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Central Arkansas sees commercial real estate recovering from covid

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Commercial real estate is continuing to push toward recovery with a third-quarter report indicating all key sectors are revitalizing and vacancy rates are falling. Central Arkansas is registering gains in the industrial, retail and office markets as the year draws to a close.

“The metro Little Rock commercial market continued its slow and steady march to covid-19 pandemic recovery in the third quarter of 2022,” Colliers of Arkansas reports in its quarterly review of real-estate activity in the sector. “These small, positive gains in the industrial, retail, and office markets send a signal that our local market is showing consistent, steady improvement nearly every quarter.”

The industrial market has been on a tear throughout the year, consistently recording the best vacancy rates, and continued the hot streak in the third quarter. Industrial had a 3.4% vacancy rate in the third quarter, down from 4% in the second quarter and a decrease from 5.8% at the end of 2021.

The danger now, however, is that not enough space may be available to continue fueling business growth and expansion.

“Industrial has been filling up fast and that’s led to a lack of availability,” Colliers noted. “In response, several speculative facilities are under construction or have already been built,” it 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 facility at the Port of Little Rock that broke ground last quarter.

Most 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 most robust sector within commercial real estate, especially in the metro Little Rock area,” said Isaac Smith, president of Colliers of Arkansas. “Our metro area is conveniently positioned at the crossroads of two of the busiest shipping routes in the nation, I-30 and I-40, making our market a critical part of the distribution chain.”

Flex space, properties that offer office and warehouse space, also is booming and vacancy tightened from 8.4% in the second quarter to 7.5% for the period ended Sept. 30.

Office space, though improving, remains somewhat in limbo as businesses support work-from-home policies and are uncertain of future needs in the market. The sector dropped to a 13.4% vacancy rate in the third quarter from 14.3% in the prior three months. Office space reached a 15.7% vacancy rate 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 lease rate of $17.54 per square foot. “This marks quite an improvement for the area, which previously struggled the most with pandemic-related vacancies,” Colliers reported.

Nevertheless, employees working away from the office threaten the long-term stability of downtown and the entire office sector.

“Many lease renewal tenants are asking for 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 in upcoming quarters as some companies, mainly tech and creative, are allowing some of their workforce to work from home a few days a week.”

Retail vacancies 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 for the sector.

“With new/revitalized mixed-use developments, entertainment concepts and restaurants at the forefront, positive-growth momentum is building,” the company reported. “In addition, strong consumer willingness to return to pre-pandemic spending levels at brick-and-mortar venues have added 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 nonprofit organizations in three Arkansas counties seeking low-cost working capital have until Dec. 8 to apply for an economic injury disaster loan from the U.S. Small Business Administration.

The loans are in place to spur recovery from drought conditions that have plagued Arkansas and surrounding states. Loans are available for businesses and organizations in Chicot, Desha and Phillips counties.

Financial aid is available to farm-related and nonfarm-related entities that suffered financial losses as a direct result of this disaster. Apart from aquaculture enterprises, 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 nonprofit organizations, with terms up to 30 years. More information is available at sba.gov.

WESTROCK SHOVELS CONWAY DIRT

Westrock Coffee Co. held a ground-breaking ceremony in Conway last week to celebrate the coffee and teas producers roasting and manufacturing plant at 480 Exchange Ave.

Nabholz Construction is leading the construction work.

“It is particularly meaningful to me to have the nation’s largest roasting to ready-to-drink packaging facility in Conway, my hometown,” said Joe Ford, chairman and co-founder of the company along with his son, Scott. “Starting these upgrades marks a significant 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-to-drink operation of its kind. The facility will include operations for development, production and distribution of Westrock’s coffee, tea, and ready-to-drink products.

Space will also incorporate a product development lab, enabling the company to create, test and produce new beverages.

Westrock provides over 20 million cups of coffee a day and is the No. 1 provider of coffee and tea to the food-service industry in the United States as well as a leading coffee extracts supplier for ready-to-drink products.

Column ideas or recommendations? Thoughts or musings that need pursuing? Contact me at [email protected] or at (501) 378-3567.

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