Colliers International of Bentonville and Little Rock is developing a retail center and neighboring three-story office building on a prime piece of commercial real estate near Pinnacle Country Club in Rogers.
Investors, including the LaFrance family of Little Rock, are hoping to take advantage of the region's tight market for upscale offices, especially those upward of 10,000 square feet.
The $20 million project is on the Pauline Whitaker traffic circle, by a Wal-Mart Neighborhood Market and near the entrance to the Pinnacle subdivision, which Colliers is billing as "the premier address in Northwest Arkansas." It's also close to billionaire Johnelle Hunt's 10-story, 240,000-square-foot office tower, half of which is already leased. That project is underway by Hunt Ventures, the development company owned by Hunt, the widow of trucking magnate J.B. Hunt.
The 80,000-square-foot office building Colliers is developing also is half-leased, said Colliers' Isaac Smith, who is overseeing the project from Little Rock.
"There's not a lot of inventory in Northwest Arkansas," Smith said Tuesday.
A research and forecast report put together by the Colliers office in Bentonville shows there was a 9.3 percent vacancy rate for all office space in Northwest Arkansas in the third quarter of this year. Of the 10.4 million square feet of office space available, just 1 million was unoccupied.
Almost 900,000 square feet of new office space is being marketed or under construction, the Colliers report said. The majority of space is high-end, known as Class A in the west Rogers submarket. This type of space goes for roughly $20 per square foot.
High-end office space is scarce, said Marshall Saviers, a partner with the Fayetteville office of Sage Partners.
"A lot of the buildings that were originally built here were built for smaller tenants," Saviers said. "When companies grow, they want to have most of their employees on one floor and have some amenities in the area." The area of Pinnacle Hills Promenade -- where everything from a steak dinner or smoothie to a new suit and a haircut is available -- is across from Interstate 49.
Colliers is involved as a third-party developer working with a group of investors. Smith would not name any of those backing the project, but public records show the LaFrance family, headed by its late patriarch Stephen LaFrance Sr., bought the 9.41-acre site about a year ago. LaFrance founded the USA Drug chain of pharmacies and later sold it to Walgreen Co.
Half of the Colliers-built office building will be occupied by Acosta Mosaic Group, an outsourced sales and marketing agency that serves consumer packaged-goods companies and retailers, such as Bentonville-based Wal-Mart Stores Inc.
Hunt's tower is scheduled for completion in less than a year. The retail and office buildings by Colliers are expected to be available sometime in the second quarter of 2016. Smith said no leases have been signed on the retail space, though "there's been lots of activity." The remaining half of the office building will be available in sizes as small as 5,000 square feet. There's room for as many as five different companies, Smith said.
The company will erect the two buildings simultaneously to save on construction costs and will break ground Jan. 12, Smith said.
Both buildings will have protruding entrances, and the interior will incorporate porcelain tile and cedar-plank siding.
"I'm trying to keep this neat and professional but not over-designed where it will be dated or where people will think it's too expensive and not in line with the market," Smith said.
The developer has scratched plans for a third building for professional offices that was to be 12,000 square feet. Site work on the 1.5-acre plot reserved for that building will be done and the land offered for sale, Smith said.
Business on 12/24/2014