Posted 8/1/2012 02:38 pm
Updated 9 months ago
The market for retail space in Pulaski County continues to tighten as occupancy reached 92.3 percent during the first quarter of 2012.
During the past two years, that quarterly figure stood at 89.4 percent in 2010 and 90.2 percent in 2011, as recorded by the Central Arkansas Commercial Data Exchange.
The affiliation of local commercial real estate professionals who pool sales and leasing information for office, retail and industrial properties keeps tabs on 357 retail properties with more than 16.7 million SF under roof.
The demand for sizable blocks of space is building but hasn’t reached the tipping point to launch construction of a new, large development.
“If you listen to all the gossip around town, there’s 500,000 SF of retail looking for a place to land,” said Jeff Yates, partner at Little Rock’s Irwin Partners.
“I’m representing 100,000 SF of retail circling for a place to land, and that’s just little old me. I know there are others out there.
“From a bringing-new-tenants-to-town perspective, all the good deals are gone, and we’re out of space. Somebody needs to step up and build some new product.”
The proposed home of the Gateway Town Center in southwest Little Rock saw a spark of activity with the announced construction start of a 120,000-SF Bass Pro Shops this summer.
The 30-acre development is part of a 169-acre tract at the northwest corner of Interstates 30 and 430. An upscale outlet mall is planned for another 30 acres of the property, Little Rock developer Tommy Hodges said.
The mall will follow about a year behind the opening of the Bass Pro Shops, Hodges said.
Nearly six years ago, the property was envisioned as the future home of a 578,000-SF lifestyle center, largely located on the never developed, 120-acre Otter Creek Mall site.
Occupancy at three of the newest retail projects in the market keeps climbing. A string of new leases totaling about 25,000 SF recently visited Shackleford Crossings in west Little Rock.
New tenants include a 14,000-SF Jo-Ann Fabric and Craft store that will be built, next door to Haverty’s on the west side of the project. Others are a 5,916-SF HobbyTown USA, 4,000-SF Sprint store and a 1,600-SF Scottrade branch.
These additions have pushed occupancy at the 278,000-SF lifestyle center portion of Shackleford Crossings to about 80 percent.
Deals for three of the projects five remaining out-parcels also are in the works that could result in BJ’s Restaurant and Brewhouse, LongHorn Steakhouse and Chuck E. Cheese joining the project.
“Things are still great activity-wise, especially in the west Little Rock market,” said Isaac Smith, principal at Colliers International in Little Rock. “Vacancy is still holding really low, and there’s still a shortage of large-box retail space. The Promenade at Chenal is nearly 90 percent full, and the Midtown area is filling up.
“At some point there’s going to have to be some new retail, but I don’t see it happening in the very near future.”
Earlier this year, two New York firms bought controlling interest in The Promenade at Chenal.
O’Connor Capital Partners and Wafra Investment Advisory Group Inc. acquired 90 percent of the west Little Rock lifestyle center through O’Connor/Wafra Retail Partners.
Red Development of Kansas City, Mo., retained a 10 percent share and continues managing the project.
A $42 million foreclosure sale last July formalized a change of ownership at Shackleford Crossings to an investment group led by the Dallas office of Invesco Real Estate. The group had earlier acquired the debt on the west Little Rock retail center from M&I Marshall & Ilsley Bank of Milwaukee.
Strode Properties Co. of Dallas is maintaining momentum on its Park Avenue project in midtown Little Rock. Construction of a Jared Jewelers store is under way along University Avenue, and interior land for apartments and retail space was sold for $4.6 million.
An affiliate of Lang Partners of Dallas bought a 2.06-acre and 1.03-acre site for $3.85 million and a 2-acre site for $800,000.
Construction is in motion on the first two parcels, backed with a three-year loan of $21.6 million from Arvest Bank of Fayetteville.
About 15,000 SF of ground floor retail space is planned for one of three apartment buildings designated for the property along with 29,000 SF of retail in a fourth building.
The property is near the parking deck that once served the now-demolished University Mall at 300 S. University Ave.
Mark Bingman, associate broker at Little Rock’s Rector Phillips Morse Inc., said the phones are ringing again and more people are looking for retail space.
“The mood is generally, cautiously optimistic,” he said. “We’ve been in a holding pattern during ‘08, ‘09 and ‘10. Activity seems to be up.
“Last year, they wouldn’t have even come into town. They’re stirring at least.”
Wal-Mart is bringing tandem Neighborhood Markets on line in redeveloped retail space in Little Rock.
A vacant 63,000-SF building in the Riverdale Center once leased to Harvest Foods is undergoing transformation along with the former Wal-Mart at 700 S. Bowman Road.
The projects are the first Neighborhood Markets to make the Little Rock scene and mark an escalation of the grocery wars.
In 2010, Kroger completed one of its expanded Marketplace stores at 16105 Chenal Parkway in the Dairyland Shopping Center, and the grocery chain is in the process of replacing a 65,000-SF outlet at 14000 Cantrell Road in Candlewood Station with a neighboring 122,000-SF store.
The old Kroger space at Dairyland is refilling with tenants such as Marshalls and Chenal Fitness & Health Center while the current Kroger at Dairyland is destined to become parking space for the new one set to open next year.