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Benton to Build Utilities to Shops

Benton is dedicating up to $1.4 million from its general fund to extend utilities and infrastructure to an area where a Tennessee developer wants to put a new 160,000-square-foot shopping center.

The $29 million project, Shoppes at Benton, is planned for an area north of the Interstate 30 interchange and west of Alcoa Road and is being developed by GBT Realty Corp. of Brentwood, Tenn. The center will have two main anchors — a soft goods, apparel and home decor store that will use 41,000 square feet and a hobby and craft store that will utilize about 55,000 square feet.

Officials from GBT attending a news conference at Benton’s city offices Tuesday declined to name the two large retail tenants. Clients listed on GBT’s website include Hobby Lobby, Sprouts Farmers Markets, Kohl’s, Bed Bath and Beyond, T.J. Maxx and Marshalls, among others. The Shoppes at Benton also will have a row of four fast-casual sit-down restaurants.

The developer has contracted to buy one parcel from Mike Sylvester and Pat Sylvester and another from Mount Carmel Investment Co. LLC. Both deals are set to close in late March.

Construction is expected to start in the first quarter of next year, and the shopping center is expected to open about a year later. Jeff Pape, managing director of GBT’s shopping center division, said construction should generate 450 to 500 short-term construction jobs. Once it’s open, the center should employ 200-plus full-time workers and more than 300 part-time people.

He said he expects the development to be at least 80 percent leased by the time builders break ground. GBT’s average occupancy upon opening is 94 percent.

“We have several retailers that are confirmed and that we are moving forward with now,” Pape said of the Shoppes at Benton. “We won’t build a bunch of buildings and hope they fill up later.” The group recently finished a project in Louisville, Ky., and one outside Savannah, Ga.

The Benton City Council passed a resolution Monday that laid out plans for the city and the Benton Public Utilities Commission to work with the Benton Investment Partners LLC, which is GBT. The roughly $1.4 million contributed by the city and its separate utilities commission will be in the form of materials and equipment needed to extend water, sewer and electrical services to the site, said Mayor David Mattingly.

Those costs, coming from reserves in the city’s general fund, are expected to be made up within the first year to 14 months the shopping center is open, he said. Raising taxes or issuing bonds was not an option, the mayor said, because he was not in favor of “mortgaging the city’s future.”

GBT has developed more than 6 million square feet of retail and commercial space in the past 6-8 years, which have been the most economically challenging for real estate development in recent times. GBT’s projects span 21 states.

The deal was put together by Flake & Kelley Commercial of Little Rock. Flake & Kelley represents one of the two large retailers planned to go in the development. Partner and CEO Hank Kelley said the retailer had been looking in the area of Interstate 30 in Benton for some time and had tried twice before to secure a location.

“Instead of the developer coming in here and trying to figure out what retailers will come, the retailer picks the location and it works right,” Kelley said.

More Preleasing, Money Upfront on NWA Properties

Matthew Dearnley, 42, is the CEO of Flake & Kelley Commercial Northwest.

Dearnley, a native of Brooklyn, graduated from Hobart & William Smith Colleges with a bachelor’s degree in history. He received an MBA in finance and investments from the University of Miami in Florida. He worked as a paralegal but soon realized he’d rather be a dealmaker. He has worked in commercial real estate since 2002 and arrived in northwest Arkansas in 2004. He is the son-in-law of Flake & Kelley Chairman John Flake.

Ten years ago, Arkansas Business quoted a real estate broker from northwest Arkansas who said, “You’d have to be a total village idiot not to make a lot of money if you had a couple of million dollars [to invest].” How have attitudes changed in the past decade — or have they?

I think most investors who have been in the business through the recession have seen the good and the bad in the real estate market. It seemed, 10 years ago, that an investor could buy a property sight unseen and make money on it. There were a lot of bankruptcies, OREO properties at banks and bank failures because of that line of thinking. There is still money being made in the real estate market, but there is no longer a sense that it can be done by “the village idiot.” I think people have more respect for the real estate market and the degree of professionalism it takes to work in it.

