Investors Showing Interest in Bentonville Office Niche

by Paul Gatling  on Friday, Nov. 9, 2012 9:06 am  

Bentonville’s evolution during the last decade-plus, from down home to downtown, has been fueled by infrastructure improvements, investment dollars and revitalization.

Those same principles are beginning to surface in the office space niche of the city’s commercial real estate market, sending more strong signals that the days of cautious investment practices are being left further behind.

“There are some great stories out there about the market coming back, money being spent on revitalizing older properties, things like that,” said Grady Mathews, a CCIM with Grubb & Ellis  | Solomon Partners in Bentonville. “It’s very exciting, and it’s important for Bentonville.”

Two notable transactions of that type were completed earlier this year in Bentonville, which had an office vacancy rate of 13.1 percent in the third quarter of 2012, down from 15.5 percent in the third quarter of 2011. The grabs illustrate the assertion that investors are spending money to re-introduce distressed or vacant assets back into the market.

The two projects involve nearly $7 million and about 180,000 combined square feet of space.

“Generally, just the simple fact that they are distressed equates to lower purchase prices,” said Chuck Sharp, a commercial realtor and owner of Sharp Properties and Development in Bentonville. “There’s an upside to it if you can buy it right and lease it right.”

On June 27, Bentonville Commerce LLC, a company owned by FBE Limited LLC of New York, landed a bargain with a $4 million acquisition — about $33 per SF — of Bentonville’s Commerce Centre, an eight-building group of bank-owned office properties with 120,000 SF on 10.8 acres. The distressed asset — just off South Walton Boulevard behind two strip mall centers, the Bentonville Post Office and Burger King — had been in the portfolio of U.S. Bank NA. It was operating at 30 percent occupancy at the time of the acquisition.

FBE Limited — which also owns the nine-story Bentonville Plaza office building and 15 surrounding acres across the street from the headquarters of Wal-Mart Stores Inc. — has re-branded its newest acquisition as Bentonville Commerce, with Grubb & Ellis  | Solomon  Partners — the leasing and marketing agent for Bentonville Plaza — leading similar efforts for Bentonville Commerce.

Also this year, a group of local investors paid $1.45 million for a vacant manufacturing/office building at 1602 E. Central Ave. in Bentonville, across the street from Washington Junior High School. Central Investments LLC bought the 60,000-SF building on 8.4 acres from global manufacturer Kennametal Inc. of Latrobe, Pa.

Oelke Construction Co. of Rogers is leading the renovation, valued at just less than $400,000 according to city records, to give the single-story building a more attractive glass and metal facade, and upgrade the interior before leasing to new tenants.

Marshall Saviers with Sage Partners in Fayetteville represented the buyer in the deal, and is the leasing agent going forward.




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