Arkansas commercial real estate firm Colliers Arkansas said the state’s largest metro continues to stabilize, the industrial vacancy rate continues to drop, and banks lead the way in new development.
Colliers’ latest quarterly report said the industrial market continued to provide the bulk of the commercial real estate industry’s growth over the second quarter of 2021 in the Little Rock metro, with no signs of letting up.
Industrial vacancy rates in central Arkansas dropped from 10.2% in the first quarter of the year to 8% in the second quarter.
Colliers compiled the report based on information obtained from CoStar, Real Capital Analytics and other industry sources.
“The industrial market, which emerged as the breakout star of 2020, continued to shine with no hint of dimming anytime soon,” the report said. “Vacancy rates again declined in Q2 due to in- and out-of-state investor interest. Lease rates rose across all submarkets as users scrambled for easy interstate access.”
Colliers reports that speculative builds are moving forward for larger bulk industrial facilities such as the 200,000-square-foot Central Commerce Center (C3) being constructed along Interstate 40 in North Little Rock near the Galloway Exit. Just across the interstate from C3, Amazon continues construction of a 1 million-square-foot fulfillment center and is nearing completion of its 3.7 million-square-foot fulfillment center near the Port of Little Rock.
The report also highlights a notable development trend of financial expansion in the west Little Rock submarket. BancorpSouth, Arkansas Federal Credit Union, Encore Bank, First Community Bank and Bank OZK have developed significant branches and headquarters during the past 18 months.
“This significant activity in west Little Rock will continue to spur demand for additional service-oriented businesses and should lead to more growth in this corridor (i.e., Costco),” the report said. “There are also large upscale multifamily projects and single-family neighborhoods underway, including The Fitzroy Promenade, The Blake and Bear Den Estates. Due to the geographic constraints of the city, look for more expansion west as our city continues to grow.”
In the office sector, vacancy rates in the Little Rock metro increased slightly in the second quarter, from 15.2% to 16.3%. Many office users have employees still working remotely and have decided to downsize their existing footprint.
“We anticipate office vacancy rates staying fairly flat for the remainder of the year as we continue to struggle with the unknowns around the COVID-19 pandemic,” the report said. “Some of the Class A properties in both west Little Rock and midtown have held firm on asking rates and, in some cases, have even raised rents.”
For a more detailed analysis of each submarket in central Arkansas’ commercial real estate market, click here for a PDF.