With several big pieces of the downtown Little Rock skyline in play, it’s a tower buyer’s market. Amid a stagnant office market, for-sale signs are competing with space for rent.
Leading the way is the 24-story Bank of America Plaza with its seven-story parking garage sporting a mystery price tag and a 56 percent vacancy rate. Now marketed as an “excellent repositioning opportunity,” the 50-year-old office tower appears destined for new things.
A hotel, apartments, condominiums and restaurants are among the redevelopment mix of possibilities for the high-rise.
The same goes for older and even more vacuous office projects downtown such as the 12-story Boyle Building, a would-be hotel redevelopment, and the 14-story Donaghey Building, an unfulfilled apartment redevelopment.
Both are empty and marked for conventional sale while the owners of the Bank of America Plaza have taken an auction-like approach in search of a prospective buyer.
William Callahan, principal broker and senior vice president at CBRE Group, reports receiving a half-dozen or so bids on the 315,372-SF office tower at 200 W. Capitol Ave.
“We’ve had some good aggressive offers, and they all need to be vetted further,” Callahan said. “We’re asking them for their best and final offer in the next few weeks.”
If the sales effort proceeds as hoped, a deal should be closed by summer.
The Wright Lindsey Jennings law firm, the largest tenant in the Bank of America Plaza, is headed toward a crossroad with a lease expiration of July 2020.
“We don’t have a set plan for the moment,” said Stephen Lancaster, managing partner at Wright Lindsey Jennings. “We’re kind of waiting to see what happens with the building. We think we will have time to look at it fully once we have more information.”
An original anchor tenant, the firm occupies 52,988 SF that includes the top five floors. Its leased quarters, which account for 19.7 percent of the building, are home to a combined 130 attorneys and support staff.
The second largest tenant at 9.1 percent (24,459 SF) is the tower’s namesake, Bank of America. No. 3 is Webster University at 2.8 percent (7,500 SF).
“It’s not hard to find office space right now,” said Jeff Yates, managing partner at ARK Commercial & Investment Real Estate of Little Rock. “There’s a lot of pressure on landlords to price their inventory more cheaply to maintain their tenants.”
Built in 1969 as the Worthen Bank Building and renovated in 2004, the Bank of America Plaza carries an appraised value of $11.3 million on the county property tax rolls. 200 West Capitol LLC, led by Edward Corbell of Los Angeles, acquired the project for $10.2 million in 2006.
CBRE’s sales flier offers helpful suggestions for potential redevelopers that include redesigning the dormant ground-floor bank lobby into chic retail-restaurant space.
“It’s going to be a great opportunity for a repositioning,” said John Martin, principal and vice president of commercial brokerage at Little Rock’s Newmark Moses Tucker Partners. “There are some real interesting possibilities there.”
Across the way at 105 W. Capitol, the 73,889-SF Two Union Plaza is on the market with a list price of $5.5 million. The move was made ahead of a major turnover in its roster of state government tenants during the next 12 months.
Gupta Vanderbilt Court I Ltd., an investment group out of Taylor, Michigan, bought the office building, originally known as the Atkins Building when it opened in 1983, for $3.1 million in March 2006.
“With what you have going on along Main Street and Capitol Avenue, there’s more of an appetite for mixing uses,” said Newmark’s Martin. “From a location standpoint, it’s right in the middle of the action.”
Two Union is across the street from ongoing redevelopment work to convert the historic Hall and Davidson buildings at 201-215 W. Capitol Ave. into a 114-room boutique hotel with a lobby bar and 5,000 SF of ground-floor retail space.
The properties encompass the five-story 41,672-SF Hall Building at the southwest corner of Capitol and Louisiana and the adjoining three-story 19,752-SF Davidson Building.
The intersection is shaping up to become an epicenter for redevelopment with the northwest and southeast corners poised for new activity at the Bank of America Plaza and Two Union Plaza.
While adaptive reuse is the catchphrase of the hour for some office buildings, others are maintaining a traditional track while pursuing off-and-on sales efforts. Back in 2015, the 30-story Regions Center and its six-story parking deck carried a sticker price of $40 million.
That was a year after the project at 400 W. Capitol Ave. allegedly could’ve been sold for $46.5 million, a would-be deal that spawned ongoing litigation when the owners claimed an offer wasn’t seriously considered by their management company.
While the Chapter 11 reorganization filed by the project’s multi-layered ownership grinds on, tenancy in the Regions Center has grown by about 60,000 SF during the past couple years.
“We hope to nose it over 90 percent soon,” Newmark’s John Martin said. “We’re at about 86 percent now.”
As far as property tax valuation goes, Regions Center is on the books at almost $30.1 million.
The 14-story Donaghey Building at 103 E. Seventh St. is listed for sale at $8 million only 16 months after the dormant 184,520-SF project sold for a reported $5.7 million to out-of-state owners.
To finance the sale to LRMU Ltd., the Charles Hendrix family of Hot Springs provided a 14-month mortgage of $3.7 million. That loan, through the family’s Lake Hamilton Corp., matured Dec. 31.
In advance of its Oct. 2017 purchase, LRMU in 2016 got squared away with city officials to convert the office building into 154 apartments ranging from 402 SF to 1,121 SF and configured as 38 studio apartments, 63 one-bedroom units and 53 two-bedroom units.
Approved development plans included transforming the basement space into 154 on-site storage lockers, 77 bike storage racks, bike work bench and dog wash. First floor space was envisioned to house a fitness center, laundry facilities, community room, 15-seat movie-theater and meeting rooms with access to an outdoor patio and lawn.
The LRMU ownership has repositioned from developer to flipper.