A Year In Review
Most CRE professionals I know say 2017 was a pretty good year. What will 2018 be like? Well, my crystal ball was thrown out a window back in 2009. However, if you will come join us for lunch on Jan. 18 to hear about 2017, you can get a sneak peek of what 2018 may hold in store. The 2018 Q1 Commercial Real Estate Lunch hosted by CCIM and LRRA will be at Kirkpatrick Plaza again, with doors opening at 11:30 a.m.
The program will be the economic outlook for commercial real estate in Arkansas. Sign up now. Space is limited, and you don’t want to miss this first-of-a-kind program. State economic forecaster Dr. Michael Pakko of the Arkansas Economic Development Institute at the University of Arkansas at Little Rock will be joined by CoStar Market Analytics Economist Brandon Svec.
Lest you think the presentation will be dull, think again. I have had the privilege of hearing both men speak. Yes, they are a couple of the smart kids. No, they aren’t boring. And, at our invitation, this is the first time they have collaborated to present together. This is going to be a good program! For more information go to CCIM-AR.org. If you are interested enough in commercial real estate to read this column, you ought to put that quarterly lunch on your calendar.
While this column can’t predict the future, it can deliver a review of 2017. Some of the discussions opening 2017 were still conversations closing 2017. Examples are highway work. Whether the work is called improvements, widening, increasing capacity, or whatever, it is still change. Change is hard. The highway changes on the radar last year, and still on the radar, include changes to the interchange at Interstate 430 and AR Hwy. 10 (Cantrell Road). A first phase has been completed. A new ramp opened in November to allow west-bound traffic to go north with a right-hand exit instead of the previous traffic movement of a left-hand turn across the east-bound traffic. Phase two of that project is where things will get really interesting though. Look for that to take a year or so to get going, with another year or two of chaos before the project wraps up. Widening of Interstate 630 east from where the Big Rock Interchange work ended east to University Avenue is still on the drawing board.
And the infamous 30 Crossing project to replace the Interstate 30 bridge over the Arkansas River and make changes all the way from where I-30 & US 67/167 meet to past the where I-530 splits from I-30 is still being argued over. Word is to expect a protest group to file a lawsuit asking for the Arkansas Department of Transportation to be stopped from making the proposed changes in downtown Little Rock. I’m guessing if you check back here next year the update on 30 Crossing will be little different than today’s report.
Also, little-changed is the construction of the new Bank of the Ozarks campus. There have been some announcements, a general contractor selected and so forth. As of this writing though, no dirt has been turned on the project. An adjacent lot has gotten started. A low-rise office building has been started next door to the First Security Bank. The still-waiting club includes the former Sears at South University and Interstate 630. Word is that the property owners are close to a redevelopment plan that is acceptable to the City leaders, and has some viability in the marketplace. Sometimes those are mutually exclusive.
Pleasant Valley and other neighborhoods that were on the western fringe of Little Rock when the former K-Mart on Rodney Parham Road opened 40-plus years ago are still waiting to learn the fate of the now-vacant big box. Personally, I’m rooting for a full redevelopment, not just a backfill with assorted bargain and discount stores. Some of the properties on Main Street in Little Rock are still waiting for long-promised redevelopment. There have been some more encouraging announcements and bits of progress with some of the owners that have made good on announcements. Many of us are still waiting to see how the panhandlers around town are going to be addressed. They aren’t exactly what one imagines as part of the Welcome Wagon corps. And Max is still waiting to learn if/when/where Costco will open. Keep your fingers crossed buddy.
Many things got done last year. One of those was the opening of the Broadway Bridge to reinstitute that third downtown connection over the Arkansas River. Mentioned above was the new northbound ramp from Cantrell Road to Interstate 430. The Little Rock Technology Park opened with a ribbon cutting, pomp and circumstance. Lowe’s opened in Little Rock after having been gone so long that most people never knew there was a store in Little Rock, only all the surrounding communities. Simmons Bank purchased the downtown building built to house Acxiom offices. Of the many sales in central Arkansas last year I mention that one because not only is it downtown, it has is an example property of how a city’s partnership with a private entity can have lasting results. When Acxiom elected to occupy offices in downtown Little Rock, it wasn’t yet truly cool to live and work there. Little Rock aided the project with the issuance of Act 9 bonds. As Acxiom moves on, Simmons Bank brings a new headquarters presence to the property, and a rejuvenation to the area. And as this column is being written it appears that a tax reform bill has been completed and the tax rules will look different going forward, for a while at least.
It appears that many, maybe most, of the tax laws that have helped drive the single-tenant-net-lease (STNL) market stay in place. We’ve touched on this submarket before. I bring it up again because not only does it continue to be an active market, but I also had an enlightening conversation with a married couple last week who had questions about a STNL investment they had considered. This couple had looked at a marketing flyer for a restaurant property and called the listing agent. Somehow the conversation lacked the clarity necessary for the couple to understand the investment opportunity. The listing agent failed to convey to the couple that the opportunity was to purchase only the real estate. The couple wanted profit-and-loss statements and financial reports on the business itself. The agent told the couple that financial statements on the business were not available. In calling me, they were asking why the agent expected them to purchase a business with no financial reports provided. After some discussion, we were able to connect the dots so that they left the conversation understanding that the investment was strictly a purchase of real estate with a tenant already in place. And hopefully, they will call me or another commercial real estate broker to advise them if they elect to move forward in seeking other STNL investment opportunities.
A big change to the way commercial real estate firms have been doing business occurred in December. Many, nay most, of the commercial real estate professionals in Arkansas have been using the CDX by Xceligent for the last eight years or so. That includes brokers, leasing agents, appraisers, underwriters, bankers and more people that have come the rely on the electronic availability of commercial property information. Residential real estate has long had cooperative data on multiple listing services (MLS). Commercial real estate was slower to adopt technology. Technology, though, has found its way into commercial real estate and the industry has become reliant on it. One of the tools of technology was the aforementioned CDX. The provider of the data platform, Xceligent, unexpectedly filed for Chapter 7 bankruptcy and liquidation. The entire company was shut down in 30 minutes and the website and all online products were immediately shut down. While there are many, many companies providing online goods and services to the commercial real estate industry, there is only one genuine alternative to Xceligent’s products. That provider is CoStar. So, the commercial real estate industry in Arkansas is in the midst of a transition to a whole family of new products for distilling commercial property data.
Tips and suggestions, well most of them anyway, are appreciated. Hope you found something interesting in the column this month. Check back again next month for the things that didn’t get included here this time and that pop up between now and then.