Big Boxes Aim For Fort Smith

Forget manufacturing. Fort Smith’s commercial real estate sector, especially for retail business, is becoming a hot commodity.

In the next two years, there are plans for four major projects on 160 acres with more than 684,000 SF of buildings.

Target is entering the Fort Smith market, Wal-Mart will build its third Supercenter, Azalea Square is booking tenants, and downtown riverfront development is attracting investors.

Although voters rejected bond issues in May that would have provided money for a $20 million sports complex along the riverfront and a $22 million city hall on the west end of Garrison Avenue downtown, developers are still positive about Fort Smith.

“We have the infrastructure in place to grow significantly,” said Jim Nunnelee of Nunnelee Commercial Properties in Fort Smith. “Now whether we will or not, I’m not sure because I think we’re doing the right things … But I’m very positive on the future of Fort Smith. It’s going to grow. It’s not going to boom. It never has. It’s never been a boom town, but it’s never been a bust either.”

Land sales due to the forthcoming development are up, and that’s a precursor to additional development, he said.

That’s good news for the city’s economy. While manufacturing jobs are leaving town, bringing in retail centers is one way to make Fort Smith attractive to investors.

“We keep hearing in the news like everybody else that people around here are scared [economically], but if they’re scared, they’re sure not showing it with their money,” Nunnelee said, referring to investors.

Riverfront Blues

It’s largely one company’s push to turn Fort Smith’s riverfront into a tourist attraction. The Westphal Group of Fort Smith, headed by Bennie Westphal, has been filling in his one-mile, 72-acre tract of property along the river to get it above the 100-year flood plane. Now he is ready to solicit interest in development.

“Right now, we’re in concept mode,” said Wayne Phillips, The Westphal Group’s chief financial officer.

The major aspect of that concept is a casino.

In March, it became public that Westphal had sold 10 acres of land to the United Keetoowah Band of Cherokee Indians to build a $135 million riverfront casino. The UKB filed an application with the Bureau of Indian Affairs to have the land granted as trust land, an off-reservation site. The application is still in the works and could take up to three years to process, Gary Garrison, a public affairs official with the BIA, told the Northwest Arkansas Business Journal in March.

If the BIA grants the land as trust land to the UKB, a 47,500-SF casino and a 250-room hotel could soon be built.

Those for the casino say it would bring in tourists and boost the city’s economy. And they say with casinos already in Pocola and Roland, Okla., which are about 20 minutes away from Fort Smith, the argument that it would bring in crime and immoral behavior is irrelevant.

“You could take a piece of paper and write up all the problems that come with casinos, and we’ve got them right now,” Nunnelee said. “And on the other side of the ledger you list all the benefits, and we don’t have any of those. We have all the problems and none of the benefits.”

Westphal’s proposition is to have 7.5 percent of the casino’s revenue go to the city and 7.5 percent go to the state, Nunnelee said. “That could turn a lot of money.”

It could actually bring in about $6.6 million to each the city and state in the casino’s first year of operation, according to a November study by The Innovation Group of New Orleans. The study shows the casino’s net revenue in its first year (for example 2007) would be $88.5 million. In 2008 it would be $90.6 million, and by 2011 it would be $96.1 million.

The hotel/casino is just one of the development ideas The Westphal Group has in mind for its master plan for the riverfront. Other ideas include residential condominiums, an art museum, boardwalk and riverboat dock, four-story commercial office condominium tower, pedestrian mall, and restaurants (see map here).

“There is very strong interest in developing the riverfront,” said Ray Gosack, co-acting city administrator. “Both the city and the Chamber have identified riverfront development as top priorities.”

But Fort Smith leaders said they suffered a setback on May 23 when voters rejected bond issues that would have paid for a $20 million sports complex along the riverfront and $22 million to build a city hall downtown. But the city feels it’s one way to connect the tourist dots. One tourist attraction will lead to another and another. Tournaments lead to out-of-town visitors who will eat and sleep in the city.

Claude Legris, advertising and promotions director of the Fort Smith Visitors Bureau & Convention Center, said having the sports complex host tournaments would generate about $6.6 million to the city annually, compared to $2.2 million that tournaments currently bring in.

“It’s a whole lot more than ball fields,” Legris said, referring to the proposed sports complex. “That’s all anyone wanted to talk about was ball fields. There’s so much more to it.”

