- SPACE AVAILABLE: On Capitol Avenue.
While the taller buildings along Capitol Avenue in downtown Little Rock surely help make for a more picturesque skyline at sunset, recent decades have been hard on the street that features most of the city’s tallest skyscrapers. Filling the largest buildings along Capitol Avenue can be a struggle these days.
According to the 2006 Office, Retail and Warehouse Lease Guide published by Arkansas Business, of eight large office complexes along Capitol Avenue (containing a total of almost 2.2 million square feet of available office space) only three could boast a 90 percent or better occupancy rate. One — the Victory building, at 1401 W. Capitol — only had 63 percent of its available space filled at the time.
These figures don’t include one large building that has been the subject of controversy in recent years: the 120,000-square- foot structure at 900 W. Capitol Ave., once headquarters of the Dillard’s department store chain. In 2003, to the chagrin of those looking to redevelop the area, the building was purchased for $1.2 million by the Union Rescue Mission, which planned to build a 100-bed homeless shelter there. But Interim Director Ahmed McMahan said that it became apparent that moving into the Capitol Avenue space wasn’t “ideal for the best partnership” with the community.
“We decided that — number one — [was] us being able to serve the people that need our help in Central Arkansas,” McMahan said. “And — number two — making sure that we continue to be the most positive ally with the community to solve these social problems. Going a different route with the new location was in the best interests of everybody.”
Jim Carman is a commercial real estate salesman with Rector Phillip Morse. He has sold the former Dillard’s building to the Union Rescue Mission and now has a resale pending to an out-of-state company. Carman is old enough that he can remember the glory days of Capitol Avenue, all the way back to when the Dillard’s building was owned by Southwestern Bell Telephone. To bring occupancy rates in those buildings up, Carman said, people are going to have to move back into the immediate area.
“Years ago, there used to be apartments over a lot of that area, particularly over where the Victory building is now and down toward Eighth Street. A lot of singles lived in those apartment houses,” Carman said. “There needs to be a little revival of that so they can have walking-to-work type living quarters, either in the way of rentals or condos down there.”
Maggie Wilson is a leasing agent with Little Rock real estate company Flake and Kelley Commercial. She handles new lease agreements for the Victory building. She said the fact that the Victory building is a new construction, completed in 2002, makes its low occupancy rate different.
“The other buildings along there have been around some time,” Wilson said. “With a fairly new building it always takes some time to get your occupancy rate as high as something either more established or not in as good a repair shape or just for a variety of reasons.”
Wilson said that most of the tenants in the Victory building are involved in work at the Capitol, just a short walk up the street: lobbyists, state and federal agencies. She said that in order to make the Capitol Avenue corridor viable again, the city and developers are going to have to work to get businesses interested in the area.
Todd Hart agrees. The president of operations at the Bank of America Plaza at 200 E. Capitol and the owner of Hart Lazenby Commercial Real Estate, Hart said that while Capitol Avenue is still the “financial center” of Arkansas, occupancy rates in the large office complexes have been hurt in recent years by bank mergers and more modern office complexes built near the River Market District. He said the only cure for low occupancy along Capitol is job growth in Central Arkansas.
“For too many years, buildings have just been swapping tenants,” Hart said, “taking tenants from one building and putting them in the next. We are still recovering from the bank consolidation. Many of those have caused a lot of vacancies in downtown Little Rock.”
Hart said that while some new construction is normal even in cities that have plenty of office space available, the River Market building boom of recent years has drawn tenants from some of the more established office buildings. If developers would hold off on construction of new office buildings in Little Rock for the next couple of years, Hart said, the city’s needs might be able to catch up to the amount of space available.
Hart said that another factor affecting occupancy rates along Capitol is simply the desire of some tenants to have their offices in the newest space. With that in mind, he said, owners and property managers of many of the big buildings along Capitol have made sure the buildings have kept pace with both modern decor and modern technology. While there isn’t much you can do to change a 30-year-old skyscraper on the outside, Hart said the remodeled lobbies and interiors of some of the buildings along Capitol are still among the most beautiful in the city.
“For those people who have not been in a building like Bank of America or Union or Metropolitan in the last couple of years, they ought to visit those buildings,” he said. “There have been significant changes… they’ve been refurbished, redecorated and really updated.”
— David Koon
capitol avenue office space
Name Sq. Footage % Occupied
Bank of America Plaza 200 E. Capitol Ave. 268,598 78%
Capitol Center 303 W. Capitol Ave. 45,973 91%
Lyon Building 401 W. Capitol Ave. 142,478 78%
Metropolitan Tower 425 W. Capitol Ave. 624,527 91%
Regions Center 400 W. Capitol Ave. 538,893 85%
Union National Plaza One 124 W. Capitol Ave 235, 694 75%
Union National Plaza Two 105 W. Capitol Ave. 67,997 94%
The Victory Building 1401 W. Capitol Ave. 247,791 63%
SOURCE: Arkansas Business’ 2006 Office, Retail and Warehouse Guide.