Property Managers Fend Off Hagglers, See More Lookers

by George Waldon  on Monday, Jul. 27, 2009 12:00 am  

Losses were more common than gains among this year's list of largest commercial property management firms. Most simply held steady.

(Click here to see the list of the state's largest commercial property management firms. A spreadsheet version is also available.)

Among the top 20 firms, four reported losses in total space managed while four recorded gains.

And amid the recession's real estate turbulence, property managers reported an increase in the number of deal-seekers.

Colliers International topped the 10.4 million-SF mark, retaining the No. 1 spot. That reflects a nearly 7.5 percent gain over its 2008 total of more than 9.7 million SF.

Flake & Kelley Commercial stayed at No. 2 despite a 19 percent drop from more than 8 million SF in 2008 to about 6.5 million SF this year.

Cooper Realty Investments of Rogers (No. 4 at 2.1 million SF) experienced a 12 percent decline. R.H. Ghan Commercial Properties of Fort Smith (No. 7 with more than 1.2 million SF) saw a whopping 47 percent increase.

At the other end of the spectrum was North Little Rock's Grubb & Ellis/Solomon Partners (No. 8 with more than 1.1 million SF), which fell by 43 percent.

Cypress Properties (No. 12 with more than 1 million SF) increased 6.7 percent. RPM Management of Little Rock (No. 14 with 915,000 SF) climbed more than 14 percent to round out the gainers.

Stephens Real Estate Investments (No. 20 with 423,000 SF) declined by 43 percent, which coincided with the razing of a half block of buildings along Main Street in downtown Little Rock.

Two new names in northwest Arkansas appear on this year's list.

Management Realty of Fayetteville (No. 19 with 560,000 SF) oversees a chunk of commercial space that previously was managed by another Fayetteville concern, Dixie Development.

Dixie left the list last year amid the financial setbacks of its leader, Ben Israel. The company ranked as high as No. 7 in 2007 with more than 1.4 million SF of office, retail and warehouse space under management.  

Portfolio Property Management of Rogers enters the list at No. 22, with 378,102 SF. The firm essentially replaces The Shearin Hathaway Group of Rogers. PPM acquired the lion's share of SHG's management portfolio in November.

Let's Make a Deal
Lou Schickel, president of Little Rock's Development Co., said that with the downturn in the economy some tenants have attempted to haggle better lease terms.

"On the front end and on the front of the middle end," he said, "some of these companies hire firms to come in and try to renegotiate a deal. We don't even respond to them, and we haven't lost anyone yet."

Greg Mueller, director of operations for The Ashley Co. in North Little Rock, also has encountered more hired guns attempting to redo leases on behalf of clients.

"It really depends on where the lease is," Mueller said. "If there's a pretty good term left on the lease, you don't really have to deal with them.

"For the most part, everyone has been fair with us. There's always a few folks out there trying to take advantage of the situation."

Bruce Burrow, principal of MBC Holdings Inc. of Jonesboro, said the pace of lease haggling really stepped up last year with the meltdown in the financial markets.

Much of the rent concession-hunting is done at the behest of national retailers, he said.

Burrow recalls a brief conversation with a national broker looking to get lease payments cut in half for a client that is doing good business locally.

"We just need to go see the bankers and see if they will cut our payments in half," Burrow said. "If they do that, we have a deal."

"Well, they're not going to do that," the hired gun said.

"Bingo, we're not going to cut your rent in half either," Burrow said.

Property managers report that while national retailers in general are in a holding pattern for new space, local tenants are scouting out locations.

"There seems to be a tremendous amount of activity," Schickel said. "There's still lots of people looking."

"I think there is some pent-up demand out there, retailers are just waiting for consumer confidence to return," Burrow said.



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