Central Arkansas commercial real estate market improving

A new report from Colliers Arkansas shows steadiness, not rockiness, in Central Arkansas’ commercial real estate market.

The office vacancy rate in Central Arkansas noted the office vacancy rate was 0.2% lower at 11.1% at the end of the year; the industrial vacancy rate was slightly higher at 4.8%; and retail vacancies rose to 6% in part due to big box developments.

The report’s executive summary provided more highlights of key details:

• Q4 2024 started off slow, but picked up post-election across all sectors.
• The office market vacancy rate jumped 0.4% from last quarter to end the year at 11.1%. However, 2024 still ended slightly lower than 2023, which saw a vacancy rate of 11.3%. There were a handful of significant sales and leases for the office sector with sales focused in west Little Rock, while leases focused in downtown.
• The industrial market remained stable all year but saw a slight uptick in Q4, ending the year at 4.8% vacancy. This is a little higher than the end of 2023, which experienced a 3.5% vacancy rate, but still below the national average of 6.6%.
• The retail market showed a slight rise in vacancies in Q4, going from 4.9% in Q3 to 6% at the end of the year. This looks like a significant jump, but it’s due to several big box vacancies spread out over several submarkets.

Colliers Arkansas provided Talk Business & Politics additional commentary from its experts in each commercial real estate sector.

Greg Joslin, CCIM, SIOR
Office Market
“The office sector numbers will likely stay fairly static in our market through 2025. Dramatic swings in vacancy versus absorption rates are unlikely as the ‘return to the office (RTO)’ shift takes a broader hold, but competes with other office occupiers determining they can reduce their overall square footage requirement without risking adverse impacts on productivity.

“This see-saw market leasing activity is juxtaposed against continued high costs of new office construction making new projects rare. Second generation office space will be the lower cost alternative for most offices users in our market in the near term.”

Drew Holbert, CCIM, SIOR
Industrial Market
“The majority of the uptick can be attributed to big box vacancy (greater than 100,000 square feet) so yes, we could experience a shift with only one or two leases. Activity remains strong in the smaller box (about 25,000 square feet) space and has slowed, as expected, in the big box space, with an oversupply of that product nationally. With the big box rates for our market being well below the national average, we remain a very cost-effective market for users looking regionally for that product.”

Lee Strother, CCIM
Retail Market
“The slight increase in Q4 2024 vacancy rates were attributed to several big box spaces becoming vacant in North Little Rock and south Little Rock. Overall, the retail market in Central Arkansas is very healthy with very low vacancy rates in west Little Rock and the Midtown area. The Conway and Hot Springs markets are accelerating retail success as well. Also, we are seeing a strong growth pattern from quality food & beverage/entertainment operators targeting our area. This trend is expected to continue.”

You can read the market research report from Colliers Arkansas at this link.