Class A office space is lacking in the north Fayetteville submarket, and one local developer sees an opening to meet the demand.
A limited liability company controlled by Fayetteville contractor Kyle Naples recently closed a $1.5 million deal to buy 13 acres situated east of North Vantage Drive, north of the U.S. Postal Service at 1590 E. Joyce Blvd. The purchase price equals $2.65 per square foot.
Naples, owner of NAPA Construction in Fayetteville, is partnering with Fayetteville commercial real estate firm CBRE to develop the property into a small office park called Vantage Drive Office Park. David Erstine, a real estate broker with CBRE in Fayetteville who represented Naples in the land acquisition, said the developer is planning to build a two-story, Class A office building with 40,000 square feet of space. The remaining acreage will be split into smaller lots, between four and seven lots ranging in size from 1 to 5 acres, and marketed for sale.
“We anticipate having lots available to close by the end of the year,” Erstine said. “We are having ongoing conversations now on portions of the property, but those are in the early stages.”
Erstine said developing the property for medical, office or other commercial development opportunities speaks to the lack of supply in the marketplace, specifically east of the U.S. Highway 71B corridor.
“We are particularly light on developable lot inventory in the market,” he said. “There is some inventory available around Steele [Boulevard] and Van Asche [Drive], and on Zion Road, but it’s pretty limited. And this is one of the last remaining sizable tracts of land in the north Fayetteville submarket.”
The larger component of the development plans for the Vantage Drive property addresses the lack of existing high-end office space in north Fayetteville. According to the Skyline Report from the University of Arkansas, Class A office vacancy has trended downward in Fayetteville, from 9% in the first half of 2015 to the current 4.1%.
Erstine said there are 11 Class A office buildings in the north Fayetteville submarket, with a combined 495,000 square feet of space. Only about 32,000 square feet of that space is vacant — about 6.5% — and Erstine said he is aware of some pending lease activity on a “significant” portion of the available space, though he declined to elaborate further.
“Our day-to-day knowledge of office demand indicates occupiers are seeking to position about 30,000 to 40,000 square feet of space over the next six to 18 months,” he said. “The strong occupancy combined with the limited product delivery and known occupier demand suggests some new Class A office space is warranted.”
Erstine added the office buildings will have floorplates that allow for up to 18,000 square feet of usable space. The building could be completed as early as the fourth quarter of 2019.
Jorgensen and Associates of Fayetteville is the civil engineer for the project and BiLD Architects of Fayetteville is working on the design of the office building.
Before Naples took ownership, the property had been bank-owned for a decade. He bought the land from Pine Bluff-based Simmons Bank, which took ownership after acquiring Metropolitan National Bank of Little Rock in November 2013. MNB recovered the property in 2008 from the previous landowner, Brandon Barber.
“We’re seeing a lot of things move that had been stagnant for quite some time,” Erstine said. “Absorption trends continue to benefit the market.”
Clinton Bennett, also with CBRE’s Fayetteville’s office, represented Simmons Bank in the land sale.