Make a move: the unprecedented level of commercial real estate activity in Northwest Arkansas means there's never been a better time for companies to reassess their office space needs

DSN Retailing Today, Sept 12, 2005

Italian apparel manufacturer and distributor GMN was in an enviable position earlier this year when it chose Northwest Arkansas as the location for its first office in the United States. After exploring the area, the company decided Bentonville Plaza--across 8th Street from Wal-Mart's home office--was the optimal location given the nature of its business.

"We needed to have a showroom near Wal-Mart's headquarters. Our business will be exclusively with Wal-Mart buyers so it was the best location we could find," said a spokesperson for GMN. The company's 2,400-square-foot office and showroom on the third floor of Bentonville Plaza opens this month. "We are very happy to be there and hope to have a very good business," she added.

These days, suppliers to Wal-Mart have reason to be happy, whether they are establishing a presence in the area, as is the case with GMN, moving to a new location or committing to additional space at an existing location. The bottom line is that construction of new office buildings has added capacity to the marketplace and given Wal-Mart suppliers and other businesses the opportunity to find space that satisfy not only their basic needs but also add desirable amenities.

"It is a great time to be a tenant in need of space because they now have a lot of choices similar to what they would have in a larger market," said Tommy Van Zandt, marketing director with Bentonville Plaza.

For example, in addition to Bentonville Plaza, which opened last October, other major office developments have opened recently or are expected to within the next 12 months. The Pinnacle Group's new project, The Shoppes at Pinnacle Hills, near the Embassy Suites, will be ready for occupancy this fall and will eventually offer approximately 200,000 square feet of office space blended with retail and restaurants.

Fountain Plaza, a project of Colliers Dickson Flake Partners, is located on the south side of Walton Boulevard at the intersection of J Street. The site for the 46-acre development shows a complex of 23 single- and multiple-story buildings and a mix of commercial uses. The firm has a larger-scale project in store for next year when it opens Superior Commercial, a nearly 400,000-square-foot, four-floor office complex on Moberly Lane.

The availability of new space offering amenities such as retail and restaurants is welcome news for suppliers who in the past often settled for space that met their basic needs, but offered little else. The increased competition is also healthy, although developers contend market conditions are rational and there is adequate demand to digest the space without resorting to dramatic incentives or reductions in lease rates.

"We opened Bentonville Plaza nine months ago and at that time we thought it would take 18 months to lease the building and we are on track with that timetable," said Van Zandt.

According to John George, director of marketing with the Pinnacle Group, The Shoppes at Pinnacle Hills is approximately 70% leased while the 600,000 square feet of commercial space under the group's management is 94% leased.

"Our tenant occupancy rate does not mirror the region," George said, as the rates at Pinnacle Hills are higher.

Ramsay Ball, a partner with Colliers Dickson Flake Partners, is under no illusion about how long it will take to lease Superior Commercial when the massive structure opens late next year. He believes it will take several years before the building is fully occupied.

"We think it fits right in with where the market is headed," Ball said. "I don't think the sky is falling. No one is slashing their prices."