The city hall project that was also denied would have anchored the west end of Garrison Avenue, a section that the city felt was due for a facelift. The west end of the avenue was revitalized in the late ’90s.

“What’s happened at the west end has not found its way to the east end because of the distance between the two,” Gosack said. “So one of the benefits of the city hall is that it could energize development at the east end of the avenue and bring stability.”

Gosack said he’s heard that Fort Smith is one of the largest cities in the nation without a city hall. Currently, the city leases space in the Stephens Production Co. building on the west end of Garrison Avenue.

But city leaders aren’t deterred from moving ahead with development ideas for downtown or on the riverfront, and they say neither are investors.

“We continue to get our act together,” said Jayne Hughes, director of downtown development for the city. “It was disappointing that it happened, but there’s a lot of things we’re working on downtown. Investors are still interested in investing.”

On Target

In May, Target Corp. signed papers to anchor the Fort Smith Pavilion — a 478,000-SF retail center on 52 acres, Phillips said.

Located at the corner of Old Greenwood Road and Phoenix Avenue in south Fort Smith, the Pavilion would have a total of 20 speculative buildings. The construction and land cost is estimated at $40 million to $50 million, he said.

Nunnelee, who represents the property owners (one of whom is Westphal), said the land should be handed over to developer Merchants Holding Co. of Mission, Texas, in June. He said construction should begin late this year, and it would take 12 months to finish.

The Target store would be about 127,000-SF and would anchor the retail center, which also includes other prospective retail stores like Belk Department Store, PetSmart, Kirkland’s, Marshalls and Chicos. Restaurants considering the Pavilion are Buffalo Wild Wings, Texas Roadhouse, Starbucks, Up the Creek and Ruby Tuesday.

Also interested in making moves are Old Navy, Best Buy and Books-A-Million — all of which have current locations in Fort Smith. Phillips said he wasn’t sure if they planned to move or open a second location.

Azalea Seeds

Nunnelee and Westphal seem to have their hands in every major development in Fort Smith. And Azalea Square is another one. Nunnelee is the developer, and the property is owned by Rogers Avenue Properties LLC, in which Bennie Westphal is a partner.

Located on Rogers Avenue near Interstate 540, it’s one of the only places left to develop along that avenue.

“Interest is picking up, and that’s a prime spot at Rogers Avenue close to the interstate,” Phillips said.

The property is home to several small retail buildings, which will be demolished, he said. The Sheraton Hotel was located on the property but was demolished after it closed in June 2003. Since then, there’s been a buzz about what would be developed there.

In May, Johnny Carino’s Italian restaurant announced its plans to open in one of the two restaurant pads slated for Azalea Square. The restaurant will be 5,800 SF and seat about 200, said Charlie Mercer, vice president of construction and design for Fired Up Inc., Johnny Carino’s parent company based in Austin, Texas.

The project’s estimated cost is about $2 million, and it should be open by the first of next year, Mercer said.

Rogers Avenue Properties is in talks with other restaurants to occupy the second pad, but Phillips declined to say who they were.

Staples Inc., the office-supply company, signed a letter of intent to build a store to anchor the 10-acre site, Phillips said. Nothing has been finalized so no plans have been drawn, but a representative from Staples said its prototype store is 20,000 SF. They declined to say how much it would cost to build.

Nunnelee said besides a big-box retailer and the two restaurant pads, there might be room for an additional 100,000-SF of spec buildings. Phillips said they’re looking at an offer from a hotel developer to build on the east corner of the site.

Construction of the shopping center should begin at the end of the year, Nunnelee said.

Wal-Mart

Wal-Mart Stores Inc. has made plans to open a third Supercenter southeast of Kelley Highway and Interstate 540, Gosack said. The plans are for a 180,000-SF Supercenter to be developed on 20 to 25 acres of land.

Tapp Development Corp. of Edmond, Okla., is the developer. Jim Tapp, president and CEO of the company, was not available for comment. But according to news reports, there are plans for retail development on a combined 60 acres, including the Supercenter.

But the development is progressing slowly because studies indicate the Kelley Highway bridge wouldn’t be able to accommodate the traffic generated by a nearby Wal-Mart.

Last year, the city agreed to pay $1.5 million of the total $4.5 million to widen the bridge from two to four lanes. Gosack said they’re waiting on the state highway department to approve the plans, and then construction on the bridge should begin at the end of the year and take a year to complete. After the bridge is built, Wal-Mart will start construction, which should take about eight to 12 months to complete.