by Paul Gatling
Posted 6/25/2012 12:00 am
Updated 6 months ago
No matter where he goes, Ramsay Ball is hearing the same refrain these days.
The chorus has been welcome and largely positive.
"Everyone I talk to [about real estate] on the commercial end - the architects, title companies, lenders - are all seeing an increase in their commercial activity," said Ball, a principal at Colliers International, working from the firm's northwest Arkansas office in Bentonville. "Instead of staring at the phone, they're all busy."
There's more happening, Ball contends, than most people realize. Investors are making deals for dirt and other developments, and leasing activity is picking up too.
Another tangible sign of the market's rebound is that CBRE Group Inc., the world's largest commercial real estate firm and the only one included in the Fortune 500 rankings, recently opened an affiliate office in Fayetteville.
"The activity has gone from zero to 40 miles an hour," Ball said. "That might be different than the 100 miles an hour we were doing in 2007, but it's certainly a breath of fresh air. There's wind in the sails."
A handful of other local professions agree with Ball's assertion. If the first few months of 2012 are any indication, expect more CRE activity throughout the year.
"We've seen a huge pickup [in closings] in the first five months so far this year," said Matt Kendall, president and CEO of Waco Title Co. in Springdale. "What we've seen in our commercial growth has been [an increase of] about 35 percent over 2011 and 22 percent over 2010. It's been a huge pickup."
Roger Boskus, a partner at Miller Boskus Lack Architects in Fayetteville, said his firm was also seeing signs of positive momentum with regard to the number of CRE inquires, and even proposals.
"Last year, if we got a couple every quarter, that was a lot," he said. "Now it's like a couple every week. We're getting barraged with all kinds of things.
"And my real estate broker friends, it seems like we'd talk to each other once a week," he added. "Now we don't even talk because everybody is too busy to chit-chat."
According to the latest Skyline Report, $37.1 million in commercial building permits were issued in northwest Arkansas from June to November last year.
That total was down 18.1 percent from $45.3 million spent in the previous six months, from December 2010 to May 2011.
"In general, with office and speculative development, there is very little new construction," Ball said, noting the exceptions of activity in the student housing sector and the numerous projects taking place on the University of Arkansas campus. "Each of those student housing projects is about $30-to-$35 million, with the land costs and everything. And you've got four of those going right now, so that's $140 million worth of new construction."
Boskus, though, said the amount of medical office, retail, new restaurant and new professional space projects his firm is involved with has increased "probably 75 percent" in the past two years.
"There are real projects happening, and that is exciting," Boskus said.
Though guarded about most CRE projects in the firm's pipeline, Boskus did reveal that The Egg & I, a breakfast food restaurant chain based in Fort Collins, Colo., will open its second Arkansas location in a new retail center being planned near Pleasant Grove Road in Rogers.
Boskus said construction of the 18,000-SF building, which will house other tenants that are yet to be named, should start later this summer.
"That's probably as specific as I can be," Boskus said. "There's some other stuff that is on the verge of becoming public information."
Researchers from the University of Arkansas' Center for Business & Economic Research produce the Skyline Report, an analysis of the residential, commercial and multifamily markets in Benton and Washington counties.
Portions of the report are made available every six months for the commercial and multifamily survey.
The latest report, released in April and covering June to November 2011, showed the vacancy rate for office space remained at 19.5 percent from the previous six months.
The report showed 77,630 SF became occupied in the market, with a net positive absorption of 57,325 SF.
Ball noted an increase in several CRE sectors, but he predicted a particularly stronger demand for office space as the year continues, spurred by renewed growth in the vendor community through expansion of existing vendors and new vendors entering the market.
"We're seeing a lot of leasing activity and additional reports will be out very soon to reflect that," he said. "The vacancy rate marketwide in multifamily should be less than 5 percent, which is very healthy. The slack is coming out of the market."
The next Skyline Report is due out in October.