Private investment is beginning to trickle back into the commercial real estate sectors in Benton and Washington counties. Several announcements and other pending deals have prompted real estate professionals David Erstine and Clinton Bennett of CBRE Northwest Arkansas to launch the I-540 Interchange Report.
The first edition (January 2014) reveals more than 24 new projects in the planning stage, some of those have since moved into the construction phase over the past month. At the same time, the region also has seen the opening of several other projects including Dunkin Donuts in Bentonville and Planet Fitness in Fayetteville.
“For a such a long time when we would drive from Fayetteville to Bella Vista we would see dirt flying and projects coming to life, but around 2009 it just stopped. There was nothing going on, no deals to speak of in the commercial sector,” Erstine said.
He said the market downturn over the last three to five years gave local municipalities time to catch up on infrastructure projects that were sorely needed from the rapid population growth of the previous decade.
“Now that these infrastructure projects are well on their way — (Don Tyson Interchange in Springdale, flyover in Fayetteville, widening of Hwy. 265 between Fayetteville and Springdale, a western loop in Fayetteville and more connectivity in western Rogers around the AMP down to the Pleasant Grove exit) — I think you are going to see private investment made as the cities forge on ahead with their projects,” Erstine said.
Bennett added that as better road access is given to certain areas, commercial investment will follow. He points to the Highway 265 widening project and the eastward extension of the Don Tyson Parkway and the impact that is already having near the Butterfield Coach Road area along U.S. 412 in east Springdale.
The Walmart Neighborhood Market has been there for a few years, but Bennett said now that the infrastructure is nearing completion he has property in the area that is drawing the attention of several prospective suitors for commercial development.
In West Springdale, the improvements made to Elm Springs Road and the new Walmart Supercenter under construction has drawn the attention of McDonald’s. Arvest and Verizon who have planned projects in that immediate area, according to the CBRE report.
Erstine said the completed interchange work at Mount Comfort Road in west Fayetteville has prompted Kum & Go to build a convenience store in that area — the first commercial project since hundreds of homes were built in that area 10 years ago.
West on Wedington, CBRE reports Freddy’s Frozen Custard and Northwest Health have projects on the drawing board. Walgreen, Super Cuts, First Security Bank, Casey’s General Store, Dickies BBQ and Slim Chickens are already under construction in the area.
An interesting redevelopment project rumored in Fayetteville is Whole Foods scouting out property on North College Avenue near Millsap Road. Estine said the site most talked about is the former Mercedes dealership. His firm does not represent Whole Foods, but he said such a store could have a big impact on redevelopment along that portion of U.S. 71 (College Avenue).
“We see clients who want to locate retail to the region but in the Fayetteville area they all want to be near Joyce Avenue and the mall area. College Avenue does not fit their criteria. If a national player like Whole Foods does decide to invest on College Avenue, it could open the possibilities for others,” Erstine said.
Whole Foods did not return calls seeking comment for this story.
Further south on Martin Luther King Boulevard in Fayetteville, Bennett said Dunkin Donuts and San Antonio, Texas-based Whataburger are scouting locations, but no deals have yet been struck.
Bennett said Dunkin Donuts, which recently opened in Bentonville, has planned at least three locations in this market. He said CVS Caremark, already under construction in Bella Vista and Fayetteville, recently secured property at U.S. 412 East and Thompson Avenue in Springdale for a third pharmacy.
Bennett said the new Wal-Mart AMP (Arkansas Music Pavilion) will no doubt drive more commercial development in western Rogers and it will also be viewed by investors as a major step forward in the “quality of life” metric that has become an important recruiting tool. He points to the Wal-Mart AMP and the Razorback Greenway in helping to deliver high marks for “quality of life” criteria.
Bennett said there are numerous large projects (retail and office space) in the Pleasant Grove Road and Promenade/New Hope Road areas that are in the planning stages. At Pleasant Grove Road, the Pleasant Crossing Shops, is a 20,000-square-foot retail shopping center, near the Wal-Mart Supercenter. SNAP Fitness, two restaurants and a nail salon are reportedly going into that space once completed by late 2014 to early 2015.
A liquor store and Cavender’s Boots are also planned projects in the Pleasant Grove area of western Rogers, according to the CBRE report.
Erstine said Country Club Plaza is planned near the gates of Pinnacle Country Club, which will be office/retail space. Hunt Ventures has planned to construct a nine-story Class A office building totaling 220,000 square feet. Another private investment deal for 40,000 square feet of office space is slated near the Shoppes at Pinnacle Hills, as well as 60,000 square feet of additional space in Metro Park.
Collective Bias is planning to build along New Hope Road, which will free up a large space the firm now occupies just one block off the Bentonville Square.
Bennett said once this office space is completed in the Rogers area, there will be some softening in the market, which is now fairly tight with respect to Class A space.
“I really think this space will be absorbed. We continue to see Wal-Mart vendors and third party suppliers expanding their offices and personnel,” Bennett said.
The CBRE group said Wal-Mart is also worth watching as they have already announced seven new stores in the the two counties from Farmington to Pea Ridge.