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5 questions with Marlin Penner and Don Arnold of NAI John T. Arnold Associates

5 questions with Marlin Penner and Don Arnold of NAI John T. Arnold Associates

BY BILL WILSON
The Wichita Eagle

Marlin Penner and Don Arnold of NAI John T. Arnold Associates call themselves fortunate to be working in Wichita, where conservative banks and investors have dulled the pain of the recession.

Among their projects is Jack DeBoer’s WaterWalk, a residential and commercial development, which the longtime Wichita entrepreneur is trying to revive.

“We’re fortunate to have contacts in other markets, both regional and national,” says Penner, president of the firm.

“A few of them are doing as well as we are, but most are not. So we feel blessed that we’re here in the Midwest.”

What and who are interested in building and real estate deals?

Arnold: “I would say that we’ve seen an increase in activity from the local market. They are looking for opportunities, and they’re people who can’t wait on the sidelines. They’re looking for expansion, those additional locations. We’re seeing an uptick as far as local activity.”

What’s motivating people to get back into the local market?

Penner: “We’ve been through a year and a half, almost two years, a time period that’s been unusual. We’ve had customers and clients whose gross income has dropped 30 to 40 percent.

“The good news is these are people who’ve lived a culture where lenders have been careful. We have basically good lenders who have not made bad loans to borrowers.

“The other thing is we have business leaders who operate prudently. That’s the good news.

“The bad news is many of those good people still lost 30 to 40 percent of their income. Now, how long can you survive in a business that has that kind of loss?...

“So what we’ve seen is more stress in the market than we’ve had two years ago because these people have experienced enough of a loss that they’ve worked through their accumulated earnings, they’ve done the layoffs…. They’ve been hunkered down, but now they’re out of hunker.

“Our level of business transactions that are economic and market-stress related are up considerably from what it was two years ago.”

Assess the level of commercial interest in WaterWalk.

Penner: “A few years ago, the common question was ‘Will it ever happen?’ I haven’t heard that question at all in recent months.

“We start in a very short time work on a 131-unit hotel that will be good for downtown. We have had rather serious inquiries from people wanting to develop offices. Some retail, some restaurants that are now looking at us because they see the need for services. And so we’re seeing some good things.

“We want really high-quality development, so while there’s an interest in doing things quickly, there is not an interest in doing things foolishly.”

How much has downtown redevelopment affected your business?

Penner: “It is troubling to see people leaving the downtown area, but we sense that exodus has turned and now we’re starting to see reasons for that.

“One is the city has done things to make it more attractive to come downtown, both financially and aesthetically.

“And there are offerings available downtown, properties like the WaterWalk, that haven’t been here that long.

“It will be great to see the new YMCA built downtown, the new hotels. There are things happening downtown to create momentum.”

What is commercial real estate’s lure to you?

Arnold: “The ability to interact with a lot of people from city government to the little guy who wants to make that move that’s terribly important to him out of the garage and into a storefront.”

Penner: “The creative element of our industry. The brokerage of real estate is far more than finding a building, sticking a sign in the ground and finding a buyer. Especially in this market, creativity is huge. You find ways for creative financing, creative ways to exchange buildings.”

Reach Bill Wilson at 316-268-6290 or bwilson@wichitaeagle.com