Arkansas’ largest commercial real estate and development firm has scooped up nearly 9 acres of prime real estate in Bentonville, with plans to capitalize on Northwest Arkansas’ resilient real estate market in the face of a global pandemic.
Colliers International Arkansas, which has offices in Little Rock and Rogers, has a redevelopment plan to transform a blighted parking lot on Walton Boulevard into a $9 million commercial development.
Redbud Holdings, a limited liability company, comprised of several entities including Colliers investors and members, closed a deal Oct. 30 to pay $3.4 million for the 8.68-acre site at 1001-1005 S. Walton Blvd.
For nearly a decade, the decrepit concrete parking lot at that address has sat empty and weed-infested. Previously, it was home to George Nunnally Chevrolet. The dealership left Walton Boulevard for a new Bentonville location on Moberly Lane in July 2011.
Square Deal Capital Inc. of Oklahoma City paid $2 million for the vacant site in November 2016, part of a $56.8 million purchase that included the nearby Bentonville Plaza nine-story office building and 16 additional acres.
Alan Cole, a principal broker at Colliers’ office in Rogers, and Bradford Gaines, the firm’s director of development based in Little Rock, lead the redevelopment and leasing efforts. Cole, a veteran of the Northwest Arkansas commercial real estate market, said when the opportunity arose to acquire the property situated along Bentonville’s main thoroughfare, Colliers moved quickly.
According to the Arkansas Department of Transportation data, average daily traffic in 2019 along South Walton Boulevard was about 25,000 vehicles.
“Having worked in this market for a long time, there’s been an obvious tract of land along Walton Boulevard to develop. And it was this piece,” Cole said in a recent interview. “We knew there would be a significant amount of interest in this property.”
Gaines joined Colliers last year, bringing extensive construction and development experience to the firm. The Redbud project is his first in Northwest Arkansas. He will focus on managing contractors, negotiating with vendors and analyzing bids to bring the project to life.
“There’s much value pent up on this site, and we’re excited to unlock it and help revitalize this section of Walton Boulevard,” he said.
Colliers’ development services division assists clients with everything from initial site selection to final tenant move-in, managing ground-up construction, exterior building enhancements, interior renovations, and pre-development on behalf of third-party clients.
Colliers’ project management is a complementary component of the firm’s brokerage and property management services, which expand its ability to serve clients statewide.
Colliers’ redevelopment plans include dividing the property into six lots, five of which will be buildable commercial lots. Gaines said utility and infrastructure work should start by the end of November, and construction should begin in the spring.
The existing tract will be filled and graded to include utility services, curb cuts and storm water detention.
“The storm water challenges at this site were pretty significant,” Gaines said. “We worked with the city and the Corps of Engineers and third-party consultants to get it out of the flood plain and [make it] buildable and ready to go. There was a spiderweb of utilities throughout the property. We will relocate those, and each lot will have utility services.”
Dan Weese, an engineer with the city of Bentonville, said the floodwater concerns extended to a neighborhood that borders the Nunnally lot to the east. He said solving the problem was an example of a great public/private partnership.
“Not only are [the developers] taking care of their own floodwaters on site, but they’re allowing the city to use part of those basins to take care of flooding [concerns] in the neighborhood,” Weese said. “It’s a win-win for everybody. The developer wins, city wins and the neighborhood wins.”
Gaines said there will be two curb cuts off Walton Boulevard and a cross-access drive that feeds into Southwest Redbud Street on the site’s northern boundary.
Bentonville firm HFA is the civil engineer and S&K Dirtworks of Rogers is the excavating contractor. First National Bank of Paragould is financing the infrastructure work.
Two lots are already under contract. On the north end of the property, at the intersection of Walton Boulevard and Redbud Street, Missouri-based Sterling Bank will build a multistory banking center on 1.7 acres. It will be similar to other large-scale projects the bank is planning in Rogers and Fayetteville.
Sterling Bank, a $1.24 billion-asset lender headquartered in Poplar Bluff, filed a development plan in August with the city of Rogers indicating a 16,000-square-foot banking center near Aloft Hotel on South 52nd Street. The company recently broke ground on a similar project on Steele Boulevard in Fayetteville.
The buyer for the second lot under contract, a 1.12-acre site, is undisclosed. Gaines said it’s a nationally-known quick-serve restaurant that’s new to the market.
On the southern end of the tract, Colliers will develop a 1.43-acre lot to include an 11,000-square-foot retail strip center. Cole said another “very recognizable” quick-serve restaurant will anchor that building with an end cap space.
Gaines said Colliers will use its national platform and network for marketing the remainder of the property to qualified buyers and users. He said having two lots under contract gives the redevelopment some early momentum.
Cole said despite the prevailing issue of the national economy due to COVID-19 or other uncertainties, Northwest Arkansas remains an attractive market for commercial real estate development.
“The businesses that have lots under contract are each coming in from outside the market and spending millions of dollars to buy and develop their property,” he said. “And they [plan] to build multiple sites in the market. If it was just one town that was doing well, they might not have the confidence to make that decision.”
Paul Hendershot is the director of market analytics for real estate data firm CoStar Group. He said there are a number of strong economic indicators that are keeping the retail market moving forward this year in Bentonville.
“The unemployment rate is currently 5.2%, from a peak of 7.1% in April,” he said. “The city’s economy has been remarkably resilient, adding 1,700 jobs since the trough in April. That’s 7.2% growth. Retail rents are holding steady as well, starting the year at $15.74 and currently reporting $15.86.”
Hendershot said since 2015, retail rents in Bentonville have increased by 10%. Strong leasing in the third quarter kept the vacancy rate in check at 5.3%.