Northwest Arkansas Business Journal’s Best & Worst of 2008

In some ways, the Northwest Arkansas economy resembled Little League baseball year after year.
Everyone was a winner; everyone got a trophy.

If you opened a bank, it flourished. If you built a subdivision filled with upscale homes, they sold. If you built a Class A office building or retail space, it filled up. If you opened a restaurant, folks lined up to check out a new offering.

No one could lose, it seemed, and our own wave of “irrational exuberance” driven by the experience of breezing through previous economic troubles had many believing the area economy was bulletproof.

We found out in 2008 that Northwest Arkansas is not an insulated, isolated pocket unaffected by the national economy. For better or worse we are part of the greater whole.

Despite seemingly Herculean efforts, developers like Ben Israel and Brandon Barber couldn’t hold out any longer. Development is a speculative business with high highs and low lows.

The same could be said for banking, with Dan Dykema’s ANB Financial, which was once a top lender to small businesses in Northwest Arkansas, but apparently got caught up in trying to do too much, too fast.

But the Northwest Arkansas market has plenty of hope and bright points: most every resident and businessperson has faith that the Wal-Mart/Tyson/J.B. Hunt/University of Arkansas consortium will continue to drive the area’s economy, at least in the long term.

Where there are troubles, there are also opportunities.

It’s our hope that all businesses have a successful and prosperous 2009.

Best Green-ovator

The Wal-Mart Stores Inc. vendor scorecard was telling about companies’ desire to get green and save money on everything from packaging waste to transportation costs. The company is even trying to figure out what to do with the dirt it vacuums out of cars as it pursues a zero waste goal at its Supercenters.

We thought one of the neatest tricks was by the makers of Hamburger Helper, who were able to reduce greenhouse gases by 11 percent by straightening noodles “just a tad” to reduce its box size.

Best Booster

One of the most interesting – if obscure – boosts to local tourism we’ve ever heard of was Roger Boskus’ water skiing competition at his Cedar Creek Water Ski Park in Durham, which was to be held in August.

At one time Boskus, who is also a partner in the Miller Boskus Lack architecture firm in Fayetteville, told the Business Journal the event would draw 300 competitors and up to 3,000 spectators.

Best Visitor

“The Donald,” aka mogul Donald Trump headlined the Economics Arkansas luncheon on May 8 and didn’t disappoint. His reputation for verbosity and hyperbole was on display as he let fly with a series of statements that only loosely could be construed as business advice. His best lines ranged from New York Yankees third baseman Alex Rodriguez’s choking under pressure to the merits of prenuptial agreements, revenge and hanging out with less successful people or “losers” as Trump called them.

“Some of my best friends are losers,” he said. “I go out with successful people and I come home with a headache. We’re all sitting around talking about ourselves, ‘I did this, I did that.’ If you go out with a loser, you can talk all night, go home feeling fantastic and go to sleep.”

Runner-up

Carrie Underwood, who played Reynolds Razorback Stadium along with Keith Urban during the week of Wal-Mart’s annual shareholders meeting in Fayetteville.

Worst Visitor

Queen Latifah, master of ceremonies at the Wal-Mart meeting. All we can say is, “Bring back Sinbad!” We missed the videos of him playing dodgeball in Supercenter aisles and returning a half-eaten bag of potato chips to customer service for a refund.

Best quote

“Dick Cheney is an idiot.”

There’s no shortage of critics for our outgoing Vice President, and consultant Chuck Taylor is sure one of them. However, Taylor didn’t stop with his brusque statement about Cheney’s poo-pooing of conservation at the Transplace Shippers Symposium in April. Taylor, a proponent of the “peak oil” theory that promises a day of reckoning for the world’s fossil fuels addiction within the next 20 years, also called then-presidential candidates Barack Obama, Hillary Clinton and John McCain “AWOL” on leadership. For good measure, he said Pulizer Prize-winning columnist and “The World is Flat” author Thomas Friedman “doesn’t know what’s going on.”

Worst Lawsuit

A class action suit filed against Springdale-based Advanced Environmental Recycling Technologies Inc. was a major strike to the company’s turnaround efforts. After facing de-listing from Nasdaq for failing to keep its share price above $1, a series of PR moves and expansions succeeded in driving AERT stock as high as $1.39 in the days before the suit was filed on Feb. 28. The stock plunged 24 percent that day, the real estate market went into the tank and the composite decking manufacturer is now trading around 20 cents.