There have been a lot of built-to-suit office spaces for specific clients to relocate. What are the prospects for the old spaces to be filled? Is backfilling abandoned space a concern?

The growth of the market in population and the continued growth at our big four — Wal-Mart, Tyson, J.B. Hunt and the University of Arkansas — are driving a lot of growth. The backfill second-generation space is being aided by the high cost of tenant finish-out. With finish-out of new construction running between $55 and $70 per SF, property owners are less willing to “turnkey” space. Tenants can get much better lease rates on second-generation space, which is helping fill a lot of buildings. You can’t overlook location as well. Being along the I-49 corridor is very important to most businesses.

What are your overall thoughts and predictions about the northwest Arkansas market? Are there any concerns or prime opportunities?

The market has clearly reached a point of possible correction. Certain areas have overbuilt, and caution is the word I would use in evaluating opportunities.

How did Flake & Kelley handle the recession and what did you learn? Do you think players in the market are wiser now?

Flake & Kelley has always had a policy of not having debt. Partners, of course, invest but not the company; hence, the livelihood of our colleagues is not jeopardized by a bad decision by one person. As for people being wiser, I would say yes. You are not seeing as many projects being built purely speculatively anymore. Buildings are being preleased, and people are no longer buying land with the intended use being to sell it in six month to someone else for twice what you paid.

How have new bank lending regulations affected the commercial real estate market?

You are seeing more preleasing and the requirement of more money down. The days of 100 percent financing may be over. You are also seeing the banks consolidating and changing to a world of haves and have-nots. You are seeing a lot of Arkansas banks aggressively expanding both within our state borders and outside of them.

Deal called near for MM Cohn site

Deal called near for MM Cohn site

Chi family to add it to planned hotel, LR mayor says
By Cyd King

This article was published September 2, 2015 at 2:33 a.m.

Frederick Blalock sands the oak floors inside the MM Cohn building Tuesday. The owners have had multiple offers on the property that will house the Arkansas Symphony Orchestra on a portion of its first floor.

Owners of the former MM Cohn Co. department store building at 510 Main St. are close to striking a deal to sell the historic property to the Little Rock-based Chi Hotel Group, which is developing an Aloft hotel next door.

Little Rock Mayor Mark Stodola said this week that the Chi family, which owns a chain of hotels and local restaurants, is planning to buy the MM Cohn landmark and turn it into additional hotel space, including conference and meeting rooms.

Jacob Chi, speaking for the family’s development business, said the $22 million to $24 million-hotel project is delayed from its anticipated opening date of late 2015. the hope now is to open sometime between the second and third quarter of 2016, Chi said.

A pool was once planned for the roof, but that proved cost prohibitive, so the Chis are relocating it to a lower level. Bringing the building up to code has taken more time and money. The developer has changed architects, as well.

The hotel has other partners, but they are silent, minority partners, Chi added.

“He’s ready to go,” the mayor said of Chi. “They have the money, they have the plans. He’s apparently made an offer on [MM Cohn] and is close to closing on that.”

“He said he thought the acquisition of MM Cohn was in short order. That’s what he said,” Stodola added.

The contract needs signatures from additional partners, he said.

Chi would not confirm any plans to buy the fivestory, 75,600-square-foot structure, which is for sale through Flake & Kelley Commercial for nearly $3.8 million. The building is owned by a limited liability company led by Scott Reed of Portland, Ore., retired attorney Wooten Epps of Little Rock and a third outof-state investor who Reed declined to name when contacted at the MM Cohn building Tuesday.

Reed — dressed Tuesday in work clothes and covered in dust from ongoing construction at the 1940s building — said he and his partners had sunk about $500,000 into project renovation. One door to the former department store remains boarded and chained; the other leads to the offices and rehearsal space for the Arkansas Symphony Orchestra, though the symphony’s space is still not complete.

