29.35% respectively. And if the AT&T building that is advertised for sale with 370,556 square feet available is added to this list then just those four buildings have a total of over 700,000 square feet of floor area available for lease.
Medical office space is plentiful on the market right now too. Physicians continue to build new buildings that have occupancy costs way more expensive than most existing buildings. I’m seeing six dollars per square foot and more spread on the annual lease rates between existing buildings and new construction. Hey, I suppose if you can afford to go with a shiny, new building built especially for you maybe you should go for it. With hard work should come rewards, right? If anyone reading this knows someone looking for affordable medical offices, send them to the midtown area of Little Rock. There’s a couple hundred thousand square feet of medical office available in the midtown area.
Many areas of Central Arkansas are growing in population. With that growth comes growing pains. Folks in Maumelle are long used to the Maumelle Boulevard parking lot that forms in the peak hours of the morning and the afternoons. Money was found to extend Counts Massie Road toward the long-imagined “third interchange” (some considered it mythical) at the old rest stop on Interstate 40. Well, now that Counts Massie Road is extended almost all the way to I-40, area property owners are having meetings to discuss how to finish the work, the City of Maumelle is considering how to finish the work, and Arkansas Department of Transportation (ARDOT) is having public meetings to discuss what the finished interchange might look like. The thing is though, there’s not money enough for the project. There’s not room here for all the whys-and-wherefores of not having enough money. The current situation is that a group of community leaders is considering getting a sales tax referendum on the ballot for the funding of the interchange. Adding a 3rd interchange won’t be a cure-all silver bullet for traffic on Maumelle Boulevard. It will most certainly be a big improvement though.
I know some people are still looking for Costco (and now Trader Joe’s also) so let me give an update what I know about the Sears property on S. University. It is NOT slated to be Costco’s Little Rock location (nor Amazon’s HQ2 either). What it is slated to be, is a collection of restaurants and retail shops. The schedule of redevelopment may seem plodding. However, the owners are busy behind the scenes working with ARDOT, the City of Little Rock and other stakeholders to address many issues before Arkansas Specialty Orthopedics moves from the building behind Sears at 600 S. McKinley to their brand-spankin’-new building at 800 Fair Park Blvd. That happens next March. It is likely that demolition of the old Sears building could commence before the McKinley Street building. And, the K-Mart on Rodney Parham closed for good in September. Many people have shown interest in the building. For now though, and probably for a while longer, it is empty, soon to be bordering on derelict. It is good real estate though and even with the challenges it faces, it is reasonable to expect it to be re-tenanted, maybe even redeveloped, sooner rather than later. “Sooner” could easily be a couple of years out though.
I want to wrap up by addressing the logical question asked by some as to why new commercial development happens even as stores close and offices stand empty. Let me first ask those questioners the same question. Why have they bought houses on the green edge of the city and participated in encroaching on the forests and forest creatures when so many houses and lots in the urban parts of the city stand empty? Why do they not choose to live in the areas of Little Rock that are already developed, that already have infrastructure built, that don’t add to the sprawl and decreasing population density of Little Rock. Why? My answer to their question of why build more commercial property is that commercial development follows rooftops. As more and more people move to an area, more and more services, restaurants and shops will follow into those areas. The bottom line is that the fault of the sprawl, the fault of the deforestation lies not with the developers … it lies with those who choose to propagate the idea that it is OK for a few people to move to the wooded neighborhoods, just not too many and only certain people.
Tips and suggestions, well most of them anyway, are appreciated. Hope you found something interesting in the column this month. Check back again next month for the things that didn’t get included here this time and that pop up between now and then.