Market conditions are reaching the tipping point to launch construction and add fresh product to the warehouse inventory in the Little Rock area.
“We know owners that are looking to develop new space, but the economics are still not quite there,” said Stuart Mackey, vice president of brokerage with Little Rock’s Coldwell Banker Commercial Hathaway Group.
The occupancy rate in the Pulaski County industrial market reflected a flat first quarter at 89.2 percent. Twelve months prior, the market registered 89.3 percent occupancy.
The census covers 859 buildings of warehouse-distribution, manufacturing, light industrial and flex space totaling more than 45.2 million SF, tracked by Central Arkansas Commercial Data Exchange.
Drew Holbert, industrial specialist with Colliers International-Arkansas, said beneath the surface of a seemingly flat market is demand for more space.
“It’s almost like the market is flat, but the activity is there,” Holbert said. “We just don’t have good, quality product for these groups to set up shop in.
“From a perception standpoint, I’m encouraged by the activity, but it’s not adding up.”
Two Industrial Projects Broke Ground
Ceremonial dirt was turned on the construction of two new high-profile industrial projects this year.
On Feb. 19, FedEx Corp. of Memphis broke ground on a 300,000-SF distribution facility in southwest Little Rock. The $17.3 million project at 8 Industrial Parkway will open in August 2016.
On April 30, Ben E. Keith Company of Fort Worth, Texas, broke ground on a 426,000-SF headquarters and distribution center in North Little Rock. The $70 million project at 8801 Hwy. 70 E. will open in spring 2017.
“Historically, there’s not any speculative space to speak of,” said Dan Robinson of Little Rock’s NAI Dan Robinson & Associates.
“On the other side, building new space is so expensive that people are doing everything they can to find existing space to renovate. Owners want 80 percent of what new space will rent for.
“That’s a frustrating situation to be in as a broker. It’s an interesting time to match up buyers and sellers.”
Two of the most significant warehouse properties to literally change hands during the past six months were a 50 percent stake in the 177,650-SF Shackleford Corporate Center at 4201 S. Shackleford Road, $3.8 million; and the 87,100-SF Educators Book Depository at 6700 Sloane Drive, $2.5 million.
The 557,950-SF Applica Consumer Products project at 6901 Lindsey Road in the Little Rock Port Industrial Park remains an alluring puzzle awaiting a solution.
“The biggest surprise is the Applica Building still sitting vacant,” said Gary Smith, director of business development at Flake & Kelley Commercial “It’s a super clean building on the inside and could easily be divided.”
$11.5 Million Warehouse Deal
The biggest warehouse deal in central Arkansas during the past 12 months was the 484,932-SF former Champs Sporting Goods/Scholastic Distribution facility at 1 Champs Blvd. in Maumelle. Out-of-state investors were on either side of the $11.2 million transaction.
Rick Freeling, director of sales for Little Rock’s RPM Commercial, said the lack of competition from new projects is allowing landlords to bump up their per SF rate or shift some of their operating costs to tenants.
“We’re starting to see an uptick in demand,” Freeling said. “We’re receiving a whole lot more inquires from people looking for space. It’s a good sign of the economy that manufacturers are ramping up.
“Quality space will be gone soon, and that’s when the sticker shock is going to come on tenants.”
Industrial Occupancy
Little Rock – Downtown
Buildings 22 Inventory 603,863 SF Total Vacant 72,188 SF
Little Rock – East
Buildings 145 Inventory 10,138,125 SF Total Vacant 1,399,617 SF
Little Rock – Midtown
Buildings 16 Inventory 796,175 SF Total Vacant 112,484 SF
Little Rock – South
Buildings 213 Inventory 11,634,962 SF Total Vacant 1,008,226 SF
Little Rock – Southwest
Buildings 34 Inventory 2,206,642 SF Total Vacant 103,628 SF
Little Rock – West
Buildings 44 Inventory 1,717,632 SF Total Vacant 234,775 SF
Maumelle
Buildings 37 Inventory 4,109,200 SF Total Vacant 286,000 SF
North Little Rock
Buildings 276 Inventory 10,937,580 SF Total Vacant 1,020,960 SF
Sherwood
Buildings 17 Inventory 281,344 SF Total Vacant 14,200 SF
Benton
Buildings 8 Inventory 62,160 SF Total Vacant 0 SF
Bryant
Buildings 3 Inventory 30,555 SF Total Vacant 0 SF
Cabot
Buildings 4 Inventory 44,090 SF Total Vacant 0 SF
Conway
Buildings 3 Inventory 21,860 SF Total Vacant 0 SF
Jacksonville
Buildings 55 Inventory 2,850,387 SF Total Vacant 680,225 SF