Covid-19 morphing commercial real estate market in state’s center
The commercial real estate market in central Arkansas continued to adapt to the new Covid-19 environment towards the end of 2020.
Landlords in the region became more flexible in accepting short-term leases, and tenants – especially larger office groups – were looking for a way to downsize when renewing leases.
The results of a fourth quarter market report released last week by the Colliers International Arkansas office read: “Some companies are seeing results working from home while others are still aiming for a gradual re-entry into 2021.”
The survey found that office and industrial vacancies were relatively unchanged compared to the second quarter when the coronavirus first hit, as real estate vacancies increased by almost 5 points and rose to 16.9% at the end of 2020, compared to one Vacancy rate of 12.3% at the end of June.
That’s not surprising given the economic chaos caused by the ongoing pandemic that has crippled retail outlets across the country. In Arkansas, the state cut more than 8,000 retail jobs from December 2019 to December 2020.
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On the other hand, Collier found in his report that vacancy rates for all three sectors improved towards the end of the third quarter. Office space fell from 20.3% to 18.1%; Industry fell from 12.5% to 10.2%; and, although compared to the second quarter, retail vacancies improved slightly from 17.5% at the end of September.
“Big brands and major retailers are still doing new business and have low vacancy rates,” the report said. “These retailers are the reason we’re seeing a 16.9% vacancy rate this quarter.”
However, the retail markets in Midtown and West Little Rock remain challenged. There the vacancy rates increased by an average of 5%, and the leasing rates are also falling.
Non-essential retail is unlikely to improve much until covid vaccination efforts ramp up, according to the report, which also predicted a rebound in multi-family homes as vaccines become more prevalent and infection rates begin to decline.
“The multi-family sector looks forward to a return to normal in 2021 as vaccinations increase,” Collier said in the study.
In other highlights, the report said that short-term leases will remain a trend in the office market in 2021 as companies evaluate how much space they need to be available to their employees amid ongoing work-from-home trends. Investors are likely to shy away from multi-tenant office space in a changing environment.
However, the report said that investor confidence and demand for industrial space remain high and should continue well into the year. “We continue to see demand for both medium-sized blocks of land and bulk distributions. This is evidence that consumers will continue to rely on e-commerce during the pandemic and users are demanding an increase in safety stock,” the report added.
In retail, rental rates could rise this year for tenants providing essential services such as auto repair, grocery, banking, and medical and pharmaceutical supplies.
Colliers International, with offices in Little Rock and Rogers, is the state’s largest commercial real estate, property management, and development management company. The company has total sales of $ 398 million and 115 employees in Arkansas. The Canada-based company employs around 18,000 people in 68 countries.
NEW Lender
Capital CDC, a nonprofit small business finance provider, has been approved as a certified development company in Arkansas.
The Austin, Texas organization will operate in Clarksville as a base in Arkansas. The company has provided funding in Texas and New Mexico.
The US Small Business Administration approved Capital CDC’s Arkansas application.
“Improving access to capital for small businesses is a top priority for SBA and our mission here in Arkansas, especially during the ongoing challenges posed by the pandemic,” said Edward Haddock, district director for the Arkansas federal agency.
Capital CDC has worked with more than 1,000 small businesses and has worked with financial institutions to provide Small Business Administration funding for the purchase or construction of buildings, machinery, or equipment under the Small Business Administration 504 loan program.
“We bring years of hands-on experience and a unique blend of expertise in using SBA products to Arkansas to provide small businesses with an efficient process for securing long-term, fixed rate SBA funding,” said Thomas Braasch, executive director for Capital CDC.
PPP loan
Bank directors and shareholders will be able to apply for Paycheck Protection Program loans from their banks under the amended rules issued by the Federal Reserve Board last week.
“To avoid preferential treatment, the board is limiting the type and amount of credit that bank directors, shareholders, officers and companies of these individuals can receive from their affiliated banks,” said the Fed when it announced the new rules. “However, these limits have prevented some small business owners from accessing PPP loans – especially in rural areas.”
The guidelines are an extension of similar rules enacted last year during the first round of funding for the paycheck protection program. The Rule Extension will take effect immediately and will apply to Paycheck Protection Loans granted through March 31st.
Disaster relief
Small businesses have until February 22nd to apply for disaster relief loans for economic losses caused by severe storms in northeast Arkansas last March.
The loans come from the US Small Business Administration and are available to non-agricultural companies, agricultural cooperatives, and other small businesses involved in aquaculture.
The Small Business Administration provides up to $ 2 million in loans over a 30 year period to cover fixed debts, payrolls, liabilities, and other expenses that cannot be paid due to the disaster. The interest rates are 3.75% for businesses and 2.75% for private nonprofits.
The federal low-interest catastrophe loans are available in Craighead, Greene, Jackson, Lawrence, Mississippi, and Poinsett counties.
For more information and applications, see Disasterloanassistance.sba.gov.
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