Report: Little Rock commercial real estate market ‘mostly positive’ to end 2021

Arkansas commercial real estate firm Colliers Arkansas said the state’s largest metro ended 2021 with the industrial sector outperforming other areas. Retail shows signs of stabilizing, and the office market is most robust in west Little Rock and Riverdale neighborhoods.

Colliers’ latest quarterly report said the industrial vacancy in central Arkansas was at its lowest, starting at 10.2% in the first quarter of 2021 and strengthening each quarter to its fourth-quarter number of 5.8%.

Retail began stabilizing by dropping to its lowest vacancy rate of the year at 16.1%. The office submarket increased in vacancy, but only by a half percentage throughout the year as downtown’s office towers continued their struggle resulting in uncertainty in that submarket.

Increased activity in west Little Rock and Riverdale — including new bank headquarters in each area — proves those neighborhoods remain in high demand for office space.

“Developers continue to look at Arkansas,” the report said. “Since industrial space is scarce, users are either getting creative with smaller spaces or seeking out well-positioned land for new construction. This is the second year in a row that industrial activity has outpaced office activity.”

Colliers reports that retail investment is in high demand. Investors are willing to take more risks, and triple-net retail isn’t staying on the market long.

Little Rock’s secondary markets are growing fast as well. Saline County spaces are leasing up quickly. The Colliers team fully leased an empty mixed-use building in Bryant in about 60 days. The vacancy rate dropped to 16.1%, slightly lower than the first quarter of 2021.

Vacancy rates moved from 14.7% to 15.7% during the fourth quarter in the office sector. That reflects slight increases in the suburban markets with more dramatic increases downtown.

According to the report, landlords and owners looking to unload existing industrial assets in the central Arkansas market continue to be in an excellent position to exploit the insufficient supply.

Colliers researchers said retail leasing and net absorption in the Little Rock market held steady to close out the year despite continued pressure on the industry from the pandemic.

Colliers has Arkansas offices in Little Rock and Rogers. For a more detailed analysis of each submarket in central Arkansas’ commercial real estate market, click here for a PDF.