Builders Still Flocking to Wal-Mart?s Back Door

Realtors in Benton County say the market for office lease space recently leveled off somewhat. But developers keep racing to open the next posh office complex that will cater to the area’s heavy retail and poultry vendor presence.

Bill McClard, Lindsey & Associates Inc.’s ace commercial agent in Rogers, said the local office lease space market is still great. But he is receiving fewer calls for space than he did a year to a year and a half ago.

“Not everyone is saying the market’s slowing down,” McClard said, “but there’s a fairly significant amount of space out there. I’d say there’s probably more than 100,000 SF of available office space in Benton County right now.”

Bentonville director of planning Troy Galloway said McClard is not the only Realtor to make that observation. The key is walking the line behind meeting demand and getting overbuilt.

So far from the building end, permit applications in Wal-Mart Stores Inc.’s hometown from August through January show about 70 permits for commercial structures. Galloway said that’s on par for the six months preceding.

“There’s not a noticeable slowdown in building,” Galloway said. “That doesn’t mean there’s not a slowdown in demand for lease space, but building is about what it has been.”

That news has not dampened the optimism of developer Kevin Harrison, project manager for BES LLC. His firm plans to build an 8.8-acre, 1 million-SF upscale office park directly across 8th Street from Wal-Mart’s Sam’s Club headquarters in Bentonville. The $80 million-$100 million project has financial backing from Elliot Spence and Michael Steinberg of New York.

The development has not yet received largescale development approval, but Harrison said 37 pieces of property have already been acquired at the site and most of the area has already been rezoned to commercial.

Bentonville Plaza’s preliminary plans include two eight-story office complexes totaling 400,000 SF, one 12-story, 500,000-SF office complex and a 200,000-SF hotel and convention center plus restaurants and retail spaces. There’s also plans for 1 million SF of parking.

The complex is surrounded on the east and west by Wal-Mart corporate parking lots. Harrison said the intention is not just to pull in vendors to Wal-Mart, but local physicians, dentists and other professionals.

“They’ll have quite a captive audience across the street there,” Harrison said. “How convenient would it be for people to just be able to walk across the street. We’d like to have restaurants and dry cleaners and other things like office supply firms there. We’ve met with Wal-Mart, and we’ve had quite a bit of interest from potential tenants.”

Harrison said he met with Wal-Mart to make sure the development could be pulled off without causing traffic stress in the area. He hopes to break ground as early as eight months from now. Targeted completion date is four to five years.

“A lot of business people are telling me they think this will be really beneficial for the city of Bentonville,” Harrison said. “What it will do is help take the city to the next level. Until now, most of the office space has been in strip malls scattered out around the city.

“What this project will do is to help revitalize downtown. It will help fight urban sprawl.”

Developers say only about one third of the vendors to Wal-Mart have established a presence in Northwest Arkansas. They expect another 1,000 more in the next few years. But right now, said Daniel J. Lewis, Arvest Bank of Bentonville senior vice-president of lending, that figure is hard to quantify.

“I can say that most of my customers have the space pre-leased before they even build,” Lewis said. “We’ve seen some vendors move around, and some taking larger spaces. But I don’t think our commercial clients are experiencing a problem yet.”