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Leasing prognosis.


The leasing market in Little Rock-North Little Rock for office space has been on the mend for six years. Occupancy rates have recovered from 76.3 percent in 1986 and have been hovering around 80 percent for the last three years.

Retail space has held its own during the last four years. Occupancy has bounced between the 84-87 percent range to 89 percent.

Players in the leasing game have recently been dealt a double wild card affecting the psyche of the business community to varied degrees. Recessionary concerns coupled with the uncertainty of how war in the Persian Gulf will impact the economy are having a mixed effect to date.

The flat office market might be feeling some additional pressure prompted by these tandem variables. There is some hesitancy and caution among tenants and would-be tenants as they mull over their options.

When it comes to dickering over office leases, tenants already have an advantage. The same can't necessarily be said for retailers in search of space. Finish-out costs are a big point of negotiation, and the the final decision boils down to who the tenant is and just how bad a leasing agent wants them.

"I don't know if it's really a tenant's market in retail," relates Rick Ashley, owner of the Ashley Co. in North Little Rock. "It's just about even money on the tenant or landlord."

This time of year is traditionally a slow time for leasing activity anyway. The short-term prospects for an improvement might be further dampened by a wait-and-see attitude out in the market.

Property managers and leasing agents are taking heart that if this conservative viewpoint prevails among tenants they will reap the backside rewards later.

Any slump in the market is predicted to be a short one, and real estate players believe the businesses that have gotten lean and mean during the recession will be ready to bust out of their conservative mode with expansions.

View From The Trenches

What are property managers and leasing agents seeing out in the trenches?

"Back before Christmas, we had a flurry of leasing activity," reports Dwight Blissard of Blissard Management & Realty Inc. "Since then it's not been as frenetic, but in some of our smaller buildings, we've achieved 100 percent occupancy for the first time in two or three years."

Two of Blissard's recent highlights are at the Ten Three Ten Building in west Little Rock, where Arkansas Sports Medicine Clinic and Miller Leek & Spinks accounting firm teamed up to lease nearly 6,300 SF.

John Hathaway, director of leasing with the Hathaway Group, notes that a lot of people are trying to make do with less. He's unsure if it's a real bottom line question for these folks or more of a psychological perception that business will slow down.

"I'm seeing basically fewer deals, fewer people looking," observes Hathaway. "From the leasing standpoint, I'm not so worried about the recessionary effects."

"I don't know that I've lost any leases because of recessionary concerns," Rick Ashley says. "If it doesn't pick up in the next couple of weeks, I may be concerned. In talking with some of my tenants, things seem to be a little bit flat."

New tenants entering the market is the one area probably hit the worst during these times. Drew Basham, marketing director with Basham & Co., has seen national and regional tenants refrain from entering the market until the economic picture settles.

"The majority of those guys are really backing off because of the economy, even though we're not as over-built as some other markets around the country," Basham states.

He is seeing some movement among tenants despite the reluctance of some to open shop or expand.

"Normally this time of year is traditionally a slow time," Basham points out. "We've probably got more activity this month than I can remember at any other time. We're real encouraged."

Positive Outlook

A recessionary period is one of the best times for businesses officials to open or expand because they don't have to deal with as much competition. That's the property manager's position anyway.

However, Hank Kelley, a partner in Flake, Tabor, Tucker Wells & Kelley, will testify that he is showing more space per customer these day. The reason? The mentality is there are bargains out there to be had.

"From an overall standpoint, we still see a healthy level of activity in the market," "Much of it is in the 1,000-4,000 SF range.

Part of that gets back to the lending climate which affects any expansions too. When money is harder to get, the leasing market feels the pinch. On the other side of the equation, some tenants are trying to downsize and / or look for more economical quarters.

"What I see in the marketplace more than any other time is that location decisions are being driven primarily by economics," Kelley adds. "I do not think that the majority of people I'm working with are overreacting. They're taking time reevaluate where their business is at and where it's going."

Landlords and the like are cautiously upbeat that business will soon be on the upswing and that tenants and consumers will regain any lost faith in the economy.

PHOTO : LAUNDRY DRYING: "We're seeing a greater influx of RTC properties, and we're trying to work through their occupancies," notes Dwight Blissard of Blissard Management Co.

PHOTO : LESS LEASING: "I'm seeing basically fewer deals, fewer people looking," observes John Hathaway, director of leasing with The Hathaway Group. "From the leasing standpoint, I'm not so worried about the recessionary effects."

PHOTO : ENCOURAGING SIGNS: "Normally this time of year is traditionally a slow time," points out Drew Basham, marketing director with Basham & Co. "We've probably got more activity this month than I can remember happening during this time of the year. We're real encouraged."
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Title Annotation:a forecast of the leasing market
Author:Waldon, George
Publication:Arkansas Business
Date:Feb 4, 1991
Previous Article:On a fast track.
Next Article:Arkansas Business of the Year 1990.

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