Little Rock real estate magnate John Flake starts new journey at daughter’s real estate firm
July 6-12, 2020
By Krishnan Collins
Arkansas real estate magnate John Flake announced May 7 he was leaving the flagship commercial real estate company he started 41 years ago to join his daughter’s newly formed Flake & Company in Little Rock’s River Market district.
Jessica Flake Dearnley co-founded Flake & Company with 28-year-old Thomas Schmidt, and her father subsequently joined the firm as chief real estate advisor. John Flake’s former firm, Flake & Kelley Commercial, is now rebranded Kelley Commercial Partners. “I have always in my life wanted to work with my family,” said the elder Flake.
The Arkansas real estate icon said his longtime partner Hank Kelley is still managing some properties the Flake family is still involved in, but he will no longer be working with Kelley. “I am 72-years-old,” Flake said. “I thought at this point in my life I needed to be working on a day-to-day basis with my daughter.”
The Flake name represents a long and iconic history in the real estate world. Flake’s father, Charles Leon Flake, started a real estate company during the Great Depression. Flake’s brother, Dixon Flake, co-founded Colliers International and is in the Arkansas Business Hall of Fame. “My brother Dixon and I talked about when both of us leave this Earth, that name is going to go away,” Flake said. “My brother and I are both extremely excited about the fact [Jessica] is going to continue that name. Everybody likes to leave a legacy if they can, that is what we are here to do. She is carrying on our tradition.”
Dearnley was the principal broker at the Flake & Kelley Northwest Arkansas office from 2012 to 2019. She moved back to Little Rock and eventually started her own company with Schmidt. “I wanted to come down here and work with my father to change downtown Little Rock,” Dearnley said. “There has not been a new Class A office project since my father had developed the Simmons Tower. That is a bit of background of how this started with us working together. There was not an opportunity for me to do that at the previous firm.”
Flake said he does not own any share of stock in Flake & Company and does not receive a salary. He also noted the importance of the younger generation, focusing on his daughter’s company. “The vision and the future of the commercial real estate industry, in particularly the service companies like we are, does not rest in the senior people controlling all the stock,” Flake said. “The stock is for young people to have a chance to grow up with their families and make a mark on the industry.”
Flake said he wanted the younger generation of Flake & Company – the people grinding day in, day out – to be able to look back in 10 years and say it was the best decision in their professional life. “It is a dream team for me,” he said. “Jessica is so sophisticated analytically and she is up to date on today’s technology. I, of course, being in the business as long as I have, I have a lot of contacts, I have closed a lot of transactions and built a lot of buildings.”
Dearnley is a Certified Public Accountant (CPA), a Chartered Financial Analyst (CFA), and a Certified Commercial Investment Manager (CCIM). She also holds four brokers licenses and has a background and experience in wealth management, regional mall management, and credit analysis. Dearnley pointed out Schmidt is part of the Dream Team as well. She said while she is usually on the sidelines and tends to be more cautious about taking on projects, her father has the vision and Schmidt is the go-getter.
Together, they combine with property manager Kevin McCollum to form a multi-generational team at the firm.
COVID-19 impact
As the company moves forward, they are yet another business in Arkansas where COVID-19 will have an effect now and in the future. Flake said where there are issues like COVID-19, there are also opportunities.
“In 2008, when the market crashed, the people that saw ways to fix the various problems made a lot of money,” he said. “The same thing here with COVID. Yes, there are issues; yes, a bunch of retail tenants have not made it, [and] big retail companies are filing bankruptcy. That is all true. But the question is can you redevelop the space they had into something that is much more conducive to what we are facing today?”
The elder Flake emphasized Amazon and explained how he thought the online retail giant has had more impact on retailers than the coronavirus due to point of sale contact not being as important as in the past because of ecommerce. With work environments changing due to COVID-19, occupancy rates in the general office market could be affected, he said.
Dearnley added that Flake & Company is working with companies who cannot just use Zoom to collaborate, but that actually need to be in an office meeting with people. “It is identifying those firms,” Dearnley said. While offices were transitioning to more open floor plans before COVID-19, Dearnley said they could be moving back towards the need for individual offices. She said many offices in downtown Little Rock might be enormous now, but the need for separate smaller individual offices could be returning.
“It will be different but similar to 2008,” Dearnley said. “I know 2008 through about 2010 to 2011, there was a fall out with CMBS loans. What we are seeing is going to be over time, with those CMBS loans it is really hard to get them refinanced.” Commercial mortgage-backed securities (CMBS) allow for non-recourse financing and very favorable rates, but loan modifications are difficult to go through, Dearnley said. She added there is potential for more foreclosures at hotels, gyms and anything that has been closed due to COVID-19.
Although COVID-19 may be slowing down the progress of some businesses, the father-daughter duo at Flake & Company pushes forward. Dearnley said she saw the market expansion in Northwest Arkansas and although she grew up in Little Rock, she has always been away from home for her education. She said they needed to do something to help the market change in Little Rock. “We always wanted to work together and do a development together,” Dearnley said. “That was the dream. It has just slowed down with COVID, but it is still going to happen. We are still trying to make progress on it and see what we can do to help Little Rock.”
PHOTO CAPTION: (Photo provided)
Arkansas real estate magnate John Flake stands with his daughter Jessica Flake Dearnley in Flake & Company’s office in downtown Little Rock.
