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The slump continues.

Little Rock Developer Sees An End To Gloomy Commercial Real Estate Market

Recent commercial real estate developments in central Arkansas have been discouraging.

Foreclosures, lawsuits and bankruptcies among major players such as the Crestwood Co. and Basham & Co. cast a pall over the industry.

Commercial real estate, like other industries, is subject to cycles, according to John Flake, a partner in the state's largest commercial real estate firm, Flake Tabor Tucker Wells & Kelley Inc. of Little Rock.

Flake believes the worst may be over.

"What we are seeing is the tail end of a real estate cycle," he says. "But we are moving slowly."

Like most large commercial real estate firms in Arkansas, Flake's firm is a diverse company involved in sales, leasing, management, consulting and development.

"Sales are excellent," Flake says.

Still, he notes a change in investors' attitudes.

"We are not seeing the conventional limited partnerships that were tax driven," Flake says.

Today's investors, having had time to learn the nuances of the 1986 Tax Reform Act, are attracted by the viability of the investment. The most attractive properties are:

* Shopping centers that are anchored well and located in established locations.

* Office buildings that are fully leased.

TABULAR DATA OMITTED

New Developments

Flake's development efforts will not include "spec" buildings in the near future.

First, there is no market. Two large downtown Little Rock office buildings -- the TCBY Tower and the Stephens Building -- are among those that are still not fully occupied.

Second, money is tight.

"Lenders are looking at credit projects with the highest debt coverage ratio I have ever seen," Flake says. "We used to see projects underwritten with a debt coverage ratio between 1.1 and 1.2."

That has risen to 1.25 to 1.3.

Almost Made The List

This week's Arkansas Business list covers the top commercial real estate agencies in the state, ranked by the number of licensed agents.

That is not always the best gauge of a firm's success, however.

Some firms with only a few agents handle a large dollar volume.

The following list is of Arkansas companies with three licensed agents that responded to a survey.
COPYRIGHT 1991 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:commercial real estate market in Little Rock, Arkansas
Author:Gibson, Carolyn
Publication:Arkansas Business
Date:Oct 14, 1991
Words:358
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