Commercial real estate continues to move towards recovery with a third quarter report indicating that all key sectors are revitalizing and vacancy rates are declining. Central Arkansas sees year-end gains in industrial, retail and office markets.
“The Little Rock Metro commercial market continued its slow and steady march toward recovery from the covid-19 pandemic in the third quarter of 2022,” Colliers of Arkansas reports in its quarterly review of real estate activity in the area. “These small positive gains in the industrial, retail and office markets send a signal that our local market is showing consistent and steady improvement almost every quarter.”
The industrial market experienced a tear throughout the year, consistently registering the best vacancy rates, and continued its good run in the third quarter. The industrial sector had a vacancy rate of 3.4% in the third quarter, down from 4% in the second quarter and down from 5.8% at the end of 2021.
However, the current danger is that there is not enough space available to continue fueling business growth and expansion.
“The industry fills up quickly and that has led to a lack of availability,” Colliers noted. “In response, several speculative facilities are under construction or have already been built,” he added, pointing to recent projects such as the Central Commerce Center along Interstate 40 in North Little Rock and the South Port Commerce. Center, a 500,000 square foot. installation at the port of Little Rock which began last quarter.
More recently, two industrial properties in Little Rock and one in Benton changed hands in transactions valued at $6.4 million.
“The industrial market continues to be the strongest sector of commercial real estate, especially in the Little Rock metro area,” said Isaac Smith, president of Colliers of Arkansas. “Our metro area is conveniently located at the crossroads of two of the nation’s busiest shipping routes, I-30 and I-40, making our market a critical part of the distribution chain.”
Flexible spaces, properties that offer office and warehouse space, are also booming, and the vacancy rate rose from 8.4% in the second quarter to 7.5% for the period ended September 30.
Office space, while improving, remains somewhat in limbo as companies support work-from-home policies and are uncertain of future market needs. The sector fell to a vacancy rate of 13.4% in the third quarter, from 14.3% in the previous three months. Offices reached a vacancy rate of 15.7% at the end of last year.
Downtown Little Rock, which has suffered from lack of investment in key towers and the work-from-home movement, executed leases and renewals totaling 121,313 square feet with an average rental rate of 17.54 $ per square foot. “This marks a marked improvement for the region, which previously struggled the most with pandemic-related vacancies,” Colliers reported.
Nevertheless, employees working outside the office threaten the long-term stability of the city center and the entire office sector.
“Many lease renewal tenants are requesting short-term rentals of just one to two years while they assess their future office space needs,” Colliers said. “This pandemic-related trend is expected to continue to affect the market over the coming quarters as some companies, primarily tech and creative, allow part of their workforce to work from home for a few days a week.”
The retail vacancy rate improved in the third quarter, falling from 14.4% to 13.7% in the second quarter and improving from 16.1% at the end of 2021. Colliers is optimistic about continued progress in the sector.
“With new/revitalized mixed-use developments, entertainment concepts and restaurants at the forefront, positive growth momentum is building,” the company said. “Furthermore, the strong desire of consumers to return to pre-pandemic spending levels in physical locations has added much needed fuel to the Little Rock MSA [Metropolitan Statistical Area] retail atmosphere.”
Colliers, which owns and manages properties in 62 countries, has offices in Little Rock and northwest Arkansas.
WORKING CAPITAL OPPORTUNITY
Small businesses and private nonprofits in three Arkansas counties looking for low-cost working capital have until Dec. 8 to apply for an economic disaster loan from US Small Business Administration.
The loans are in place to spur recovery from the drought conditions that have plagued Arkansas and surrounding states. Loans are available for businesses and organizations in Chicot, Desha and Phillips counties.
Financial assistance is available for agricultural and non-agricultural entities that have suffered financial losses as a direct result of this disaster. Outside of aquaculture businesses, the SBA cannot provide disaster loans to agricultural producers, farmers, and ranchers.
Borrowers can apply for up to $2 million in loans with interest rates of 2.83% for small businesses and 1.875% for private nonprofits, with terms up to 30 years . More information is available at sba.gov.
WESTROK CONWAY DIRT EXCAVATORS
Westrock Coffee Co. held a ribbon-cutting ceremony in Conway last week to celebrate the coffee and tea growers roasting and manufacturing facility at 480 Exchange Ave.
Nabholz Construction manages the construction works.
“Having the nation’s largest ready-to-drink roasting and packaging facility in Conway, my hometown, is especially important to me,” said Joe Ford, president and co-founder of the company with his son. , Scott. “Starting these upgrades marks an important milestone in our company’s history to further accomplish our mission.”
Once fully operational, the 524,000 square foot facility will be the largest roasting-to-ready operation of its kind. The facility will include Westrock’s coffee, tea and ready-to-drink product development, production and distribution operations.
Space will also integrate a product development laboratory, allowing the company to create, test and produce new drinks.
Westrock supplies over 20 million cups of coffee daily and is the leading supplier of coffee and tea to the foodservice industry in the United States as well as a leading supplier of coffee extracts for ready-to-drink products. .
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