Posted 2/5/2018 12:00 am
Updated 2 weeks ago
A month shy of its first birthday, the Little Rock Technology Park has exceeded expectations for attracting startup-minded entrepreneurs and tech-related ventures. The 38,000-SF downtown venue at 417 Main St. is off to a promising start with a current roster of 36 tenants whose rent contributes to the tech park’s monthly cash flow supporting operational expenses.
The warm reception has prompted the launch of planning work on the next phase: construction of a new 100,000-SF building that will become the tech park’s showcase.
“Looking back over the past 11 months, I was struck by just how immediately we had a good level of occupancy and a good mix of tenants,” said John Burgess, chairman of the Little Rock Technology Park Authority board. “You wonder if that was due to a new-thing buzz. But it has just continued to grow.
“I’ve really been pleased with how the local community has embraced the park. There is a lot of activity and collaboration going on in the facility among all the tenants.”
Month-to-month space, measured in terms of desks or workstations and not square feet, is 76 percent leased. The short-term arrangement is to accommodate fledgling enterprises that may come and go or need to expand quickly into a bigger floor plan.
Brent Birch, executive director of the tech park, said a couple of these smaller tenants are on the brink of becoming a full-fledged business.
“They’re getting close to blowing up,” he said. “It’s exciting to see someone about to take off if the cards stack up.”
Birch said visitors touring the tech park during normal work hours often mistake empty offices, desks and workstations as vacant, unclaimed space. But that’s an illusion because of the 24-hour nature of the facility.
“The cleaning lady says people are here all hours of the night,” Birch said. “It’s a different work environment. Some people are coming here in the evenings from their day job to work on their startup project.
“We are really happy with the progress. It’s been faster than expected, and people are paying their leases.”
In round numbers, tenants leasing first-phase space account for $23,000 per month, with parking revenue adding another $9,000.
At $63,000 per month, the biggest contributor of cash flow is the state of Arkansas. Office space leased to the Departments of Education and Higher Education is envisioned to one day house an expanded tech park.
For now, the state lease on the six-story, 48,264-SF Five Main Place at 421 Main St. expires in 2022. That coincides with the tech park paying off its first-phase debt and the sunset of the special 10-year local sales tax that supports it.
The building is on the strategic drawing board for future redevelopment as the tech park’s phase-three expansion. The state lease could be extended until demand puts that plan in play.
A $17.1 million funding agreement through a consortium of Arkansas lenders led by Conway’s Centennial Bank of Conway was set up to bankroll the tech park’s first phase.
Originally budgeted at $7.5 million, construction work ended up requiring only $5.8 million. The balance of the financing ($9.6 million) was devoted to property acquisition costs.
That war chest paid forthe two phase-one buildings, neighboring land for phase-two construction, Five Main Place and a half block of parking across Main Street. It also included the now-razed former home of Stephens Inc. at 114 E. Capitol Ave. The tech park combined the site of the 20,952-SF office building with its parking lot purchase at the northwest corner of Capitol Avenue and Scott Street.
“We made a $3 million principal payment in December,” Birch said.
The money supporting the first-phase debt is courtesy of a 3/8 of a cent capital sales and compensating use tax collected in Little Rock. So far, the tech park has received about $8 million from the city. The tax is forecast to raise about $22 million in total.
Of the tech park’s current 38,000-SF configuration, 13,000 SF is reserved for long-term tenants. A third of this space is leased to a trio of tenants.
On the first floor, the Venture Center accounts for 1,955 SF, and Conway’s Blue Sail Coffee Roasters operates a 1,222-SF java shop.
“The Venture Center is a key tenant with the programming they’re running,” Burgess said. “Their programming is drawing new people into the community and the facility. That has worked out great.
“Right out of the gate, we had graduates from the Venture Center’s FinTech accelerator establish residency, and we picked up some more in the latest round.”
Blue Sail Coffee hit the ground running as a retail concern and tech park amenity.
“When we first opened up, it was unbearably busy,” said Jay Barber, manager of the Little Rock shop. “We have had consistent foot traffic since then, and we’re happy with our experience.
“We love being a part of the downtown community. We’ve made a lot of friends with customers who live downtown and customers who work downtown. It’s been cool interacting with the professionals in Little Rock.”
The social magnetism of Blue Sail Coffee is influencing the planning for the tech park’s second phase.
“The coffee shop has turned into a collaborative meeting space,” Burgess said. “We’re paying special attention to the ground-floor space in the new building because of that.”
Jonesboro’s Ritter Communications uses 1,224 SF on the fifth floor as a base to serve customers and develop business on a partial fiber footprint that extends from Little Rock up the U.S. 65 corridor to Harrison and west along the Interstate 40 corridor to Russellville.
Ritter’s tech park space is home to a couple of permanent staffers and supports up to eight full-time employees who rotate through the office on weekly business.
“We enjoy being a tenant there,” said Heather Terry, carrier sales manager for Ritter. “It’s a great hub for us to meet with people in Little Rock, and it’s easy to get to great restaurants with clients.”
The biggest blocks of vacancies at the tech park, all part of the space envisioned for long-term tenants, are in the upper stories.
The entire sixth floor (5,016 SF), reserved with an eye toward a single-tenant user, awaits its first occupant. Most of the fifth floor (3,784 SF) is available, a situation that could change in the coming weeks.
“We are entertaining some serious inquiries,” Birch said.
A contract for design work on the tech park’s 100,000-SF addition could be finalized with WER Architects of Little Rock as early as this month. The hiring of a construction manager to work with the architect and help develop a budget for phase two and oversee the project will follow.
Construction might start by 2020 if the all-important funding puzzle can be assembled.
“We hope it’s a short stop, but until we have the financing worked out, it’s hard to say when,” Birch said. “If we find the right pot of money, it could be sooner than later.
“The timetable is the hardest part because we don’t have the funds. Once we get the space details worked out, then we’ll know what we need.”
A mix of private and public money is expected to pay for the phase-two expansion. Who the participants might be is among the questions for another day.
“We’re putting those conversations off until we get more details worked out on the numbers for phase two,” Burgess said.