The commercial real estate market in Central Arkansas should continue to stabilize heading into the last nine months of 2022 as covid anxieties ease and more workers return to the office.
The region ended 2021 with recovery in sight for key industrial, office and retail sectors, with the industrial market generating low vacancy rates and a boom in speculative builds to meet growing demand. That momentum continued in the first three months of this year and should remain strong throughout 2022, according to a report from Colliers of Arkansas that outlines real estate market trends in Central Arkansas.
“As the pandemic persisted and users’ needs for multi-purpose space surged, industrial vacancy tightened up and stayed that way throughout the year,” the report notes of activity last year. “Speculative builds began popping up across the metro to help ease the unprecedented demand. Still, there was minimum availability across the board throughout the Central Arkansas industrial market and lease rates continued to rise.”
No change seems to be in sight. Investors need more multitenant flex properties, and that need should fuel increased rental rates in the area, Colliers predicts. Industrial markets will continue to outperform other sectors this year as property owners and landlords remain in prime position to demand higher rent.
It’s a different story in the office market, which held its own in 2021 — with vacancy rates remaining flat from January to December. Nevertheless, the remainder of 2022 is an open book, though Colliers is projecting a “hold steady” approach as suburban markets continue to outperform downtown Little Rock, which is filled with older skyscrapers with huge lobbies that were built for a different banking environment.
Suburban growth and downtown decline is projected to continue. “This trend will likely continue for the foreseeable future as the leading downtown properties struggle with over-sized lobbies no longer in demand by banking institutions,” Colliers reports.
More of the same for the office market is the outlook for 2022. “Overall, the central Arkansas office market has held up reasonably well during the two-year covid-19 pandemic,” the report says. “We are cautiously optimistic that this will continue in the near term.”
Retail should see a lift with rising consumer spending and “explosive growth” in the leisure and hospitality sectors. Hotel and restaurant owners report business this year should return to 2019 levels and a pre-covid environment. However, slow population growth and inflation are concerns and could be a drag on the retail sector.
Real-estate development increased in 2021, bolstered by a favorable lending environment that charged growth in multifamily, single-family, industrial and banking-related developments. Much of that growth, like the office market, is occurring in suburban areas such as Benton, Bryant and Conway.
While construction picked up, supply chain issues and labor shortages remain challenges for the real estate sector. “While 2022 looks hopeful, we expect to see a continued strain due to the supply chain disruption, higher material costs and rising interest rates,” Colliers reports.
Colliers, a global real estate investment and management company, has offices in Little Rock and Northwest Arkansas. It has more than 19.3 million square feet of space under management and more than $550 million in total sales in Arkansas.
Little Rock-based Windstream Holdings Inc. reports it is fast deploying the nearly $523 million in federal funding it won to expand 1 gigabit service across its 18-state footprint. The company says it eventually will reach more than 19,000 new residents and businesses in Arkansas with the funding.
Company officials say about 2,800 Arkansas customers will receive the service this year. Under federal funding rules, Windstream has six years to complete the buildout.
“As the pandemic demonstrated, robust broadband has become an essential service as more and more of the nation’s economy moves online, and public-private partnerships are essential to making it available in the most rural areas of America,” said Tony Thomas, president and chief executive officer of Windstream. “That’s why Windstream is participating in network expansion partnerships at the federal, state and local levels to deliver future-proof fiber broadband connectivity to our customers, and we have a strong track record of meeting our commitments.”
Windstream’s efforts are being funded through the Rural Digital Opportunity Fund, which was established by the Federal Communications Commission to accelerate high-speed internet delivery for rural communities in hard to reach and costly areas.
Federal funding will allow Windstream to deliver fiber internet to more than 192,000 locations in its service area, the company says.
Entergy Arkansas customers are eligible for cash rebates when they purchase electric technologies under a new initiative that has been approved by state regulators. This includes purchases of forklifts, cranes, golf carts and electric vehicle chargers.
The program will help the utility with sustainability efforts and improve control of greenhouse gas emissions, the company says. “It will help manage greenhouse gas emissions while supporting the technology-forward options our customers desire,” said Laura Landreaux, president and chief executive officer of Entergy Arkansas.
The eTech initiative, which is known as a beneficial electrification program in the industry, can be used by any Entergy Arkansas customer, including homeowners and businesses. More than 40 utilities across North America provide similar programs.
The Arkansas Public Service Commission approved 14 technologies that are eligible for rebates, such as refrigeration trucks, school and transit buses, drayage trucks, digital billboards, scissor lifts, scrubbers and sweepers, tug and tow tractors and belt loaders.
Rebates range from $150 for a golf cart up to $5,000 for a digital billboard. The company said it does not have an annual limit on the number of rebates per customer.