Migration of State Agencies Generates Little Rock Office Ripples

The reshuffling of state offices around Little Rock has set the stage for construction of two buildings and the possible sale of a third.

The relocation of the Natural Resources Commission from downtown to interim office space in west Little Rock puts the plan to develop a new building nearby one step closer to launch.

The timetable is less certain for a future sale of the state-owned Main Street Mall downtown and the planned construction of office space in midtown.

A sale of the 192,475-SF mall project at 501 Main St. is linked with an expansion of office space on the Arkansas Department of Health campus at 4815 W. Markham St.

“That’s in the future with really no timeline for now because of the pandemic,” said Anne Laidlaw, director of the Arkansas Building Authority. “The Department of Health has its hands full with that. We’ll start looking at the project more closely whenever things settle down.”

Laidlaw said department officials want to expand their campus facilities so various health-related boards scattered around Little Rock can consolidate there.

Whenever the new construction is completed, five state boards in the Main Street Mall are marked to move: the Board of Dental Examiners, Board of Examiners in Speech-Language Pathology & Audiology, Board of Examiners in Counseling, Board of Chiropractic Examiners and Arkansas Psychology Board.

Six state offices that until recently called the mall home have already relocated to another state-owned office building at 900 W. Capitol Ave.

This roster consists of the Appraiser Licensing Board; Auctioneer Licensing Board; Arkansas Manufactured Home Commission; Board of Architects, Landscape Architects Interior Design; Professional Bail Bondsmen Licensing Board; and the Board of Public Accountancy. The group vacated a combined 12,633 SF in the office mall to help backfill space left by relocations of the Arkansas Economic Development Commission and the Arkansas Development Finance Authority to the state’s Commerce Building.

That structure, the former Building 4 on the Verizon/Alltel campus in the Riverdale area was bought 19 months ago for $26 million. The state spent an additional $480,000 to finish out office space to suit the needs of the AEDC, ADFA and six other state agencies that migrated to the 303,355-SF, six-story building.

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Commerce Building Rent Roll

1  Commerce Way
Former Building 4 on the Verizon/Alltel campus in Little Rock

Occupancy of net rentable space: 69.4%
*The total annual rent and former square footage for DWS from multiple locations or for OSD at Capitol Mall 3 was unavailable.
Source: Arkansas Building Authority

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Additional space in the 900 W. Capitol Ave. project was backfilled by the Department of Labor & Licensing to return the 120,000-SF building to full occupancy. The former Dillard’s headquarters was acquired by the state for $18.5 million in March 2010.

The Labor Department’s move downtown from the Cone Building at 10421 W. Markham St. in west Little Rock brings the reshuffling of state offices full circle.

The state Building Authority signed a two-year lease for the Natural Resources Commission to conduct business out of space formerly occupied by the Department of Labor & Licensing.

Natural Resources is in the process of completing its move from 28,354 SF in the Main Street Mall to 16,604 SF in the Cone Building.

The relocation from more spacious state-owned accommodations to smaller private sector-owned quarters resulted in an annual rent decrease from $350,268 to $249,060. The move to free parking also cut thousands of dollars from the commission’s budget for paid parking downtown.

Laidlaw described the Cone Building location as transition space to get Natural Resources closer to its final destination with other arms of the Department of Agriculture.

The state is in the early stages of pursuing design work for a building on Natural Resources Drive. The project is expected to house the department’s plant and livestock labs. That would free up existing lab space for redevelopment for the Natural Resources Commission.

The exodus of Natural Resources leaves half of the Main Street Mall’s 107,966 SF of usable office space vacant. The state bought the former retail project for $2.3 million in June 1993 from Leader Federal Bank for Savings in Memphis.

“It very well met a need we had at one time, but it doesn’t meet that at this time,” Laidlaw said of the four-story redevelopment that blended five buildings into one on the east side of Main between Capitol Avenue and Sixth Street.

“Once we’ve addressed the Department of Health project, a more logical step is to take a formal bid to sell the building.”

She estimates it could be three years before a decision is made to market the mall. In the meantime, the Building Authority is entertaining offers to lease space to non-state tenants.

“Our goal has been to try and empty the first floor, and the third floor will be vacant after Natural Resources finishes moving,” Laidlaw said. “We’re not opposed to a mixed-use rental situation. We had a number of calls about space in the building before COVID.”