Kelley Commercial Partners emerges with new brand, new energy amid COVID-19 pandemic
July 6-12, 2020
This is the first in a two-part series on
KELLEY COMMERCIAL PARTNERS
By the Daily Record Staff
After entering 2020 expecting another strong year of performance, Arkansas’ foremost commercial real estate brand was suddenly faced this spring with two, once-in-a-lifetime business interruptions in the space of 30 days.
Today, as Arkansas continues its Phase 2 reopening from the global coronavirus pandemic that has now topped 20,000 cases in Arkansas, the former Flake & Kelley has completed a 60-day companywide rebranding following the surprise announcement on May 7 that one-half of the iconic real estate firm’s partnership was parting ways.
Reflecting on those tumultuous days now in the rearview mirror, Henry “Hank” Kelley Jr. and his new team of partners sat down for nearly 90 minutes with the Daily Record at the company’s office at the downtown Simmons Tower to talk about the new rebrand and “new norm” the firm faces amid the COVID-19 crisis.
Kelley, the CEO and executive broker at the newly branded Kelley Commercial Partners, said his current team had already been in place for many years but now the strengths and talents of the new nine partners will be the focus of the real estate venture.
“All the people here are partners of Kelley [Commercial] Partners,” Kelley said, looking around the table. “We have other associates but when we named the company … my hope was to emphasize the ‘partners’ associated with the firm. If you look at our tenure in the business and what clients we represent as a group, we are active and grateful with clients we have.”
Kelley later emphasized even though John Flake left the firm and removed his name from the company, the company’s focus and operations in Central and Northwest Arkansas commercial real estate will continue much the same way it has for years.
“I have been given a license to drive the bus,” Kelley said jokingly of his chief executive responsibilities. “The corporation didn’t change – the name changed.”
Statewide, Kelley Partners’ main offices in Little Rock and Springdale now include nearly 80 employees providing brokerage and leasing services, investment sales, property management, retail and tenant landlord representation, consulting, accounting, marketing and administration, and facilities services. Kelley said the firm – which manages the Simmons Tower, Little Rock’s tallest office building – also provides some legal, regulatory and other development management services when needed.
Kelley CFO Maggie Hogan, also with Company President Daryl Peppers and Executive V.P. Nicholas Kelley, serves as the firm’s executive team that handles day-to-day operations. She said the companywide rebranding effort began immediately after the Flake & Kelley split in early May. She said John Flake had already stepped away from most of his management duties and was mostly involved in “transactional” deals.
“But the [rebranding] has been well-received as far as we can tell,” said Hogan. “But generally speaking, it is a lot of work and a lot of coordinating trying to get websites changed, email addresses, signage and all those types of things that come with it.”
Kelley added that part of the redemption agreement with Flake included mothballing the familiar Flake & Kelley moniker so there would not be multiple names in the Little Rock market associated with the Flake family. In ending his partnership with Kelley, the 72-year Flake has joined his daughter Jessica Flake Dearnley in a new firm called Flake & Company. (See related story on web).
“We wanted to avoid confusion in the marketplace so there would not be a Flake & Kelley Commercial and a Flake & Company. Everyone would say that is a confusing situation, so we were glad to make that as one of the arrangements in the redemption agreement to say, ‘we will change our name.’ And we have done so in less than 60 days,” said Kelley.
Hogan also said the company’s former logo, corporate colors and brand layout have stayed with Kelley Commercial. Kelley added that all the partners and the firm’s outreach team, led by Brooke Miller, have ramped up efforts to sit down with clients and explain that nothing at the firm has changed in terms of day-to-day operations and the service the company provides.
“These were the partners of Flake & Kelley and are the partners at Kelley Commercial,” said Kelley, pointing at the newly minted partners gathered around the table at the firm’s corporate offices at the Simmons Tower. “Our new name is intended intentionally to raise up the partners in the firm. I like to think I am a part of that, but it is a partnership now where we value each of the partners here and the associates that are with us.”
COVID-19 and the commercial real estate market
While Flake’s departure may have been in the cards for a time, what the state’s premier commercial real estate firm did not foresee was the impact of COVID-19 on the industry after Arkansas reported its first positive case of the novel coronavirus on March 11. Soon after, Gov. Asa Hutchinson instituted stay-at-home orders and social distancing policies that have greatly impacted the commercial real estate industry in Arkansas.
