There’s nothing wrong the retail market in northwest Arkansas.
The vacancy rate in the market is less than 5 percent and new areas of development are showing promise, experts said. The Pinnacle area in Rogers is an obvious growth area as new offices and retail centers feed off each other.
“In terms of activity and tenant demand, I would say the retail market is as strong or stronger than it has been,” said Alan Cole, a principal with Colliers International. “Retail is a very hot sector in the market. What we are seeing is there are certain corridors that are ripe for expansion and will probably be a focus for retailers over the next year or two or five.”
Joe Whisenhunt’s Whisenhunt Investments built a 24,000-SF retail center and has a 16,000-SF center under construction on Pauline Whitaker Parkway. The completed center, District Shops I, is filled up with active or pledged tenants, and the second center already has one confirmed tenant: Mirabella’s Table, a restaurant by Carl Garrett, who owns the popular Table Mesa in downtown Bentonville.
Burke Larkin of Whisenhunt said that the market is strong enough that the retail center is offering a minimum five-year lease.
“The rents are good right now,” Larkin said. “We’re kind of getting picky and choosy with our tenants. We’re signing some five-, seven-, 10-year deals. We have a good mix of local, regional and national tenants.”
Shops I, the completed center, has tenants such as Fuzzy’s Taco Shop, Kom Hot Yoga and Adella Nail Bar. Developers try to get lease combinations that work well with each other so a retail center becomes a destination for today’s shoppers.
“You go do your yoga and then get your nails done and then go get tacos,” Larkin said. “That’s a female friendly shopping center when it’s all said and done. That’s just what the market is doing right now.”
T.J. Lefler, executive vice president with Sage Partners, said grocery-anchored centers that offer goods and services consumers can’t buy online are good bets. Amazon can ship just about anything to your house but it can’t give you a manicure or a workout.
“You really can’t order your haircut on the internet,” Lefler said. “Anytime you see a center come available on the market, it doesn’t last very long. Ten years ago, there were a lot of centers being built for no reason. Now any center I see has a reason. They’re preleased at least half. It’s tenant-driven. There’s not a lot of spec out there.”
Cole said Pinnacle will be popular until it fills up, which could be soon the way retail center space gets scooped up as it become available. With Pinnacle filling up, developers are naturally looking for the next hot spot. So far, that looks to be a few miles to the south at Pleasant Grove. The downtown areas of each of the region’s four main cities continue to be popular as well.
“It is blowing up down there,” Larkin said of Pleasant Grove. “There is all kinds of stuff happening down there. I look forward to what happens a year from now.”
Don’t forget the downtowns, though, Cole said, pointing out Bentonville’s surge, Fayetteville’s steady activity and Springdale’s resurgence.
“Those downtown areas that have been overlooked for retail for the past decade have all really started seeing this renewal,” he said.
See more from the 2017 Northwest Arkansas Lease Guide.