Cody Crawford likes being in the position to pick and choose, and the northwest Arkansas market is allowing him to do just that.
Crawford, the president of CR Crawford Construction LLC of Fayetteville, said his company had a great year in 2015 with revenue of approximately $125 million, and, so far, this year is looking to be just as good. As the area shakes off the hangover of the recession from nearly a decade ago, contractors such as Crawford are finding their services growing in demand.
“In this current market, we can be a little more selective about the deals you’re doing,” Crawford said. “In the recession, every deal counts. Right now, you try really hard to stay involved in the opportunities that appear to be with good clients. You can be a little pickier about that.”
It’s a nice boost to the company, which celebrates its 10th anniversary this year and in February was named the Arkansas Business of the Year for companies that have between 26 and 75 employees. CR Crawford survived the economic downturn in its infancy and has consistently added workers the past 18 months, and Crawford believes further expansion is coming.
“Last year was the first year we could say it was significantly better as far as the amount of opportunities out there,” Crawford said. “Compared to the middle of the recession, it has literally doubled the size it was at that time. I don’t know if it is our company growing and obviously having the opportunities out there. There are more developers doing things. Business is growing for most of our clients, and those people have provided a ton of opportunities for us.”
The costs of building things have gone up in northwest Arkansas, developers said. It’s not just that land value has risen — making that prime location for the next office complex that much more pricey — but construction and labor costs have also risen.
Because it’s market-driven, though, rent rates have also responded to the pressure, so the higher price tag on projects hasn’t kept activity in northwest Arkansas from rolling right along. T.J. Lefler of Sage Partners in Fayetteville said the availability of good financing terms is another factor keeping the market growing.
“I haven’t seen it having an effect on people wanting to build things,” Lefler said of rising prices. “Interest rates are still so low that people can get a loan. I’ve seen aggressive restaurant expansion.”
Quality Market, Quality Deals
No one wants to return to the hard times of the recession, especially Joshua Brown, the co-founder of Haag Brown Commercial Real Estate & Development of Jonesboro. Brown said that downturn forced contractors to do whatever was necessary to survive.
A company like Haag Brown, which pays contractors to build its projects, was often the beneficiary.
“Back when the market in northwest Arkansas shut down, one of the things that was good was you could get A-plus construction for a C-minus price,” Brown said. “It’s just the whole supply-and-demand thing. If a contractor is really, really busy making a lot of money doing a lot of deals, he’ll probably give you a lot different price to build a small strip center than he would at a time he was really wanting a deal.
“It’s no different from that now. If you call any of the major construction guys who are busy now, you’re going to get a different price. If they’re really busy, it makes sense they’re going to give you a higher price.”
Brown said Haag Brown usually contracts with Stonebridge Construction of Jonesboro, and the long-standing relationship between the two companies helps each avoid bidding battles. Haag Brown was named the Arkansas Business of the Year for companies with one to 25 employees, and it recently opened a branch in northwest Arkansas.
“I don’t think we’ve seen construction costs go up much over the last two to three years since we’ve been developing,” Brown said. “For construction costs, we try to be more competitive than someone who just calls a construction company and gets a bid to build something. We have a pretty refined process between the builders and our in-house architect. That is one of the advantages we have; our prices aren’t going up. We have to pay more money for a piece of property to build a building.”
Logical and Sound Forces
Ramsay Ball, an executive broker with Colliers International in Bentonville, said his company is in the process of putting some projects together and he is interested in seeing how the pricing of all the parts come together.
“We’re fixing to do a little recon to see where the numbers fall,” Ball said. “The main thing is you have accurate pricing and don’t get yourself in a bind. I hear the market is pretty tight. There is a lot of work for different folks. It can be challenging to get costs down on projects.”
Ball said the current market is good because the growth is being driven by rational forces and rational deals. Developers are getting sound financing and getting a lot of pre-leasing, which stabilizes rent rates and prevents some wasted space.
“This market is very similar to 2015; 2016 is going to be the same way,” Crawford said. “There’s going to be a lot of good opportunities out there with legitimate, capable clients. So far the banks have done a really good job of making sure the right guys are doing the right deals. It’s just not a crazy environment where you have people doing projects they have no business doing.”
When CR Crawford started, the company did more than 70 percent of its work outside of Arkansas, Crawford said. It went where its clients went, but now the company does approximately the same percentage of its business in Arkansas and recently moved into the top five of largest construction companies in Arkansas.
“Now we have our name out there and we’ve become a competitive contractor in Arkansas, and we probably have 70 percent of our business in Arkansas,” Crawford said. “There is a lot of stuff going on around Little Rock. Northwest Arkansas, in my opinion, is back and as good as it has ever been. Since I’ve been doing it, it is as good as it has been. On a per capita basis, we have as much going on as anybody.”