A new all-Arkansas ownership and management team has a 21st-century vision for one of Little Rock’s history-making medical buildings, the 1962-vintage Doctors Building in midtown.
The plan is to spend several million dollars improving the look and parking convenience of the medical office hub at 500 University Ave., a prime 9.21-acre site near CHI St. Vincent Infirmary, the University of Arkansas for Medical Sciences and midtown’s cluster of medical practices.
The vision, drawing synergy from a huge redevelopment project at the old Sears shopping center immediately to the south, was outlined last week by Brad Henry, managing partner of Natural Capital, an investment group that spent $16.5 million to buy the 213,000-SF landmark in October.
The coronavirus pandemic scuttled a planned public grand opening and renovation preview, so Henry and Marshall Saviers, president and principal of Cushman & Wakefield/Sage Partners as well as a partner in Natural Capital, joined a conference call interview last week.
“Natural Capital formed back in June 2019, and really the purpose was to make private investments in Arkansas and the heartland region that we could have a long-term hold for, something to produce very solid returns for our investors,” said Henry, 39, a Little Rock native. Cushman & Wakefield/Sage is managing the property.
“We couldn’t have thought of a better investment to come out of the gate with, right in the middle of Little Rock, a building that everybody you talk to recognizes. But as part of the investment strategy, we always knew it was going to require significant upgrades.”
The new team has committed several million dollars — they wouldn’t be more specific — to giving the property “a sort of a facelift” over the next 18-24 months, including new glasslike awnings, exterior paint and improvements to the first-floor common area of the eight-story building. The goal is to satisfy current tenants like Radiology Associates PA, which has had a presence in the building since its opening 58 years ago, and to lure five or 10 more tenants to improve occupancy, now running at about 70%.
Help From Citizens
Midtown Doctors Building LLC, the company Natural Capital set up to purchase the building, raised nearly $7 million from both local investors and the fund in an equity offering. It borrowed the rest of the price from Citizens Bank of Batesville to complete the purchase from Little Rock Midtown Ltd., an affiliate of Provident Realty Advisors Inc. of Dallas.
“We feel that now that since all the owners are from Arkansas, that allows us to be more focused on the building and make the investments to bring it back to something that the tenants, the owners, the patients and the community can be proud of,” Henry said.
Along with Henry and Saviers, Natural Capital’s partners include Todd Simmons, CEO of Simmons Foods of Siloam Springs, and Brock Gearhart, president and CEO of Greenwood Gearhart Inc., a registered investment adviser in Fayetteville.
“Our financing came from within the state as well,” Henry said, referring to Citizens. “Frankly, we wouldn’t have been able to make this transaction happen without them.”
Crews are painting the building exterior and starting with parking lot reconfiguration and signage. VCC of Little Rock is the contractor, in coordination with Cromwell Architects Engineers, also of Little Rock.
Where History Was Made
Since the start, Radiology Associates PA has had a place in the Doctors Building, an early entry in Little Rock’s 20th-century rise to prominence as a medical business nexus. (Health and medical care provided 45,000 jobs in the Little Rock metropolitan statistical area in 2018 out of a total civilian labor force of 358,000.)
“Our docs are part of the group that went in on the Doctors Building back in the ’60s and was integral in getting the building built,” said Tony Carozza, RAPA’s chief administrative officer. The century-old practice pioneered the use of cutting-edge imaging equipment in the Doctors Building, Carozza said, breaking ground for Arkansas and beyond.
“RAPA put the first CT in Arkansas in that building in the early 1970s, and it was actually only the 23rd CT in the world at that time,” Carozza said, referring to a computed tomography scanner. “In the ’80s, I believe, the first MRI in Arkansas went into that building.” (That’s magnetic resonance imaging.)
Along with its imaging center, RAPA has a vein center and interventional radiology clinics in the building, as well as a breast imaging center that’s a joint venture with St. Vincent.
Carozza said the building has needed renovation for some time. “Disrepair is not the right word, but the aesthetics have needed updating, and I think that we’ve lost some tenants in the building because of that.”
He said the renovation and improved parking and wayfinding aids will entice other medical practices, which in turn are likely to need imaging services for their patients. “The doctors’ doctor, right? That’s how radiologists are referred to, because the more doctors the building has, the more business for us,” Carozza said. “So we’re thrilled to see this group put some money and investment into it so as to get more tenants.”
Location, Location
Location is a cliche in real estate, but that’s because it’s truly so important, Saviers said. “It’s the first thing you always look at, and that’s what drew us to this initially.”
Beyond its central location and proximity to UAMS, St. Vincent and Baptist Medical Center a few miles west, the Doctors Building should also benefit from an infrastructure overhaul at the former Sears site next door, Saviers said.
“We bought the building from a group out of Dallas that is developing, just to the south, the District at Midtown, involving extensive infrastructure work, millions of dollars’ worth,” he said. “It will create a lot of pad sites for various retail uses and others. They have also been a great partner to us.”
The mixed-use District project, developed by Provident Realty Advisors Inc. of Dallas, has been described as a $100 million investment at the central city’s gateway to west Little Rock, the intersection of University and Interstate 630. CDI Contractors of Little Rock is doing site preparation work.
“The area enjoys the densest daytime population in the state thanks to four hospitals, more than 1 million square feet of retail and more than 500,000 SF of medical office space within two miles,” promotional literature says. “The dense medical employment is also clear in the demographics, with more than 40% of households holding a bachelor’s degree and average incomes of just under $60,000.”
Those characteristics give Saviers long-term confidence in midtown, “with all the various shops and restaurants that already make it such a hub,” he said. “There will also be various new uses in the War Memorial Park area, so it’s an exciting time for this. And, yes, we’re looking for five or 10 new tenants to round out the roster” of about 50 current tenants.
The Midtown Medical Park Building a few hundred yards away landed a major tenant last year, leasing about 46,000 SF to UAMS for its Women’s Center.
The Doctors Building will continue to live up to its name, with all tenants in the medical business, Saviers said, adding the coronavirus pandemic may reshape the ways people seek health care.
“We have 50 tenants running the gamut from pediatrics, to dermatology, oncology, diagnostics,” Henry said. “There are few things you can’t have done, medically, in the building.”
“But we have continued to sign leases through this pandemic, believe it or not,” Saviers interjected. “We do continue to see that activity.”