According to the highly watched Skyline Report produced quarterly by Arvest Bank, Arkansas commercial real estate sector was poised for another great year entering 2020. In the high-growth Northwest Arkansas, where Kelley Commercial is now a major player, commercial building permit values for all of 2019 were $363.9 million, the highest one-year total since the inception of the industry report.
“The Northwest Arkansas market has added more than 1.5 million square feet of new office space since the beginning of 2015, and during this time the vacancy rate for such space has steadily fallen,” said economist Mervin Jebaraj, director of the University of Arkansas Center for Business and Economic Research (CBER). “This demonstrates the continued demand for quality, rentable office space in the region. It will be interesting to see how the current financial situation due to COVID-19 impacts growth and demand in the region in the near-term.”
As noted by Jebaraj, some analysts have also predicted that COVID-19’s toll on the estimated $16 trillion U.S. commercial real estate market has only begun to show as buildings start reopening in cities and properties emerge from months of mass shutdowns.
Locally, Kelley said his firm is working closely to assist those tenants impacted by the COVID-19 spread in Arkansas. He also noted that many of the firm’s clients have also been able to get state and federal financial assistance through the federal Coronavirus Aid, Relief and Economic Security (CARES) Act, the $2.2 trillion emergency relief act enacted into law on March 27.
“Tenant safety and assisting tenants with shortfalls they may experience with the after-effect of COVID-19 shutdown and how we can assist to get them through the difficult time as a team effort, we are all in this together,” he said. “We have been fortunate with our tenants. Due to the CARES Act, we have not had a tremendous number of tenants asking for abated, deferred rents.”
Still, Cynthia Lu, a Kelley Commercial partner and commercial real estate broker who serves the retail sector, said her clients on the front lines of the pandemic in Arkansas have been greatly impacted. Although the firm has built its reputation on understanding the local retail market by building strong relationships with clients, Lu said her job has become more difficult since the stay-at-home and social distancing policies kept her working remotely for several months.
“Not having that face-to-face connection has been challenging – even just wearing a face mask to a showing,” said Lu, speaking through a mouth covering at the company’s downtown headquarters. “You cannot read people as well, so that is one of the main changes I have seen in how we do business.”
Lu said she and Kelley Commercial partners and associates are compensating by holding virtual Zoom meetings and Facetime calls with clients. She also said that one of the good things that has occurred from the pandemic is that the Little Rock firm has strengthened ongoing relationships with clients.
“What is interesting is that when we were all working from home, people had time to have conversations,” said Lu. “And so that has strengthened the bond that we have with a lot of our clients. In a normal situation we were not able to do that because we are all busy going to the kids’ soccer games, going to church, and doing this and that – so that has been a positive.”
Lu, Miller and Kelley Commercial property manager Eric Varner, all agreed that most national and retail deal flows were stunted during the local and state shelter-in-place mandates. More recently, however, the firm has seen a strong rebound in activity since Gov. Hutchinson initiated the state’s Phase 2 reopening on June 15. Lu said Kelley Commercial partners are now reaching out to those clients that put deals on the shelf in March.
“We are going to reach out and they are going to say now they are ready again,” said Lu. “So, it has been a rollercoaster. The goalposts have changed daily, and strategy has changed daily because every day we get new information.”
While all the other partners were speaking, Kelley Commercial President Daryl Peeples sat quietly and shook his head agreeably concerning the company’s operations since the highly contagious virus alit upon Arkansas in March. When Hogan noted that Mayor Frank Scott’s recent executive order requiring anyone in public to wear a face mask sent the firm scrambling on how to respond, Peeples echoed the current cliché that has become part of COVID-19-speak.
“It varies every day,” Peeples said of the real estate firm’s “new norm.”
“The thing that I know we have when I walk in and look at the organization is that talent to handle whatever area that is going to pop up. I am confident that when we get our arms around whatever the issue is, the people within these four walls are capable of dealing with it – and dealing with it effectively,” said Peeples, who joined the firm in 1985.
And as Kelley Commercial continues to navigate through the recent spike in coronavirus cases amid talk of a possible second wave of the contagion in the fall, both Peeples and Kelley said they are willing to work with and partner with their clients to get through this difficult period as long as they are transparent and open.
PHOTO CAPTION: (Photo by Marlon Willis)
Little Rock’s premier commercial real estate firm pivots with new name amid COVID-19 crisis. Kelley Commercial Partners at Simmons Tower, from left to right: Cheryl White, Cynthia Lu, Daryl Peeples, Eric Varner, CEO Henry “Hank” Kelley, Kevin Pledger, Nicholas Kelley, Brooke Miller, and Maggie Hogan.
