Cody Crawford loves this economy.
Crawford, the president of C.R. Crawford Construction of Fayetteville, has his hands full with work these days. He’s not alone as the region has shown signs of finally shrugging off the hangover of the recession of 2008 to get back to the business of building.
“There has definitely been a major improvement,” Crawford said. “I wouldn’t call it boom times. Everyone later learned that wasn’t necessarily a good thing. We’re in a healthy market right now. I can say this: I like the market we’re in better than any past market. It’s not over-the-top, which I would rather not see.”
The cities along the Interstate 49 corridor that form the nucleus of northwest Arkansas have seen surges in construction permits. Considering only new commercial construction permits, Rogers saw an increase from $28.9 million in 2013 to $75.4 million in 2014, and Bentonville saw its year-over-year permits go from $36.5 million to nearly $106 million.
Fayetteville also saw an increase from $45.4 million in 2013 to $58.8 million in 2014.
Of course, things looked great about eight years ago before the roof fell in on a lot of heads. Developers and builders say this time feels different.
“It’s a smart market,” said Greg Fogle, the president of the midwest division of Nabholz Construction of Conway. “I’m impressed with how calculating people are with investments.”
Crawford Construction, which is licensed in multiple states, is working on several northwest Arkansas projects, including a new office complex for BNSF Logistics in Springdale, a new school in Prairie Grove and a medical clinic in Fayetteville. Crawford said he has hired 10 new employees — a mixture of project managers, superintendents and support staff — in the past year to handle the increased workload.
“This year really feels like a year where we’re moving forward even further,” Crawford said. “There’s no doubt the past year or 18 months there have been several things that, three or four years ago, would not have happened or would have been canceled. You’re seeing it get back to a normal market where a developer goes out and buys land, gets the entitlements done and does a contract and the project starts.”
It’s a sentiment echoed by other developers and construction executives in the area. Ramsay Ball, a principal with Colliers International in Bentonville, compared the previous post-recession market to “The Price Is Right” since some investors bought property but weren’t emotionally ready or financially able to do much with it.
“When there is demand, people will step up and build,” Ball said. “It’s not a shell game. There are more beads under the shells.”
The Billion-Dollar Mile
More beads means more shovels in the dirt. Ball and other developers, such as David Erstine of CBRE in Fayetteville, said the region’s building energy is represented by the Pinnacle Hills area, Benton County’s Billion-Dollar Mile.
Hunt Ventures completed one office building there and has a nine-story building under construction.
“Pinnacle certainly has a lot of new development going on,” Ball said. “The rebirth of Pinnacle is a story because it went through a lot of PR, and during the recession it kind of shut down. There has been a lot of money made and lost at Pinnacle over the years. It’s certainly a very dynamic area right now. You can really see shovels flying and cranes up.”
Fogle said he believes one project being put into action can cause a ripple effect that leads to another project and another, especially in an optimistic time such as now.
“It’s definitely a different environment than it was two years ago,” said Fogle, who is based in Rogers and is overseeing the company’s construction of the Scott Family Amazeum in Bentonville. “People are investing in building. It’s really exciting. It’s like, ‘Stay tuned. Something great is going to happen.’ It’s almost like a sigh of relief in the market.”
Grady Mathews of Sage Partners said that when he meets with developers and investors he asks them if they are getting scared yet. Mathews said, in his experience, most developers are entering projects with a Plan B just in case something goes wrong, a fail-safe not common last go-around.
“You see all this money that has been sitting on the sideline, and now people are out there doing stuff with it,” Mathews said. “The longer the economy stays positive, the more risk people are going to be willing to take. That’s a little scary considering what we’ve gone through.”
Fogle said the only drawback to the rebirth of construction is that the demand for skilled labor can be hard to satisfy. He said Nabholz has 60 positions open, including 15 in northwest Arkansas, that the company is having a hard time filling.
Matt Crafton, CEO of the engineering-architecture firm Crafton Tull of Rogers, recently hired two new project managers because of increased work demand. Crafton said big projects get a lot of publicity but northwest Arkansas is seeing a lot of construction demand in many different sectors.
“It’s really not one thing in particular, not one particular sector,” Crafton said. “It’s a rising tide lifting all boats. It’s a good feeling, again. It has been a long time since it has been like that. The general sense is things are on a good trend for the design and construction world right now.
“It’s not crazy, but it’s good and steady, and that’s the way we like it.”
The underlying fear, of course, is of another market bubble that will pop. The last one was memorable, but if the market continues to heat up, the temptation to get caught up in the hoopla may be more difficult to resist.
“I’ve seen that mindset kind of diminish as these projects that are new to the market are so well received,” Erstine said of investors’ cautiousness. “We’re seeing the mindset change to more of a speculative state than we’ve seen.”
So far, though, no one has apparently thrown caution to the wind. Crawford said one main reason for that is the major investors in the area are the ones who were smart enough and deep-pocketed enough to survive when others didn’t.
For construction companies — or engineering-architectural firms — the biggest risk in real estate is getting involved in a project that you don’t get paid for.
“We don’t want to get too caught up in the hype of a good market and go out there and take on some major project for a developer who could wind up selling,” Crawford said. “If you look at the guys who are still around — Hunt Ventures, [Sam] Mathias, those companies — they stood the test of time. They’re going to be here. The good thing is the people who are doing projects have weathered the storm and they should be doing this.”
Crafton said no professionals suffered more during the recession than architects, who had a 25 percent unemployment rate. So you’ll excuse Crafton Tull, in business for more than 50 years, for not falling for rash exuberance.
“There are a lot of very hard lessons learned during the recession,” Crafton said. “A lot of people got their nose bloodied. It seems like we’ve learned those lessons, at least for now. In the development world, people are doing their homework and building where there is a need. We’ll be better off in the long run using our heads instead of our guts.”