No Siesta for Fiesta Square

Sam Mathias said the departure of a 37,733-SF Stein Mart store this coming March from Fayetteville’s Fiesta Square won’t hurt the 250,000-SF shopping center because he already has another tenant lined up.

Mathias, who owns 86,223 SF of Fiesta Square, and John Stuckey, who owns the rest of it, haven’t had much trouble keeping tenants. Fiesta Square is currently at 100 percent occupancy, and the void left by Stein Mart will be filled soon by a new retailer that Mathias plans to reveal after Jan. 1.

A mile and a half to the south on College Avenue, Evelyn Hills, Fayetteville’s oldest shopping center, looks a little like Main Street in an Arkansas Delta town. Fourteen of the 30 spaces in the 150,000-SF Evelyn Hills are currently vacant. The empty space amounts to about 35 percent of the shopping center.

But Blane O’Banion, a leasing executive with Winegarten Realty Investors of Houston, the public company that owns Evelyn Hills, said things are looking up for the 43-year-old shopping center.

O’Banion said he has signed a lease for Best Sports of Fayetteville to occupy 11,548 SF of the vacant space at (two of the empty spaces) Evelyn Hills in March. Guy Davis, owner of Best Sports, will consolidate merchandise from his two Fayetteville locations (Dickson Street and North College Avenue) at Evelyn Hills. Best Sports, a 30-year-old company, also has a Rogers location.

“I’ve got several positive things working on the shopping center,” O’Banion said.

But in general, the trend seems to be that entertainment businesses are clustered around downtown Fayetteville and retail is gravitating to the area around the Northwest Arkansas Mall.

“Things are moving north,” Bob Nickle, a partner in Fayetteville’s Nickle-Hill Group, said of retail in Fayetteville. “As often happens with older shopping centers, they get bypassed with growth.”

Nickle handled the leasing of Evelyn Hills for nine months until Weingarten took that job in house early in 2002.

With more retail stores opening near the mall, a mile north of Fiesta Square, Fayetteville’s older shopping centers along College Avenue have had to be creative to survive. That often means landing niche tenants that serve as a destination for shoppers. Malls have become what downtowns used to be, with pedestrians walking from store to store. The older shopping centers are more likely to draw customers who stop by one store, or possibly two, then leave the shopping center.

Fiesta Square

Stuckey’s Gottlieb Corp. of Rogers owns “several” area shopping centers in addition to the Dixieland Mall in that city.

Fiesta Square opened in 1981 when Fred Stuckey, John Stuckey’s father, sold the property that Mathias now owns to Wal-Mart. The site was previously home to a drive-in movie theater.

The world’s largest retailer operated a discount store at the location from 1981 to 1997, when it moved the store to a new 200,000-SF Wal-Mart Supercenter near the mall. That was the biggest departure of the biggest anchor store at Fiesta Square. But the space was soon leased to Stein Mart and a home decorating store called Silk Tree Factory, which now goes by the name Trees & Trends.

Historically, Stuckey and Mathias have had little trouble keeping the big tenants at Fiesta Square. Hastings, Harps and Regal’s Fiesta Square 16 Cinemas have been long-term tenants, but the smaller businesses come and go on a regular basis.

“You’re going to lose a few to competitors, but hey that’s the way it goes,” Stuckey said. “Look at the national rates: four out of five businesses fail. It’s just going to happen … We feel good about it. You’re always going to have turnover.”

Evelyn Hills

John Askew built Evelyn Hills in 1959 on what was then considered the edge of town. Back then, downtown was the place to be, and the Fayetteville square bustled with local stores, including Campbell-Bell department store and Lewis Brothers Hardware, as well as a J.C. Penney department store. Now, downtown Fayetteville is pretty much an office and restaurant zone.

A Montgomery Ward store opened in Evelyn Hills in 1963 and became the primary feature of the shopping center for decades.

Weingarten bought the shopping center from Askew in 1990 for $3.2 million, according to Washington County records.

The 96,137-SF Montgomery Ward store closed in 1999. Winegarten renovated the space and leased 13,000-SF of it to the Ozark Natural Foods Cooperative, but much of the former Montgomery Ward location remains vacant to this day.

The health food store seems to be thriving at the location. It serves a niche of customers who would probably drive several miles to shop at that store before going to a traditional supermarket.

Other tenants at Evelyn Hills include Uncle Sam’s outdoor store and Chuck E. Cheese’s, a pizza place for kids.

“I suspect what happened to Evelyn Hills is the location isn’t very good,” John Stuckey said. “They don’t have an east-west corridor there. What happened to Evelyn Hills isn’t going to happen to [Fiesta Square]. We have the east-west corridor they they don’t have.”

Stuckey was referring to Rolling Hills Drive, which connects College Avenue to Old Missouri Road. Stuckey said Fiesta Square is also adjacent to a neighborhood to the west, which means there are shoppers in the immediate proximity.

“All the growth is around us,” Stuckey said. “There isn’t any growth around Evelyn Hills. Location is everything.”

“I don’t think that makes any difference,” Bob Nickle said of the lack of an east-west road intersecting with Evelyn Hills. “North Street is not that far south. It’s just two blocks from Evelyn Hills. I don’t think the lack of an east-west artery means anything.”

The CMN Business Park, just south of the Northwest Arkansas Mall, has no homes nearby, Stuckey said, but the area is the city’s primary shopping zone, so a nearby neighborhood isn’t necessary.

“They have the mass,” Stuckey said of the retailers packed into the CMN area.

Neither Stuckey nor Mathias would reveal their lease rates, but Reed & Associates, a Springdale appraisal company, gave us estimates (see chart, Page 12). Stuckey said it would be meaningless for him to give an estimate because rates are “subject to negotiation” and “vary widely.” He said large tenants invariably end up paying less because they’re leasing more space.

Stein Mart

Stein Mart plans to close its Fayetteville store at the end of February.

“It’s the only one announced for fiscal 2003 at this point, the only closing at all at this point,” said Susan Edelman, director of stockholder relations for the Jacksonville, Fla.-based retailer. “Unfortunately, it has not met our expectations.”

Stein Mart’s fiscal year 2003 begins Feb. 1. The company closed four stores in fiscal 2002.

Connie Sisemore, the store manager, said she will cut prices to liquidate as much inventory as possible by the closing date.

Sisemore said the store, which opened in 1998, made a profit last year but would have been unable to do so next year if the rent goes up.

Mathias said he lowered the rent for Stein Mart last year to try to help the company, but he couldn’t do that for two years in a row.

“They were going to leave at the end of three years,” he said. “But we lowered the rent substantially to keep them there another year.”

Mathias refused to give specific details concerning the lease agreement.

“Stein Mart usually gives a store four years to make a profit,” Sisemore said. “We were able to do that last year … We were finally able to get in the black, and then this happened. … So we can’t make a profit. We sell what Dillard’s does for half the price, so we can’t compete in high-rent districts.”

Retail space leases for $5-$15 per SF per year along College Avenue in the vicinity of Fiesta Square, according to Reed & Associates. At the mall, the rate can be more than $30 per SF per year.

Sisemore called the Business Journal back later to say Mathias had tried to help and was “the good guy in all of this.”

“It’s strictly just a business decision for us to pull out of that market,” said Mike Ray, senior vice president and director of stores for Stein Mart. “These are not easy decisions.”

Stein Mart has four stores in Arkansas that will remain open. Those stores are in Little Rock, North Little Rock, Jonesboro and Fort Smith.

The Fayetteville store had 60 employees.