Retail activity slows as prospective tenants take a cautious watch-and-wait posture.

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THE COMPETITION FOR TENANTS continues to ratchet up as the national economic downturn casts a lingering shadow on the local retail scene.

The two newest and largest retail projects to hit the Little Rock market, Shackleford Crossings and The Promenade at Chenal, are in the forefront of the battle to maintain momentum and fill empty store space.

Jeff Maxwell, vice president of Little Rock's Clary Development Corp., said development of a 203,000-SF Wal-Mart Supercenter remains idling on the starting line at Shackleford Crossings after the retail chain delayed buying a 25.1-acre site last year.

"We have a lot of interest from prospective tenants, but they are wanting to see the Wal-Mart open," Maxwell said of the west Little Rock project. "Penney's [the first store to open at the center in October 2007] couldn't be happier, and the restaurants are doing well."

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While some await the arrival of the supercenter in 2010, others are moving forward at the $74 million Shackleford Crossings development, at the southwest corner of Interstate 430 and Shackleford Road in west Little Rock.

Haverty Furniture Cos. Inc. of Atlanta opened a 36,000-SF store in May, and Gordmans Inc. of Omaha, Neb., an off-price department store chain, is opening a 50,000-SF location in September.

Leaseable space at Shackleford Crossings totals about 278,000 SE Nearly a third (92,500 SF) of that is vacant. Retail space eventually will total 585,000 SF counting two owner-occupied pieces, Penney's and the planned supercenter.

The future supercenter site is construction ready, envisioned to replace the Wal-Mart at 700 S. Bowman Road, which is slated for conversion to a Neighborhood Market grocery store.

Besides Wal-Mart's slow play on opening, Clary Development has had to contend with two bankruptcies of sizable would-be tenants: The Dunlap Co. of Fort Worth, Texas, and Goody's Family Clothing Inc. of Knoxville, Tenn.

The timing of The Promenade at Chenal launch put it under even more pressure as national retailers scaled back expansion plans and delayed new store openings in the face of a troubled economy.

Completed last year, the upscale lifestyle center at the southwest corner of Chenal Parkway and Rahling Road was awash in announced tenants. However, that roster hasn't translated into occupied space in every case.

Since February, Ann Taylor Loft, James Eyewear, American Eagle Outfitters and Claire's Boutique have opened for business. DSW (Designer Shoe Warehouse) and Kay Jewelers, were to open in April, but now June is the expected arrival. Luxury Nails is said to be opening in July.

Among the missing in action with no word on a scheduled arrival are Bath & Body Works, Bebe, J. Crew, J. Jill, Lucky Brand Jeans, Peyton Place, Sleep Number by Select Comfort, Talbots and Victoria's Secret. All have borne labels of spring 2009, 2009 and opening soon.

RED Development of Kansas City, Mo., which brought the $64.5 million project on line, pegs occupancy at 75 percent. Maybe that's a number linked with signed leases, but it certainly doesn't jibe with empty storefronts.

Described as a 340,000-SF center, the heart of the project is a 241,000-SF lifestyle center. These nine buildings contain the only completed, for-lease space at The Promenade at Chenal.

About a third of this space is physically occupied by tenants. The 32,000-SF Chenal 9 Theatre, operated by Dickinson Theatres of Lenexa, Kan., anchors the north end of the 37.8-acre development.

The uncertain economic climate continues to prompt retailers and restaurants to delay or postpone the rollout of new locations, and The Promenade is among the projects experiencing the slowdown.

Exacerbating the slowdown at The Promenade are some lease agreements that contain co-tenancy clauses. The leases of some tenants are tied to the opening of another tenant, and until that named tenant opens, the first tenant isn't obligated to move on its space.

Designed in a French Gothic style, the development indudes four water features and a variety of window treatments, tile accents, facade elements and roof styles that push the envelope for upscale retail development in central Arkansas.

THE SHOPPES IN LIMBO

The Shoppes at North Hills, an 866,000-SF project planned for North Little Rock, entered another year of limbo. A land-use battle over wetlands conservation has taken the dispute to the 8th Circuit Court of Appeals in St. Louis.

"We're going to take that one all the way to the end and hopefully get a resolution, so we can start construction," said Bruce Burrow, president of MBC Holdings of Jonesboro.

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The proposal for the 70-acre site at the southwest corner of Interstate 40 and North Hills Boulevard has been on the drawing boards for more than six years.

What is Burrow, a regional commercial developer, encountering with prospective retail tenants these days?

"We're seeing some activity with smaller tenants, but the larger tenants are still on the sidelines," he said. "It will probably be a couple years before we get back to normal, if we ever get back to what we once considered normal."

Redevelopment of the former site of Little Rock's University Mall remains on hold as Strode Properties Co. of Dallas awaits renewed retailing interest.

The 27-acre site at 300 S. University Ave. is set to be transformed into the Park Avenue, a mixed-use open-air lifestyle center. Definitive plans remain to be sorted out after Strode purchased the nearly vacant, neglected 886,000-SF mall for $21 million and bulldozed it last year.

The estimated occupancy of the central Arkansas retail market is 92.3 percent, according to data gathered by Xceligent Inc. of Independence, Mo. The data was gathered this spring and included more than 300 properties with more than 17.6 million SF.

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