During the COVID-19 pandemic, most office workers shifted to working from home during the healthcare crisis. A Gallup poll reported that 62% of employed Americans in April had worked from home during the crisis, double the number in March.
The trend has raised questions about the future of office space. However, a real estate deal closed Monday (June 22) in Northwest Arkansas that should illustrate the confidence some investors have of office buildings still playing a role in company culture and productivity in a post-pandemic world.
NWA Business Center LLC paid $12.95 million for a three-building office park at 506, 509, and 515 Enterprise Drive in Lowell, just off the northbound lane of Interstate 49. It’s known as the Northwest Arkansas Business Center and includes 108,627 square feet. The property is north of the J.B. Hunt corporate headquarters.
The purchase price for the office park equals $119.21 per square foot.
The ownership group consists of the Cosby Hodges Trust of Fort Smith, Graham Streett, a Russellville native now living in Texas, and Bennett Holdings LLC, managed by longtime Northwest Arkansas commercial real estate broker Clinton Bennett. Cosby Hodges is a longtime Fort Smith resident and businessman now living in Fort Worth, Texas.
Bennett, who recently left CBRE to open Bennett Commercial Real Estate in Rogers, will be the leasing agent and asset manager for the property. He said he hopes the investment illustrates how the new owners are “leaning into Arkansas” amid an uncertain time.
“This is our home, and the rest of the nation realizes what we have known for quite some time — we’re not just another tertiary market,” he said. “We are a community of entrepreneurs that are hopefully showing how powerful the spirit of cooperation and capitalism can be.”
The First National Bank of Fort Smith financed the purchase with a seven-year loan of $9.06 million. City Title & Closing of Fayetteville was the title agent.
Little Rock-based real estate investment fund CapRocq, through its Lowell Park Plaza Office Partners LLC, was the previous owner of the 8.8-acre office park. CapRocq is a family of real estate investment funds established in 2012 by co-founders Kevin Huchingson and Franklin McLarty along with partners Dewitt Smith and Ted Dickey. The fund now includes two additional partners — Mark Saviers and Isaac Smith — and is separated into CapRocq Core I, CapRocq Core II and CapRocq Auto. CapRocq I and CapRocq II include Arkansas individual and institutional investors.
“This portfolio was one of CapRocq’s first acquisitions in 2016,” Huchingson said. “It has consistently been almost fully occupied and was a great core investment for our partners. After four years, the time was right to exit, and we are pleased to convey to a local and capable group.”
Hutchingson, Steven P. Lane, and Butch Gurganus of Colliers International | Arkansas represented the seller in the transaction. Colliers will continue to manage the property for the new owner.
The three buildings had a combined occupancy of about 96% at the time of the sale. Tenants include Transplace, Banker’s Life, Mercy Behavioral Health, Rockline Industries, and the Rogers-Lowell Area Chamber of Commerce.
Transplace, one of the country’s largest third-party logistics service providers, is the largest tenant at the office park, occupying roughly 80,000 square feet. That space will be available next year. Dallas-based developer Cawley Partners started construction in March on a new 150,000-square-foot building along Interstate 49 in Rogers. The new building will serve as a regional operations center for Transplace. It is expected to be done in the second quarter of 2021.
“Transplace has been an asset to the region and this property, and we are thrilled that they have chosen to grow their footprint in Northwest Arkansas,” Bennett said. “We plan to continue to support them and to work cooperatively to assist them as they grow. We expect to support them in their transition to their new facility, and we are excited about the opportunity to play a role in the repositioning of their space when the time comes.”
The sale represents the second prominent transaction in Benton County for CapRocq in the past month. OZRE Capital paid $32.32 million in May for 20 buildings in the Village on the Creeks, a 40-acre commercial development along Interstate 49 in Rogers. CapRocq took ownership of those buildings in 2014.