Tough Times Will Lead to Best of Times, Hank Kelley Tells Commerce Arkansas

by Mark Carter  on Tuesday, Nov. 3, 2009 10:35 am  

Almost 1,000 people registered for Commerce Arkansas.

(Watch Streaming Video of Commerce Arkansas attendees here.)

Hank Kelley brought a silver lining with his cloud Tuesday morning at Commerce Arkansas.

The Little Rock commercial real estate magnate forecast another 18 months of tough economic times before things return to normal. He cited numbers that show the national market down 26 percent with a further drop of 14 percent expected. But the wait will be worth it, he promised.

"If you can make it through this period, then it's the best of times," he said.

Kelley, CEO of Flake & Kelley Commercial, was one of many speakers participating in the second annual Commerce Arkansas business expo, sponsored by Arkansas Business and the Little Rock Regional Chamber of Commerce and held at the Statehouse Convention Center in downtown Little Rock.

Addressing the commercial real estate market, Kelley said a peak-to-trough decline of 40 percent is expected. Since the second quarter of 2007, commercial transaction values have dropped 39 percent, and appraisal values have fallen 24.6 percent and are expected to dip another 16.7 percent.

Kelley noted local and national office vacancy rates:

  • Vacancy rates are at 14 percent nationally and expected to hit 18 before things turn around. Office vacancy rates vary from 9 to 15 percent in central Arkansas and from 22-23 percent in nothwest Arkansas.
  • Nationally, retail space occupancy is down 12 percent; industrial space down 8 percent; office space down 10 percent, and apartment occupancy is down 6 percent. Kelley said longer-term leases have been a saving grace. 
He said he has seen a recent rebirth of business activity in northwest Arkansas and noted that things are beginning to move in downtown Little Rock as people begin the recognize the bargains available there.

"There are signs of growth locally," Kelley said. "People are reaching down to try and make the next step happen.

"The good news about the bad news is that in our area, once we can get through this contraction, I think we're well positioned in central Arkansas for growth with our diversified economy."

Comerce Arkansas continues through 4 p.m. today. Windstream CEO Jeff Gardner will provide the luncheon address, and is expected to provide details of his company's acquisition of NuVox, announced Tuesday morning.

See live video streaming from Commerce Arkansas here



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