Industrial Lease Market Reports Modest Gain

by George Waldon  on Monday, Aug. 15, 2011 12:00 am  

Occupancy for industrial space in the Pulaski County market this spring improved slightly to 84.3 percent, according to CACDE, compared to 83.7 percent a year ago. The group’s survey encompassed 870 properties with more than 45.2 million SF.

Rick Freeling, vice president of Little Rock’s Coldwell Banker RPM, said favorable signs in the central Arkansas market portend better times are on the way.

“We’re starting to see some activity in the industrial sector,” Freeling said. “Most of it has been with people beginning to inquire about warehouse space. There is an anticipation the economy will start getting better very soon.

“That’s typically when we begin to see the market begin to move, with people needing warehouse space. The manufacturing side is still slow, but the storage of goods is beginning to pick up.”

Stuart Mackey, broker at The Hathaway Group in Little Rock, said improvements in the retail sector are expected to improve the industrial sector.

“We’re heading, it looks like, for better times,” he said. “The asking rate for space has declined, and there has been some sales activity that has affected the market. The good news is we’re seeing reasonable demand in the market place.

“The number of calls coming in is up. We’re working to be patient, and there appears to be capital to make deals.”

Drew Holbert, industrial specialist with the Little Rock office of Colliers International, sees a market flux continuing for the next few quarters before settling.

“Since our industrial market bottomed at 16.8 percent in late 2010, we have seen the vacancy rate drop to 14 percent then jump to 15.7 percent in the last two quarters,” he said. “After not experiencing an absorption swing greater than 135,000 SF positive or negative for the first three quarters of 2010, we saw a positive swing of over 1.2 million SF followed by a negative swing of over 700,000 SF. For an industrial market of roughly 45 million SF, those are huge back-to-back numbers.

“Although we are currently seeing increased activity in the industrial sector, new supply continues to outpace demand. Because of this, we will more than likely experience another uptick in the vacancy rate at the end of this quarter. Expect to see this trend continue short term, but look for the vacancy rate to continue its flat to slow downward trend over the long term.”

Vacancy Rate Moves Up
The average vacancy rate of industrial space in Pulaski County in the first quarter of 2011 stands at 15.7 percent compared with the 14 percent of fourth-quarter 2010 and the 16.3 percent of first-quarter 2010. “Central Arkansas market swings are never as dramatic as larger markets,” said Stuart Mackey of Coldwell Banker Commercial Hathaway Group. “The greater Little Rock market has never been quick to change, one way or the other. This is evident in the fluctuating occupancy in the industrial market. While this quarter’s occupancy slipped compared to last quarter, the general trend reflects a gain with this quarter’s occupancy at the second best percentage over the last six quarters.”



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