Commercial Agents Poised for Land Rush, Growth in Johnson

Squeezed from the top and from the bottom, the city of Johnson might just do what real estate agents want it to do — explode in a land rush from Willow Creek Women’s Hospital eastward along Johnson Mill Road and Main Drive.

Only time will tell if that happens, but the pieces are in place to at least make that a possibility. Blessed with a new road, plenty of undeveloped green space, Northwest Arkansas’ sizzling economy, and two neighbors bulging at the seams, Johnson appears ripe for development.

At least $29.5 million in commercial real estate is listed, a figure that includes the headliner, James at the Mill and the Inn at the Mill, the restaurant-hotel complex recently brought to market for $6.9 million by Red Tree Real Estate Group of Rogers.

Another property, 11.5 acres on Interstate 49 just north of Willow Creek, was listed for $4.5 million but the listing recently expired. However, all the old cars were cleared off the lot through auction, and agent Phil “Gumbo” Madison of Lindsey & Associates said the property could come back on the market soon.

While the mill and the development potential of 11.5 acres on the interstate represent big pieces of the puzzle, they are only pieces. Sage Partners, RG Real Estate Services, CBRE, Flake & Kelley and Coldwell Banker Harris McHaney and Faucette also have commercial listings in Johnson.

And with talk of retail, office, medical and hospitality uses, the dominoes are seemingly in place.

“Sometimes it just takes one deal to kick off an entire area,” said Matthew Greer, a principal at RG Real Estate Services, which, between Willow Creek and Hawk’s Landing in Johnson’s central business district, has $5.7 million in listings.

Known as the sleepy town between Fayetteville and Springdale, the two largest cities in Northwest Arkansas, Johnson is not a stand-alone like Prairie Grove, but rides piggy back on its neighbors.

The Don Tyson Parkway and Arvest Ballpark in Springdale, and the extension of Van Asche Drive and an upcoming multi-use development on Joyce Boulevard by Specialized Real Estate Group in Fayetteville, are just some of the developments that feed into the sales pitch for Johnson.

“Everybody sees development at their interchanges, and it looks like [Johnson] is in the path of growth,” Greer said. “We hope it blows up.”

 

A Place to Go

Up until August, when the $9.8 million Johnson Mill Road opened up, Exit 69 wasn’t ready for development. But the new road, a three-lane leading from I-49 to the Tyson Foods Inc. headquarters, has made the area much more appealing for investors.

“The reason it’s been slow to develop is that the road was not ideal for commercial traffic,” said Tommy Van Zandt, a managing partner with Sage Partners of Fayetteville. “It’s a good location now for many different reasons.”

Sage has three listings in the area, one of which is a 9-acre parcel just east of the mill. It’s listed for $3.1 million, and its owner, Small Mountain Group LLC of Fayetteville, can afford to wait for the right buyer.

Prior to the new road, interest in the Sage parcel was for residential purposes. But in the recent past, a retail center, Shoppes at the Mill, has filled up, and the TownePlace Suites by Marriott sold for $4.7 million.

Now, the intersection has more of a commercial flavor, and Small Mountain Group is looking for an appropriate suitor.

“Obviously, the landscape has changed for Johnson,” Van Zandt said.

The apparent inevitability of Johnson’s development is underscored by the growing trend of national investors making big plays here in Northwest Arkansas. Just recently, Massachusetts-based Senior Housing Properties Trust bought Culpepper Place facilities in Springdale and Fayetteville for a combined $31.2 million. And in February, Pennsylvania-based GMH Capital Partners bought the Sterling Frisco student housing development in Fayetteville for $49 million.

“There’s a lot of money in the economy that’s looking for a place to go,” Van Zandt said. “That’s not just local, but national.”

Van Zandt said he wasn’t really surprised the mill went up for sale. With prices going up and CAP rates going down, and with so much activity in Northwest Arkansas, if you own commercial property, you have to at least consider a deal.

“Why wouldn’t you look at your property and say, ‘Wow, this might be a good time to sell,’” he said. “Why wouldn’t the owner of commercial real estate think about selling?”

 

Hospitality, Offices and Retail

If the listing documents are any indication, Miles James is looking to sell the mill to an individual or group that wants to continue operating the property as it is.

In its listing documents, Red Tree Real Estate Group says there is room to expand the total footprint, perhaps by 40 rooms, and even purchase the adjoining 4.1-acre parcel just north of the mill.

A new owner could convert 2,000 SF of office and storage into a corporate meeting space to generate new income. Red Tree also says there’s a lot of work to be done in regard to branding the property.

“Management believes that opportunity exists for additional marketing within the social media and print advertising categories, beyond what is currently being done,” reads the listing package. “There is also room for more intensive cross-promotion targeted at getting the inn’s guests to frequent James at the Mill.”

For Johnson Mayor Chris Keeney, that’s music to his ears.

“It’s been there so long, I can’t see it as anything else,” Keeney said. “I hope whoever buys it runs it the way it is.”

Clinton Bennett, a broker with CBRE in Fayetteville, has the listing for the 4.1-acre tract adjoining the mill on the north. He said there are no firm plans in place as of yet. But he said he’d like to attract an investor who wants to build office space there.

Interest from clients in the 10,000- to 20,000-SF range is strong, Bennett said, and the property is large enough to accommodate multiple buildings.

“We’ve had a few conversations with people,” Bennett said.

Evaluating Exit 69, Bennett said he’s not so sure the recent interest has a whole lot to do with Johnson.

“This is I-49 play just as much as it is Johnson play,” Bennett said.

Meanwhile, across the street from the mill sits the Maverick Commercial Park. The listing is controlled by Jessica Dearnley, a principal broker with Flake & Kelley.

In April, Jim Phillips, head of the Springdale Liquor Association, bought Lot 9 for $475,000. And according to records from the state Alcoholic Beverage Control Board, a liquor store is supposed to open there.

As the Phillips development creeps forward, Dearnley is busy marketing Maverick’s eight remaining lots.

“We’re reaching out to national retailers and trying to educate them,” Dearnley said. “I’ve been working on letters of intent.”

Even though traffic counts have risen to 70,000 vehicles per day along the Johnson leg of I-49, and even though, according to Dearnley, exit 69 is within 7 miles of more than 60,000 households with an average household income of over $61,000, those numbers might not be enough to convince investors to come to what, in comparison to places like Dallas and Kansas City, remains a small market.

“That’s our biggest challenge, to convince them to locate here,” Dearnley said.