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Colliers President Isaac Smith on the ‘New Normal’ of Commercial Real Estate

2 min read

Isaac Smith is president of Colliers Arkansas, where he and CEO Kevin Huchingson lead the brokerage firm’s overall strategy. Smith joined Colliers in 2003 as a broker, became a principal in 2009 and was named president in 2017.

Smith earned a Bachelor of Science in business administration from the University of Arkansas.

What’s your overall outlook for office space in Arkansas?

Fortunately, Arkansas is relatively insulated from the extreme office woes we all are hearing about in the news. The west Little Rock, Riverdale and certainly northwest Arkansas office markets are still very strong. There are also several positive strides being made in downtown Little Rock. In general, we expect continued demand for quality office space, particularly suites in the 2,500- to 7,000-SF range.

Post-COVID, what does the “new normal” for office and retail real estate look like?

For office, the return-to-office vs. work-from-home dynamic is a huge new factor in operational decisions. Companies are now forced to decide what (and who) will be required for their physical footprint, which has huge implications on office real estate. Retail has weathered the COVID storm a little better than office, and users continue to make adjustments and right-size in light of the online shopper growth.

Is central Arkansas poised for more spec industrial space?

In Arkansas, developers are currently in a wait-and-see state regarding new industrial speculative builds. Typically, spec development is geared toward distribution users opposed to manufacturing. Currently, there is plenty of new Class A distribution warehouse space on the market, and more spec development won’t happen until that space is leased.

What effects are high interest rates having on commercial real estate projects in Arkansas? How are you and your clients adjusting?

The largest impact of rates we are currently seeing is in the investment and development sectors. At elevated interest rates, market rents no longer provide the proper debt service coverage, so our clients are forced to consider increasing equity, attempt to push rents higher or place projects on hold.

How has working with banks and other financiers changed in a high interest rate environment?

The largest change is that some banks are opting to build liquidity rather than lend on new projects. Fortunately, Arkansas is blessed with several great banks that are still actively looking to finance deals.

What’s a good leadership lesson you’ve learned?

A lot of the negative in this world is virtually impossible to control or even curb. But as a leader you can create and multiply the positive. My experience has shown me it can breed faster and have a more powerful impact than the negative.

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