To add insult to injury, a silo in Springdale blew its top – literally – on May 22, sending a worker to the hospital and knocking out power around the Jefferson Street facility.

Best Opening

Jason’s Deli in Fayetteville. Long lines, great food and free ice cream every day greeted hungry lunchers at the newest location in Nelson’s Crossing. We’re not ready to give it the nod for best sandwiches around just yet, but let’s just say the Deli Cowboy and the MeataBalla Po’Boy have quickly become favorites ’round here.

Worst Opening

Meaux Dad’s in Fayetteville. Grand opening: January. Grand closing: November. We were hoping for good things from Meaux Dad’s, but instead it became just another casualty in the difficult business of running a restaurant. The former O’Charley’s location is up for lease again – and we wish Grubb & Ellis luck in finding a tenant – but we don’t want to call it the black hole of restaurant locations. After all, Logan’s, TGIFridays, Red Lobster, Olive Garden and Noodles are all located nearby and all rank in the top 10 for sales in Fayetteville.

Now, we’re waiting for the City of Fayetteville to get its act together and finally put up some signage that directs folks to the Meaux Dad’s area via the Gregg Street exit off the Fulbright Expressway. It takes three right turns to reach Meaux Dad’s from the exit and no trip through the busy Joyce Boulevard intersection, but you’d never know it driving by.

Best Unpublished Photo

Burt Hanna, owner, Greenland Composites. Sometimes a picture needs more space than we can give it, and that was the case with this shot of Hanna tossing one of his SmartStones made out of old Wal-Mart shopping bags.

Hanna had a good year (see cover) with the SmartStone, securing deals with both Home Depot Canada and Wal-Mart/Sam’s Club to carry the lightweight paving stones.

Best Deal

Superior Building, Bentonville. The “Wal-Mart Effect” has many iterations, mostly derived from the large ripples produced whenever the Bentonville retailer hops in a pond.

In the oversaturated Rogers/Bentonville Class A office space market, the Wal-Mart Effect was simple and powerful. Wal-Mart purchased the near-empty Superior Building for $29.9 million from owners Burt Hanna and David Slone for use as a new headquarters for Sam’s Club and its 1,000 or so associates. Wal-Mart saved Colliers International the trouble of leasing the 370,000-SF building out 10,000 to 15,000 SF at a time in a rough market – not to mention the return for Slone and Hanna, who secured $22 million from Arvest Bank for construction in 2006.

The purchase slashed the vacancy rate for Rogers/Bentonville. The Superior Building alone represented around 40 percent of the vacant, or “see through” space in the market.

Worst Deal

Legacy Building, Fayetteville. A microcosm of all the busting elements of the Northwest Arkansas market, the Legacy Building has it all. There’s a broke developer whose eyes got bigger than his stomach, a startup bank that now finds itself under an agreement with federal regulators and a big, near-empty building.

After fronting Brandon Barber, his partner Seth Kaffka and their wives more than $19 million to construct the seven-story, 37-unit building, Legacy National Bank received a foreclosure degree totaling more than $18.7 million in liabilities on the project on July 23.

The building, which has a host of issues, most notably a tenuous parking situation, was purchased by LNB at auction for $11.25 million on Nov. 13. The court-appointed foreclosure receiver estimated that a best-case scenario if all the remaining condos, the restaurant space and parking garage were sold at list prices would net around $16.6 million. That’s more than $2 million less than the outstanding debt.

Worst Phone

Jeff Wood, publisher of the Northwest Arkansas Business Journal, informed readers earlier this year how he had to fork over money to fix his BlackBerry 8830, essentially paying for it half again two months into its usage. He was told “it’s a very delicate phone” after the charger mechanism went on the fritz.

He’s never gotten satisfaction out of its makers, Canada-based Research In Motion, and encourages people with the same problem to complain by calling them at 518-888-7465.

Best Phone

It took us a while, but a couple of staffers recently bit the bullet and jumped on the iPhone wagon. They’re convinced it is the best mobile device for business and personal communications out there. It’s fast, it does what you want it to do and it’s wicked cool.