Colliers central Arkansas report: Retail sector ‘healthy’

Colliers central Arkansas market report for the first quarter of 2025 showed positive trends for the retail and office sectors. The industrial market has stabilized, but demand is slightly down.

The latest report from the commercial real estate firm indicated that retail space leasing continues to be healthy with low vacancy rates across the board.

“The vacancy rate stayed relatively steady, moving from 6.0% in Q4 2024 to 6.1% in Q1 2025. The areas where retailers want to go are fully absorbed so, even though construction costs have bumped up, we’re still seeing new construction. Most of this new construction is being driven by national retailers, banks, financial institutions and restaurants since they have the financial means to keep up with the rising construction costs,” the report noted.

The report also said retailers are largely finishing up repairs and construction from the March 2023 tornado damage.

“Storm-related upgrades often come with higher CAM expenses and we’re seeing it become a driving factor, with some retailers re-evaluating their locations. They will have to determine if consistency and a good location are worth the new price, especially if it’s hard to get into another area with the vacancy rate being fairly low,” it said. “The restaurant side of central Arkansas is very vibrant. These spaces don’t stay on the market very long and many local restaurants are expanding and creating multiple locations across the city. National restaurants have determined that they don’t need the big cafes that they boasted in the past. Many are cutting cafes nearly in half and pivoting to a fast-casual model.”

The Colliers report said the Little Rock metro office market picked up momentum in the first quarter 2025 with the vacancy rate falling to 10.1% this quarter from 11.1% in the fourth quarter of 2024.

“The market is experiencing renewed interest in this sector with many larger companies requiring employees to come back into the office full time. Two of the biggest office leases this quarter happened downtown and that submarket is expected to gain more momentum. The downtown Heifer International campus also sold recently, coming in as the second largest sale overall. Office sales remained steady for Q1 2025,” according to the report.

INDUSTRIAL, FLEX
Industrial market vacancy rates rose ever so slightly in the first quarter to 4.85% from 4.8% in the fourth quarter of last year. There were two huge sales this past quarter – a $36.4 million sale in southwest Little Rock and a $23.5 million sale in Maumelle.

“The industrial market is stabilizing with leasing activity and demand slowing down for assets larger than 10,000 SF,” the report said. “Supply has remained steady for now with no new construction in the pipeline.”

The report also commented on flex market space, which is growing in popularity.

“Flex vacancy rates dropped to 6.2% this quarter. Q4 and Q1 numbers show that once the available industrial square footage became more scarce, we saw more companies turning to flex space. Consequently, the 15,000 – 20,000 square-foot spaces are being picked up quickly and inventory is tightening in the flex market,” the report said.

You can read the full report here.