Reed said he and his partners have had multiple offers on the MM Cohn building but would not say whether they had accepted any of the offers.

“I couldn’t confirm any contract on any property until it closes,” he said.

The timetable on the hotel project has been wavering for a while, Chi said.

“We have a hard time trying to execute a $22 [million] to $24 million project without knowing what’s going to be happening with the rest of the block,” he said, speaking of the MM Cohn owners.

“We’ve been in that position for six to eight months. We’ve been trying to get some definitive closure from our neighbors and others up and down Main Street as to what is going to occur on the remainder of the 500 block of Main.”

Chi still had few answers as of Monday, but said meetings with other property owners, including the MM Cohn owners were ongoing, sometimes daily.

“As of right now the Little Rock downtown Aloft is moving forward. It’s going to be a project that comes to fruition,” Chi added. “From our standpoint, the project is ready to go.”

Before Reed and the others put the former department store on the market with Flake & Kelley in July, they had intended to sink another $4 million to $5 million into it, Reed said. Upper levels were to be high-end luxury lofts.

Reed Realty paid $1.5 million for MM Cohn, the Boyle building and two others they are developing on Main Street then later sold the Boyle building to the Chis for redevelopment into the Aloft. The Chis paid $4.6 million for the Boyle building.

Reed said he and his partners decided to sell MM Cohn and other downtown properties after the Arkansas Legislature changed the number of historic-project tax credits developers can use on a single property.

However, Flake & Kelley’s marketing materials for MM Cohn have been approved for tax credits.

New Leasing and Management Team Announced – Shackleford Crossings

LITTLE ROCK — Flake and Kelley Commercial has been retained to provide Leasing and Management services to Shackleford Crossings Shopping Center. Shackleford Crossings is a 315,912 square foot, open-air retail center, located at Interstate 430 and Shackleford Road in Little Rock, Arkansas.

With its convenient location, ample parking and well-manicured landscaping, Shackleford Crossings appeals to shoppers and retailers alike. The center benefits from a successful mix of well-known and established national retailers and restaurants including Walmart, JCPenney, Babies “R” Us, Gordmans, Jo Ann, Copeland’s, BJ’s Restaurant and Brewhouse, Cracker Barrel and Longhorn Steakhouse. Flake & Kelley plans to recruit additional first class national and regional retailers and service providers to make Shackleford Crossings the area’s premier shopping destination.

“Flake and Kelley is excited to have the opportunity to provide leasing and property management services to the owners of Shackleford Crossings. The ownership of Shackleford Crossings Investors, LLC, includes Invesco and The Retail Connection. With our hands on approach to management and our aggressive marketing strategy for leasing vacant spaces, we are confident that we will bring great value to the property owners, our merchants, and the Central Arkansas community.” – Hank Kelley, CEO of Flake & Kelley.

For leasing opportunities at Shackleford Crossings, contact Cynthia Lu at 501.244.7554 or clu@flake-kelley.com or Brooke Miller at 501.244.7570 or bmiller@flake-kelley.com. More information about Shackleford Crossings can be found at www.shacklefordcrossings.com. For information about Flake & Kelley Commercial and their leasing and management services, please visit www.flakeandkelley.com or call 501.375.3200.

About Flake & Kelley; Kelley Commercial

Flake and Kelley Commercial is Arkansas’ premier commercial real estate provider and has more than 36 years of experience in property management, development management, investment sales, tenant representation, consulting, brokerage, leasing, and build to suit. Headquartered in Little Rock, Flake & Kelley is the state’s only ChainLinks Retail Advisors affiliate, making it part of a nationwide network dedicated to retail-only real estate services and commercial property brokerage. Flake & Kelley is dedicated to providing the highest level of customer service, utilizing its agents’ expertise, extensive industry connections, and a systematic approach to produce the best possible results for its clients.

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