Fayetteville is hoping for a Whole Foods effect of its own.
Whole Foods broke ground in August for its new location at the College Marketplace at 3525 N. College Ave., which is just south of the Northwest Arkansas Mall and new flyover bridge connector to the Fulbright Expressway. Whole Foods is known to have a pronounced effect on surrounding real estate — and leasing rates — when it moves into a community.
So far, developers said, it seems warranted. T.J. Lefler of Sage Partners said Whole Foods asked for much higher rent rates for the businesses that will accompany it in the College Marketplace and were mostly successful in negotiations.
Lefler represented a mattress company that will occupy a building in the marketplace.
“The Whole Foods deal in Fayetteville is a bigger deal than everybody thinks,” Lefler said. “They’re asking $35 a [square] foot, and everybody freaked out whenever they asked that. They may not be getting that, but they’re getting close to it. What that does is it tells neighboring property owners that I may not be able to get Whole Foods rents but instead of charging $15, I can for sure charge $22.”
Alan Cole of Colliers International, which represents Whole Foods, said the College Marketplace is one rented space from being filled. Cole said the Whole Foods attraction is because it is the favorite of wealthy, educated shoppers who “spend money there all the time.”
Who doesn’t like those kind of shoppers?
“Historically there has been the Whole Foods effect,” Cole said.
“Certainly, we’re seeing the Whole Foods effect in that market. The best tenants want to be there, and they’re willing to pay more to get there.”
North Fayetteville is a solid office market sector, but Cole said most retailers had wanted to stay north of where Whole Foods eventually located.
“Whole Foods created a whole new trade area by going south of the expressway,” Cole said. “No retailer had really looked there because they all tried to get on Joyce.”
As Fayetteville continues work on improving its infrastructure in the area, the retail and office markets should continue to see growth. The city is working to extend Van Asche Drive for one mile, which should greatly improve east-west movement in north Fayetteville.
David Erstine of CBRE said the flyover bridge and Van Asche extension will also make it easier to get in and out of north Fayetteville.
“There are a lot of working deals in that area right now,” Cole said. “There is very low vacancy and very high interest in that area. As the infrastructure and access gets cleaned up, you’ll definitely see more construction there.”
Lefler said College Avenue is an important geographical line separating west Fayetteville and east Fayetteville. The city has limited access from one side to another — part of the reason for the Van Asche extension — so College Avenue is kind of a central meeting point.
“College Avenue has some really old buildings and some new buildings, but the fact is everybody drives down College,” Lefler said. “West Fayetteville will not go to Mission and Crossover and the mentality of east Fayetteville is they don’t want to go to west Fayetteville. The oldest drag in town is still the most populated road in town.”
The challenge with north Fayetteville is finding suitable space, either by repurposing existing structures or buying available parcels for new developments. Also, retailers are looking at the ever-popular areas such as west Rogers and downtown Bentonville.
“The retail market is healthy,” Cole said. “It’s really tight in terms of available space in areas tenants want to be. There are a lot of tenants actively seeking space in the market. From four years ago to today, it’s almost a complete 180 in the retail market.”
The entire northwest Arkansas market is popular with retailers. It’s a simple fact companies have to grow or die, Cole said, and if you’re a company looking to expand you look for a region that has a strong economy and growing population base.
“Retailers look for specific areas,” Cole said. “They are required to grow. When they look across the country for an area with a robust economy, then northwest Arkansas really stands out.”