Report: Little Rock commercial real estate market ends 2023 on mostly positive notes
by January 30, 2024 11:22 am 555 views
Commercial real estate firm Colliers Arkansas metro Little Rock office market continues to buck the dour national office trend of high vacancies but still remains a market concern. The firm’s latest quarterly report also revealed that the industrial market experienced a slight vacancy uptick, and retail/restaurants are leading the way in growth opportunities.
“The 2023 Q4 office vacancy rate of 11.3% is on par with the average for the entire year,” Colliers analysts wrote. “It’s slightly higher than Q3, but lower than the start of the year, which was 12.6%.”
According to the report, office users are shrinking, and most potential tenants were touring smaller spaces at just 3,000 to 4,000 square feet.
“Higher tenant improvement (TI) costs and moving expenses resulted in some tenants making the decision to remain where they are,” the report said. “However, some saw this as an opportunity to negotiate for other lease upgrades.”
Colliers analysts report that industrial vacancy rates slowly rose throughout 2023, with 3.2% in Q1 and 3.5% at the end of the fourth quarter. The market also experienced an overall rise in flex space vacancy, which was 7.7% in Q1 and 7.9% at the end of the year.
Retail vacancy experienced steady recovery throughout 2023, ending the year at 4.4% vacancy compared to 8.8% at the start of the year.
“While the market is still experiencing some national retail closures, local retail shops are mounting a comeback,” the report said. “Restaurants continue to shine within the retail sector. The amount of existing restaurant space available in the MSA is effectively ‘zero.’ This prized space is not staying on the market long.”
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.