PRESS
New Owner Says ‘No Limit’ to Incentives for Regions Center Tenants
by Griffin Coop, Arkansas Business
Regions Center, the 30-story skyscraper in downtown Little Rock recently sold for $7.52M and is headed for major changes. (Amanda Cordell)
The new owner of Arkansas’ second-tallest building is ready to make some deals.
Jim Ryffel (Karen E. Segrave)
Woodcrest Capital of Fort Worth, Texas, bought the 31-story Regions Center office building at 400 W. Capitol Ave. for $7.52 million in a November auction. The price was significantly lower than the building sold for in 2022 when it was purchased by a New York investment company for $31 million.
Jim Ryffel, the founder of Woodcrest Capital, and the company’s leadership team think they can raise the Regions Center’s occupancy rate from 44% to 90% or more. “We plan on turning all the lights on,” Ryffel said.
Ryffel said it’s time to change the narrative of the building, which he said has been “fairly dead.” And he’s willing to make some concessions to tenants to do that.
Ryffel said he will be willing to consider hiring an architect, paying for finish-out renovations, paying for moving expenses and offering a period of free rent to new tenants.
“There is no limit to the creativity we are willing to go to to provide incentives for new tenants to relocate to our buildings,” he said.
Office space in the building goes for about $20 per SF, and that likely won’t change, even with renovations to the building, he said. “We are serious,” he said. “There’s nothing that we won’t entertain.”
Woodcrest Capital plans to make upgrades to the inside of the building over the next few months, but did not specify the changes during a recent interview. The changes will “bring excitement to this whole part of downtown,” Ryffel said.
The leadership team of Fort Worth-based Woodcrest Capital LLC, the new owner of the Regions Center, from left to right: COO Michael Roy, President Travis Ryffel and founder Jim Ryffel. (Karen E. Segrave)
A Family-Owned Firm
Formed in 1981, Woodcrest Capital is a family business that owns commercial property, including shopping centers and office buildings, in about 21 states. The company has focused primarily on community shopping centers, but has been adding more office space to the mix.
“Typical local tenants that don’t have any competition with the internet — that’s been our primary business model,” Ryffel said of his shopping center tenants.
The company owns one other Arkansas property, the 38,480-SF Pine Plaza shopping center in Crossett. That shopping center includes an Atwood’s Ranch & Home Goods store and some smaller stores.
Woodcrest Capital owns about 8 million SF across the country and recently bought an 863,403-SF office building campus in Lincolnshire, Illinois, west of Chicago. The company is in the process of determining how best to lease the four-building office space and data center property, Ryffel said.
Woodcrest Capital also owns a five-story, 194,075-SF office complex known as the Town Centre in downtown Cedar Rapids, Iowa. In the first year of ownership of the property, Woodcrest Capital has improved its occupancy rate from percentages in the 40s to the 60s or better, according to Travis Ryffel, the company’s president and Jim Ryffel’s son.
Travis Ryffel (Karen E. Segrave)
The company also owns its office building in Fort Worth and that building is full, Travis Ryffel said.
Jim Ryffel was also an investor in two tech businesses that were later sold to Mexico-based Prodigy and to Hewlett-Packard.
The Ryffels think they have some advantages to help them get where they want to go, despite the age of the Regions Center, constructed in 1975. For one thing, they say the building is in good condition. The previous owner, a New York investment firm, spent $15 million on renovations in recent years, including upgrades to mechanical systems, the air-conditioning system and the elevator.
Before Woodcrest Capital bought the building, COO Michael Roy asked the building’s staff to give him an honest assessment of the property. But they told him there wasn’t anything wrong with the building, other than one cracked window.
“And he really wasn’t lying,” Roy said. “The mechanicals are in great condition.”
Expecting an Upswing
Jim Ryffel and the Woodcrest Capital team think they have some advantages to offer tenants.
Woodcrest Capital didn’t take out a mortgage to buy the building, a practice Jim Ryffel said is common among his purchases. The company also doesn’t have any partners. As a result, it doesn’t need approvals “on the rates or creative structure that we are known for,” Ryffel said.
The company also believes office use is on the beginning of an upswing. The COVID pandemic resulted in more employees working from home and employers needing less office space. But Ryffel believes the trend is heading back toward employees working from the office more. “The businesses want their employees back in the office, no question about it,” Ryffel said.
Ryffel said he’s seeing some “scale back” in the size of the spaces businesses want “but they still need the space,” he said.
Travis Ryffel said he thinks this is a good time for office investment, but it won’t last forever.
“We’re on that upswing,” he said. “The opportunities for office(s) are going to close and we’re going to go back to a normal market. That’s really what we believe about the market and we believe we’re on that upswing. People are coming back to the office.”
Michael Roy (Karen E. Segrave)
Jim Ryffel said employees want something different now, though. “The employees want a greater experience in offices,” he said. “And that is our goal, to give the employees a building with great amenities and a great experience and that will bring the businesses here, because we will have the great amenities of any building for an employee.”
The 30th floor of the Regions Center has an empty restaurant space with a view to the west overlooking Capitol Avenue to the state capitol building and a view to the north overlooking the Arkansas River. The space was home to the Little Rock Club for about 50 years until it closed in 2020.
Roy envisions a restaurant and events like weddings in the space.
The building has a range of spaces to offer prospective tenants, from turnkey spaces with glass walls and doors to spaces that need renovation to suit tenant needs, Travis Ryffel said.
The building has suites from 2,000 to 30,000 SF that are ready for immediate occupancy and other spaces of similar sizes that can be renovated, Roy said. The building also has a coffee shop, a barber shop, a sandwich shop, on-site management staff, security, a pharmacy and two floors of rentable conference room space.
A Matter of Flexibility
Woodcrest Capital paid $7.52 million to buy the Regions Center, a steep decline from the $31 million Taconic Advisors of New York paid to buy the building out of foreclosure in 2022.
Jim Ryffel declined to say how much he was willing to pay at auction to get the building.
“I think (the purchase price) was much less than we were willing to pay, but at that price, it allows us flexibility to invest in the building and in new tenant infrastructure, new finish-out,” he said.
Pulaski County officials appraised the building at $29.47 million last year, a similar value as the slightly larger and newer Simmons Tower, Arkansas’ tallest building, which sits across the street.
The Simmons Tower is owned by Kelley Commercial Partners through a limited liability company. Hank Kelley, a veteran of the Little Rock commercial real estate industry and CEO of Kelley Commercial Partners, said the new owners got a good deal.
“The reality of the sale is that it’s a bargain and I don’t know any other way to say it,” Kelley said.
Kelley said that price will be just the start, since the restoration of the building and the leasing operation will be part of the business plan.
Jim Ryffel sounds ready for that. “I don’t think there’s any limit to what we are willing to spend,” he said.
Kelley echoed Ryffel’s belief that employers are bringing more people into the office now.
“It has improved and it has improved because people came back to work, maybe not the exact same way they were pre-2019, but they have come back to work,” he said. “They are using spaces slightly differently than they were using them in 2018.”
Kelley noted there has not been new speculative office building construction in Little Rock in many years, so prospective tenants are looking at the buildings that are already available.
Jim Ryffel agreed his company got a good price on the tower, but he was quick to note that it’s only a bargain if they can turn it into a successful venture.
“It’s a bargain as long as we can execute on our plan and show the market that we are willing to be very flexible on leasing,” he said. “Our goal is to change the narrative of the building. We’re going to show a lot of activity, a lot of new tenants. We’ve got great plans for the building.”
