by Butch Gurganus, President and Principal at Focus CRE Group
Focus Commercial Real Estate’s Fall 2024 Leasing Report for Bentonville and Pinnacle Hills produced some interesting data points:
Executive Summary
Take Aways
The most interesting data point is asking rates, which increase as the spaces get larger. Typically, small space rates are more than large space rates. We attribute this anomaly to larger spaces tending to be in new or newer buildings where construction costs have risen significantly.
Tenant Improvement costs have increased to a point where tenants are looking for spaces that require minimal improvements, therefore, shell space is harder to lease than in the past due to the required out-ofpocket construction costs borne by tenants.
Walmart Suppliers over 20,000 square feet are downsizing more than growing. However, we believe as Walmart requires employees to return to work, Walmart Suppliers will follow suit. At the other end of the spectrum, tenants under 10,000 square feet are remaining the same size or expanding.
Lease rates for new buildings is approximately $20.00 - $25.00 higher than Class B Garden Office.
The lowest vacancy by lease rate is for space under $20.00 PSF.
Vacancy by Lease Rate
Lease Rates
Lease rates increase as the square footage increases, which is counterintuitive. Spaces Under 3,000 SF have the lowest average rate at $22.73 PSF with spaces over 20,000 averaging $32.66 PSFf. An increase of $3.28 and $3.19 from 2023 respectively.
The Ledger and Midtown Lane Downtown Bentonville have the highest asking rates at $45.00 and $40.00 PSF respectively.
Rates for all office classes range from $18.00 Class B- to $45.00 Class A.
Tenants are not pushing back on rate. All negotiations are focused on Tenant Improvement costs.
The chart below indicates the Availability by City. The square foot ranges are the total building or park size. For example, Bentonville 5-10k square feet means there are 19 properties with 5,000 to 10,000 square feet available with an average asking rate of $22.05.
