Editor’s Note: This is part two of a three-part series examining inflation and how it is affecting Texarkana area businesses.
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The increase in the cost of goods is affecting new commercial construction in Texarkana, but that has not stopped prospective businesses from looking at existing facilities as new homes for their companies.
Prices for goods associated with property production have steadily increased over the past two years. A U.S. Census Bureau Survey showed construction costs increased by 17.5 percent between 2020 and 2021 and by 23% since 2019.
Locally, this trend has constrained new property construction in the commercial space.
“The cost of goods linked to new construction has the biggest impact on commercial real estate growth in Texarkana, but this has forced retailers to consider existing vacancies, and Landlords are more motivated than ever to lock in long-term leases,” said Richard Reynolds, owner of Reynolds Realty Management Inc.
Texarkana has several empty commercial lots, which has given businesses an opportunity to look at leasing as opposed to building, Reynolds said.
“The market has seen noticeable vacancies, such as the former Sears and Albertsons on Richmond Road, but these have turned into opportunities for retailers like WinCo Foods, other national retailers and a wide array of national retailers circling the market,” he said. “The medical developments in the Waggoner Creek Crossing development will create the demand for goods-based business regardless of inflation, and the businesses will overcome inflation with smaller buildings and less deliveries.”
Reynolds said despite the challenges associated with inflation, locally the commercial real estate market has been strong.
“The reality is that there are approximately half a billion dollars in projects planned or under construction in the market as we speak,” he said.
Mike Malone, president and CEO of the Texarkana Chamber of Commerce, said although uncertainty exists he hopes to see a slowdown in cost increases in the coming months.
“Many of these items are outside our local control, but we will work with communities outside of Texarkana to address the present challenges. We are positive about the community,” he said. “Like all citizens we hope to see a reduction of the rate of inflation and a return to ‘normal’ at all level. We feel, historically, inflation moves up and down. With the return of interest rates, increase of product supply, and the reduction of world tensions, we should see a reduction of the inflation rate. We consistently urge the community and businesses to be prudent and patient.”
Innovation is key given the current business climate, and Malone said the chamber is encouraging its members to look at new ways to update their businesses and evolve.
“Many times, economic challenges lead to growth in other areas as well and the introduction of new products, communication and services,” he said.
The Texarkana commercial real estate market has been well protected from inflation, Reynolds said, which has allowed the community to weather previous economic storms. Yet, other factors have contributed to the churn of some national brands with local operations.
“While some national retailers have left the market while shutting down stores across the country, this is more tied to national changes in retail than inflation. Think brick and mortar versus online sales,” he said.
Malone emphasized that the Twin Cities are not alone in the current inflation struggle.
“It is important for our community members to remember, costs are going up in all area. Just as the cost you pay for gas has gone up, it has also gone up for your neighbors, business owners, and government,” he said. “It is definitely more expensive than what it was a year ago. We and you are not alone. Texas and Arkansas are not the only two areas of increased costs. Everyone is feeling the strains of the present economic costs.”
Although the current cost of goods may slow some commercial construction projects, Reynolds said ultimately the market’s success is poised to continue an upward trajectory.
“Commercial real estate projects are planned over the course of years, not months, so projects that seem inevitable can be delayed until the cost of goods decreases,” he said. “The growth of Texarkana as measured in decades, not years, has been exponential.”
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