What’s Happening?
November 2-8, 2015
Commercial Real Estate around Central Arkansas
By Jeff Yates
Jeff@ARKCIRE.com
Fall is conference season. I think a person could attend a conference every week from Labor Day to Thanksgiving. Maybe it is that way year-round and I haven’t noticed. I’ve talked to others this month who tell me that there are so many professional conferences this time of year that they have to pick between them. Not only are there too many to attend, some are the same week as others. I’ve attended a few this fall, and they’ve all been productive and informative.
One of the common topics heard at these conferences is demographics and the effect Millennials are having on every part of the economy. This column has noted previously that Millennials are being largely credited with the wave of new apartment construction. Little Rock has seen, and still is seeing, that wave of new apartment homes. Additionally, apartment complex sales continue to be the going trend. There was a group of pretty hefty apartment sales this month. The Reserves at 1912 Green Mountain Drive sold for a cool $19,000,000. With 337 units at the property that works out to be a little over $56,000 per unit. At 1602 Green Mountain Drive, $9,000,000 bought 239 units at Pleasant Pointe. At just under $38,000 per unit it seems like there might be some room in the price for new investment. Nearby 1502 Green Mountain Drive traded for $9,000,000, also. That bought only 211 units though at the Valley Crossing complex. And The Berkley apartments on Shackleford Road sold in October for $12,750,000. That’s almost $50,600 per unit for the 252 units in the community.
These apartment homes all appear to have been purchased by the same group. All the properties now carry a billing address to Monarch Investment & Management in Franktown, CO. Based on past comments from neighbors, and the plentiful incident reports by the LRPD, I imagine many in Little Rock hope that the folks at Monarch will make some operational changes at these apartment communities. Maybe the new owners will invest in some physical improvements also. Contractors take note …
Across Shackleford Road from The Berkley, the building housing Ten Fitness has a new owner. Formerly Powerhouse Gym, and before that (and before my recollection) the building housed a Jim Bottin’s. Bottin continued to own the building in the intervening years and it was Bottin that sold the building this month for $1,165,000, or approximately $115 per square foot. We noted a while back that the building next door had sold. It is now the home of McGhee Insurance. This activity along Merrill Drive leads to wondering what will happen to the property across the street when the BMW dealership relocates. A brand-spanking-new BMW showroom is under construction on Colonel Glenn Drive. The pay for this column doesn’t cover investigative costs. So we haven’t made time to inquire about plans for the current BMW location, or if Volvo is also moving. If anyone that knows wants to share the plan we can address that in a future column.
It being near Halloween as this column is written, it seems fitting to mention that just a little up Shackleford Rd about a half-block is what some might refer to as a zombie. A zombie, as in a business still operating but seemingly on the way to certain demise. That zombie is the Kmart at 10901 N. Rodney Parham. Kmart bought, or merged with, Sears in 2004. The passing years have not seemed to improve the outlook for either brand. This column has previously noted that Sears Holdings is reported to be notoriously difficult to deal with. Earlier this year Sears raised $1.4B in capital by spinning off some real estate holdings into a real estate investment trust (REIT) called Seritage Growth Properties. Don’t count on the changes in ownership structure of Sears real estate to make a difference at the Rodney Parham Kmart. The building at 10901 N. Rodney Parham is a leased property. The Sears on S. University is also a leased property.
According to the CDX Retail Market Trends report published by Xceligent with review by a local advisory board of retail property practitioners, vacancy is low. The vacancy rate of retail real about 5%. In other words, most of the space in shopping centers and retail buildings is leased. Many of the spaces that are vacant have been vacant for a while. The reasons heard for that vary. Some were built in a way that is not currently popular, or are less practical than others. Another common theme from some of the larger retailers is a desire to be near Interstate highways, or at least highways in general. What’s the point you ask? The point is that it very well may be time for the Kmart to be redeveloped. Perhaps some of the other properties along the urban highways of Little Rock may soon be redeveloped, some of those properties might even see a use change. Circling back to the Millennials and looking at the redevelopment of downtown and the redevelopment of midtown, it seems logical that redevelopment of what I’ll call near-west might be next, especially the area along Interstate 430. Near-west in my mind is the west side of town from around St. Charles back to the east to midtown. I think the lines vary depending on who you ask. There are some folks that think Mississippi Street is on the west side of town.
Tips and suggestions, well most of them anyway, are appreciated. Hope you found something interesting in the column this month. Check back again next month for the things that didn’t get included here this time and that pop up between now and then.