If recent history is any indication, the Rice Office Complex shouldn’t stay vacant for long.
That is certainly the hope of CrossMar Investments and Marshall Saviers of Sage Partners. CrossMar is developing the building, which is still in the planning and approval stage with the city of Bentonville; it will be just off Central Avenue adjacent to Interstate 49.
Saviers and Sage Partners are handling the leasing. A sign of the region’s thirst for high-quality office space is the approximately 71,000 SF of space that has already been advertised for leasing, even though ground hasn’t been broken for construction.
“I don’t know if you would call this ‘Northwest Arkansas 3.0,’ but we’re becoming a more mature area,” Saviers said. “As that happens, as the tenants become more mature, folks want a higher quality space. It’s the next evolution.
“When people are moving here from wherever, that is what they want. Most of the people who live here now are not from northwest Arkansas. You have to mimic those areas that they came from.”
The ROC, as CrossMar is calling the development, is actually just the first planned building of four that are expected to add 210,000 SF of office space to the market. Like most new office construction, it has certain features and amenities that modern companies are looking for.
The ROC will have 24-foot ceilings, exterior walls with plenty of windows to let in sunlight and fast internet and other technology. This building trend has become prevalent in northwest Arkansas, something CrossMar learned when it renovated a 60,000-SF building with a modern look a few years ago and saw it immediately leased up. They built a new building in the same vein next door and it was scooped up, too.
“We didn’t know if the market was ready,” Saviers said. “We had it leased up before it was completed. We were like, ‘Whoa, we have something here.’ Then they built the building in the back that was 30,000 [SF] with a similar feel but a new building, and that was leased up before it was completed.
“We’re parlaying that into the RICE office complex. The owners think it’s another project that will have success.”
The success of new office construction is partially based on the quality of product but also because of the demand for it. David Erstine of CBRE said the area’s vacancy rate in the office market is 8.6 percent, basically the same as it was the year before.
“We’ve got strong occupancy,” Erstine said. “Any vacancy of single-digit percentage usually indicates a healthy office market. We’re in pretty good shape.”
The Pinnacle area of Rogers is a hot corridor. The 10-story Hunt Tower, a modern, glassy building that dominates the skyline just off Interstate 49, is set to be joined by others.
Joe Whisenhunt’s Whisinvest Realty has one office building under construction just off Pauline Whitaker Parkway where it will be sandwiched between two retail centers Whisinvest is also building or has built. Whisinvest plans two more office buildings in the development.
“One thing I would note in that arena, in that Pinnacle area, there is more developer competition than we’ve seen in quite some time in and around Pinnacle,” Erstine said. “You have three or four groups competing for office occupants. That is something interesting to us, the amount of developers tackling that Pinnacle submarket.”
Erstine said the south end of the northwest Arkansas market — by that he means Springdale and Fayetteville — has an office focus that is geared more toward smaller footprints. While the north is looking for 30,000-SF users, the south has more potential lessees looking for, at most, 10,000 SF.
“You don’t see that reliance on the vendor and supplier community that you do moving up north,” Erstine said. “Build to suits have picked up some momentum, especially at the south end of the market. That’s occupants telling the development community we need some more space.
“We’re at the stage in the cycle in the north Fayetteville market that new construction is warranted. You have some groups looking to do some freestanding, single-tenant, smaller-footprint buildings.”
See more from the 2017 Northwest Arkansas Lease Guide.