Wal-Mart home office buys Sam’s a clubhouse

BY STEVE PAINTER

Posted on Wednesday, September 17, 2008

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Wal-Mart Stores Inc. has purchased the 375, 000-square-foot Superior Commercial Building in Bentonville, about three miles southeast of its headquarters, to serve as the new home of its Sam’s Club members-only division, the company confirmed Tuesday.

The building, roughly the size of two Supercenters, became available for commercial tenants about a year ago, but was less than half full when Wal-Mart bought it. The company paid $ 29. 9 million for the property but said no additional details would be disclosed.

Doug McMillon, Sam’s Club president and chief executive officer, said the shift to the building at 2101 S. E. 25 th St. will bring all of Sam’s Club home office staff under one roof, creating a more collaborative environment. The move should take place next spring, the company said.

“As we look ahead at future growth plans, we couldn’t build a building like this at this price,” McMillon said. “If the value wasn’t right, we wouldn’t be having this conversation.”

Sam’s Club personnel currently work at two buildings — a one-story structure and a threestory structure— next-door to the Wal-Mart headquarters, 702 S. W. Eighth St., sharing the space with workers in the Wal-Mart stores division.

The bold brick-and-glass look of the Superior building is a stark contrast to the humblelooking structures that dot the home-office campus, where the company’s growth has squeezed personnel into tight quarters.

“I wouldn’t call it cramped. I might say it’s kind of tight,” Mc-Millon said of the current setup. Sam’s Club was chosen to fill the newly acquired space “largely because of the fact that we fit,” he said.

Still, about 25 percent of the new space will be available for other Wal-Mart personnel in the future.

Some space in the Superior building remains unfinished, which McMillon said gives the company the opportunity to design the interior in a way that helps teams work together.

He said the company would “do it in a Wal-Mart way. It won’t be too fancy or over-thetop.”

The original building permit for the structure described it as 374, 452 square feet of office space, with a projected investment of $ 45. 7 million.

Partners in the project were Burt Hanna, owner of Hanna’s Candles in Fayetteville, and David Slone, owner of the Superior Auto group of Springdale.

Hanna declined comment on the sale, citing a confidentiality agreement. Slone did not return a telephone message Tuesday.

Ramsay Ball, vice president at the Colliers International Property Consultants Inc. office in Bentonville, said the Superior building was filling steadily with tenants before it was pulled from the market. Colliers was the leasing agent.

Tenants began moving in during December, but the building was still less than half full, he said.

“I don’t think there was another building of that size in the market here, and very few in Arkansas,” he said.

The original leasing plan set out a three- to five-year timeline, and the company was on track to fill it, Ball said, attracting some of the larger Wal-Mart vendors.

“It was leasing very well, but we’re also happy to see that amount of space off the market, because it helps the overall market,” he said.

Wal-Mart’s purchase of the building should boost the Bentonville-Rogers office occupancy rate from 85 percent to 90 percent, Ball estimated.

The most recent Skyline Report on the commercial real estate market in Northwest Arkansas, compiled by the Center for Business and Economic Research at the University of Arkansas at Fayetteville, put vacancy rates in Bentonville and Rogers at just over 21 percent. That includes office space of all types, not just the top end of the market. The center is part of the university’s Sam M. Walton College of Business. Kathy Deck, center director and lead researcher for the Skyline Report, said the Superior building sale likely will reduce vacancy rates, but she was skeptical that it would boost lease rates for other buildings. “There still is quite a bit of other space, both class A and class B, available in the Bentonville market,” she said. McMillon said he looked forward to the move of Sam’s Club staff to new quarters, but downplayed its significance. “Home offices don’t really matter much. They don’t have cash registers in them,” he said.

To contact this reporter: spainter@arkansasonline. com

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