Report: Central Arkansas tenants getting creative to combat CRE challenges
by May 3, 2023 2:24 pm 944 views
Commercial real estate firm Colliers Arkansas said tenants in the state’s largest metro market are getting creative to combat tight industrial vacancies, hybrid work schedules and higher interest rates.
The company’s latest quarterly report also said Little Rock metro office users are looking harder at second-generation buildings to save money, and retailers are mixing in entertainment options to keep the industry afloat.
“The market saw a mix of new and existing tenants making moves,” Colliers analysts wrote in the report. “Some existing tenants chose to downsize and relocate for the best fit rather than face the high construction costs of a new build. Some larger tenants are searching for owner/occupant properties that can provide the best value by letting the owner/occupant control their tenant improvements.
“With landlords raising rates to cover the high cost of tenant improvements, it was no surprise that the market experienced a slight uptick in average lease rates in Q1.”
Colliers analysts said industrial vacancy rates dropped to 3.2% in the first quarter of this year.
“Many prospects are looking for 50,000 to 300,000 square feet, and central Arkansas just doesn’t have the supply to meet the demand on the lower end,” the report said.
Central Arkansas’ retail market is busy, with restaurants and entertainment options leading the charge. One notable sale included Park Plaza Mall. The Outlets of Little Rock was also put on the market.
In the office market, national tenants continue experimenting with the hybrid work schedule, which typically results in a tenant requesting to reduce their square footage need at renewal time.
“On the flip side, we have also seen several tenants, such as logistics and engineering groups, become aggressive with their expansion needs,” Colliers analysts said.
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.