Central Arkansas Retail Holding Pattern Reflects Transitions In Market

Occupancy in the Central Arkansas retail market declined to 94.3 percent during the first quarter compared to 95.1 percent a year ago.

Vacant space tracked by the Central Arkansas Commercial Data Exchange totaled 1.2 million SF during the first three months of 2017. Total space among the 426 retail projects in the market: Nearly 21.3 million SF.

In 2015, the vacancy rate rose to 6.3 percent after reaching 5.2 percent during the first quarter of 2014.

“There’s just not a whole lot of excitement going on with retail,” said Mark Bingman, executive broker and vice president at The RPM Group in Little Rock. “The vacancy and absorption rates are relatively flat for the last three quarters.

“Everybody seems to be kind of in that holding pattern, which is not a bad thing. I’m saying that as a positive.”

Retail redevelopment plans are still shaking out for a 16.2-acre tract in midtown Little Rock. For now, the property at the northwest corner of University Avenue and Interstate 630 is home to Doctors Plaza, Sears Auto & Tire Center and former Sears store.

All three buildings are anticipated to go the way of the wrecking ball as early as next year to make way for new retail construction.

“Everybody’s talking about internet sales and how brick and mortar will no longer be relevant,” Bingman said. “The demand may be slowing down, but there will still be a need for structures.”

Build out of new retail projects continues in Benton, west Little Rock and Conway.

GBT Realty Corp. of Brentwood, Tennessee, is moving toward a Labor Day opening of its 170,000-SF Shoppes of Benton. Among the lineup of tenants at the $36 million project are TJ Maxx, Hobby Lobby, HomeGoods, Ulta Beauty, Rack Room Shoes and Texas Road House.

At the Little Rock’s Gateway Town Center, construction of the $3 million Creek Plaza, a 14,500-SF retail project has joined building activity on two neighboring developments: the $9.8 million Movie Tavern and $9 million Tru by Hilton Hotel.

The 11-screen, 46,000-SF dine-in movie destination will join the nearby Dave & Buster’s that opened last summer, expanding Gateway’s entertainment offerings.

At the $65 million Lewis Crossing in Conway, Collett & Associates of Charlotte, North Carolina, is rolling out more pieces of the 441,871-SF project.

Hideaway Pizza and Red Robin are starting work on their stand alone buildings, while Success Vision, T-Mobile and Rita’s Italian Ice are set for finish-out work. Construction of David’s Burgers, another stand alone building, waits in the wings.

“The retail market is a little bit tame,” said Jeff Yates, managing partner at ARK Commercial & Investment Real Estate of Little Rock. “I’d like to see more activity.”

Road work and other infrastructure construction should be completed this year in support of the proposed Shoppes at Central Landing in Conway. While the city’s $28 million in improvements winds down, the redevelopment timetable of the municipal airport property remains fuzzy.

Jim Wilson & Associates LLC of Montgomery, Alabama, is championing this drawing-board project envisioned as a 750,000-SF lifestyle center anchored by a 100,000-SF Dillard’s.

“With the proliferation of online sales, it’s affecting a lot of big boxes and traditional purchase order retailers,” said Greg Nabholz, senior managing director at Newmark Grub Arkansas. “You see increasingly store closings and consolidation.

“My question is: Are there retailers who will come in to fill the gaps. As the dominos fall, how does that translate? The projects that will have greater success will be integrated into a mixed-use format. Where you have growth in the market are service-type retailers.”

Five of the largest retail transactions in the market during 2016 included:

• The 296,000-SF McCain Plaza at 4200 E. McCain Blvd. in North Little Rock, $23.1 million.

• The 90,000-SF Colony West Shopping Center at 10300 N. Rodney Parham Road in Little Rock, $7.1 million.

• The 60,148-SF Midtown Center 105 N. Rodney Parham Road in Little Rock, $6.2 million.

• The 17.2-acre site for a Lowe’s home center at the northwest corner of Kanis and Bowman roads, $6.1 million.

• A 13,536-SF CVS Pharmacy at 8902 Geyer Springs Road in Little Rock, $5.7 million.

As the retailing landscape keeps shifting, property managers are turning to shop alternatives to replenish rent rolls and boost occupancy.

“We’ll see non-traditional uses continue to fill vacant spaces,” said Brooke Miller, partner with Little Rock’s Flake & Kelley Commercial. “Instead of retail, medical clinics, school, and interactive entertainment concepts are backfilling empty boxes.”

CENTRAL ARKANSAS RETAIL OCCUPANCY

Information reflects most up to date quarterly data available at time of publication. Figures provided by Xceligent.

See more of the 2017 Arkansas Business Office / Retail / Industrial Lease Guide.