Unique mixed-use project begins in Bentonville — without WeWork

For the past few weeks, two large tower cranes have punctuated the skyline in downtown Bentonville. They’re often seen regularly in major cities but are a unique site in Bentonville.

It makes sense. To build something distinctive, you need specific tools. And there’s something distinctive coming out of the ground on South Main Street.

Construction work has started two blocks south of the downtown square on a 230,000-square-foot office/retail building, known as Ledger. The principals involved describe the structure as unparalleled in Northwest Arkansas.

It’s hard to argue that contention. Consider this: the six-story building’s exterior design will incorporate a 3,900-linear-foot bikeable and walkable path. The zig-zag switchback pattern will provide direct outdoor entry on every floor, with terraces that allow for open-air access.

Josh Kyles, the Bentonville developer, says the design approach is community-centric, giving pedestrians and cyclists access to the building. People working at Ledger will be close to the city’s arts, restaurants and surrounding trail systems.

“Our goal from day one was to provide Bentonville with a Class A workplace that goes beyond just an office building to connecting directly with the growing community in Northwest Arkansas,” Kyles said. “And construction continues to track on schedule despite the ongoing pandemic.

“The Ledger will be a business and community hub serving as the entrepreneurial heart of Northwest Arkansas.”

Kyles, through his Center City LLC, is the landowner (1.74 acres) and is leading Ledger’s development team. Nabholz Construction of Rogers is overseeing the construction with a building permit valued at $51.6 million. That amount does not include the construction of Ledger’s detached, eight-story parking garage with approximately 500 spaces. The first floor will be reserved for public use.

Marlon Blackwell Architects of Fayetteville and WeWork architects Christian Callaghan and Haruka Horiuchi handled the design work. Cushman & Wakefield/Sage Partners in Rogers will lease and manage the project. It’s planned to open in early 2022.

Kyles did not disclose a value for the project or additional partners with Center City. He said funding is coming from nontraditional financing and private investment.

WEWORK INVOLVEMENT
New York-based co-working giant WeWork announced the Bentonville project — to be its first in Arkansas — in April 2019 as an investment partnership with Kyles. The official announcement was made at an invitation-only panel discussion at the downtown Bentonville event venue Record. Gov. Asa Hutchinson, Bentonville Mayor Stephanie Orman, Greater Bentonville Area Chamber of Commerce CEO Graham Cobb and WeWork co-founder Miguel McKelvey led the conversation.

Since the announcement, a lot changed at WeWork. Founded in 2010, the company enjoyed a mostly meteoric rise, but 2019 was challenging. The company went through a failed initial public offering (IPO) in the fall, and co-founder Adam Neumann was ousted as CEO and chairman.

Following those two events, the embattled company’s new leadership has reduced its massive lease liabilities. Just last month, the Wall Street Journal reported WeWork sold control of its China business, the latest sign that the company is abandoning its former rapid growth approach and looking to reduce risk.

That drawdown strategy impacted its Northwest Arkansas plans, and WeWork is no longer involved with the development. The company and Center City worked together on the project design, but the building will be operated and managed locally.

“In streamlining our portfolio towards profitable growth, we have reached a mutual agreement with our Center City partners for the project to move forward without WeWork’s involvement,” the company said in a statement. “We remain committed to Bentonville through the launch of WeWork Labs in the historic Massey Building downtown and look forward to seeing the Ledger succeed.”

WeWork Labs is the company’s global startup incubator program. It launched in Bentonville in late October.

Kyles said it was an amicable decision for the two sides to go their separate ways.

“We started this project over four years ago before WeWork was involved,” he said. “We had a great collaboration on many parts of it. We’ve got a great relationship with them. They’re just changing what they do.”

WORKPLACE DEMAND
Ledger will provide flexible, on-demand and traditional workspace for tenants ranging from corporate offices, flex startups and growth-stage companies.

“Our goal is to be there for anybody from one person to 1,000 people,” Kyles said. “I think that’s been underserved. If you were a small office, your options were not nearly as versatile. We saw that with other projects done [in Bentonville] that were never meant to be offices but ended up being multiuse as offices or meetings for one or two people. We want to feed that market.”

Marshall Saviers, president of Cushman & Wakefield/Sage Partners, said the firm will have a targeted marketing campaign to ensure the building has a good tenant mixture. He said the region’s growth, particularly in Bentonville, is feeding demand for workplaces that can connect businesses with their communities.

“The great thing about Northwest Arkansas is there are different things for everybody, depending on how they want to work and where they want to work,” he said. “We’ll focus a little bit less on [marketing] this building itself and more on the surroundings. But in the case of the Ledger, you’ve got a great building to market, as well.”

Sage Partners is the property management and leasing division of Hunt Ventures in Rogers, led by billionaire developer and philanthropist Johnelle Hunt. The firm is behind many of the recent and ongoing large-scale office projects totaling nearly 750,000 square feet in Benton County, including Rice Office Complex, Hunt Tower, Northgate Plaza and Founders Plaza.

“People want to be around more amenities with better access to them. The Ledger qualifies for that, and so does Rice Office Complex and the buildings in Pinnacle Hills [in Rogers],” he said.

Saviers added that the COVID-19 pandemic had not disrupted the region’s office market.

“There’s a lot of construction going on right now, but a lot of it is founded,” he said. “If you look at what’s going on in Pinnacle Hills, the [office] space that’s being built is being occupied fairly quickly.”