Stuart Dalrymple, a Certified Commercial Investment Member, bought Powell Realty in 1990 and became a commercial broker. Dalrymple has brokered numerous commercial deals across Arkansas and Oklahoma, developing commercial projects resulting in more than $100 million in sales, and has renovated or developed more than 40 major retail or industrial sites in Arkansas and Stillwater, Oklahoma.)
Commercial real estate sales have struggled in the past couple of years. Is that entirely related to interest rates, or has something fundamentally changed?
The main decline has been related to investment portfolio properties. A massive amount of investment properties was purchased with return on investment at low rates of capitalization. These properties were originally purchased with exceptionally low interest rates, which gave the investor a decent return. However, many of the low-interest rate loans are being repriced at higher rates as they mature. There is a lot of cash on the sideline. Safe investments such as Treasury and certificates of deposit are giving decent returns, making it hard to price in risk for commercial real estate investments. Another major factor is inflation of construction costs, development costs, insurance and property taxes, all of which make it challenging to put a deal together with lease rates that tenants can sustain.
What’s driving the increase in retail development in Searcy?
Recently the citizens of Searcy voted to invest in their community through projects such as a new community center, library, sports complex, bike trails and park innovations. We have a forward-looking mayor, city council and chamber of commerce. Our Forward Searcy initiative, partially led by our economic development arm, is focusing on development and growth that is contributing to such projects as an $80 million expansion of Bryce Corp., Walmart’s investment in its distribution center in Searcy, an Arkansas Economic Development Commission grant of $1.5 million to Harding University for its digital forensics lab, and the list goes on. Searcy has a unique, vibrant, growing downtown. The Searcy Commercial Historic District is listed on the National Register of Historic Places. Our workforce is extremely healthy, with support in precisely targeted areas by Harding University, Arkansas State University-Beebe’s Searcy Campus and Unity Health. Searcy has become an art and cultural hub of central Arkansas. The citizens living here are excited and bound together.
What are the greatest unmet demands of potential commercial developers, buyers or lessees?
The cost of extending the infrastructure is expensive. Developers and buyers need a way to recover the cost, either by partnering with the cities or through shared contributions and tax incentives.
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