Multi-family Apartments Remain Hot Commodity in LR Area, NWA

by George Waldon  on Monday, Nov. 12, 2012 12:00 am  

Construction should start soon on boat slips for John Burkhalter’s marina-residential project in downtown Little Rock.  (Photo by Michael Pirnique)

Hundreds of new apartments have hit the Pulaski County market, and hundreds more are on the way. Favorable market conditions and available financing have kept the line of new projects growing and moving.

• Lindsey Management of Fayetteville will expand its extensive Arkansas portfolio by 432 units when The Greens at the Rock is built out. The company ranks as the largest residential property manager in the state.

(Download this week's list: PDF (free) | Spreadsheet (for purchase))

Lindsey's $25 million development in North Little Rock's Counts Massie corridor is among the biggest under construction.

• Less than a mile south, site work is under way for The Villa at River Pointe Drive in Maumelle, a 216-unit project by Little Rock's Monde Group.

• The first units of The Pointe at Brodie Creek in Little Rock will start leasing in January. First-phase construction of 168 units should be completed in March, and North Little Rock's RichSmith Development expects to begin construction of 168 or 192 units in the summer.

• The first of 258 units at Park Avenue Lofts in midtown Little Rock, a development by Lang Partners of Dallas, are expected to come on line early next year.

"During the next two years, more than 1,300 units will be added each year," said Richard Cheek, partner in Little Rock's Multifamily Group LLC. "It's pretty impressive when you have the upper tier of the apartment market running at 96 percent occupied."

Developers are investing millions of dollars, attracted by a market that absorbed a healthy dose of new units while midyear occupancy tightened to 93.7 percent.

"No surprises," said Jerry Webster, president of Little Rock's Webster Corp., an apartment broker. "Historically, Pulaski County has been a stable market. We don't have wild fluctuations like other markets. We seldom have an oversupply."

Among the newest market-rate apartments to open is Riverside at Rockwater in North Little Rock. Post Investment Group of Los Angeles opened the 264-unit project near the River Trail in June.

"Leasing is good," said Amber Davis, property manager of Riverside at Rockwater. "We're at about 40 percent leased.”

In west Little Rock, The Ridge at Chenal Valley brought 312 units to the market, and half of the 260 units at Chenal Pointe at the Divide are open for leasing, with finishing work on the balance on track for completion by year's end.

Phase two of John Burkhalter's Fountaine Bleau Apartments added 144 units when it was completed late last year in North Little Rock. Framing work is in progress on phase three, which encompasses another 144 units and a second clubhouse.

The opening 120-unit phase of Burkhalter's Fountaine Bleau North at the northeast corner of Smokey Lane and 46th Street in North Little Rock should be completed by December. Plans call for a second phase with 96 units by late summer 2013.

"The lease rate is on a skyrocket path," Burkhalter said of the project. "No one has served the Class A market over there."

The North Little Rock businessman's grand marina-residential project in downtown Little Rock should start construction on 150 boat slips in the next few weeks.

Plans for The Residence at Harbortown call for construction to begin in the spring on 192 apartments, with one- and two-bedroom floor plans. This $35 million first-phase development should be completed in 2014.

"We have new construction, and it's spread throughout the county," Webster said. "The jury is still out on how many of them will hit their rent levels. I'm not talking about filling up their apartments. I'm talking about getting the rental rates they were expecting."

Northwest Arkansas

The apartment market in Benton and Washington counties has fared well in the post-bubble recovery, with occupancy rates ranging from 90.8 percent in Springdale to 97.1 percent in Rogers.

“I think rental rates are trending slightly upward,” said Brian Donahue, senior associate at the Tulsa office of the commercial real estate services giant CBRE Group Inc.

“Occupancies are holding pretty firm. The market has been fairly strong. Overall, it’s a positive outlook on where things are and where things are going.

“Transaction volume has been slower to date. But it wouldn’t surprise if a few deals closed before year-end.”

Jerry Webster is bullish on the northwest apartment market.

“I do a lot of work up there, and I love the market,” Webster said. “It has really stabilized. People make the mistake of looking at that as one market. There is a distinct difference in the three submarkets between Fayetteville, Springdale and Bentonville-Rogers.”

Enrollment growth at the University of Arkansas is driving development of $150 million worth of privately owned student housing near the Fayetteville campus.

One 632-bed project, The Grove, opened in August, and three more projects are under construction that could bring another 1,983 beds on line for the 2013-14 school year.

Benton County is poised for a new round of apartment development as occupancy has climbed to more than 96 percent in its two largest cities.

“Get ready for some new construction in Bentonville-Rogers,” Webster said. “That market has gotten pretty solid.”

He won’t be surprised to see sales activity pick up as the market has tightened and the number of bargain deals from developers gone bust has dwindled.

“The northwest Arkansas market got overbuilt five years ago, but they’ve worked through those problems,” Webster said. “We’ve finally got all the bottom fishers out of the market, the ones looking for foreclosed properties.”

Pulaski County Apartment Market (Mid-Year 2012)

Project AgeOccupancyAvg. Unit SizeAvg. Monthly RentRent Change*
Post-2000 (4,599 units) 95.8% 961 SF $841 0.8%
1990s (2,758 units) 97.4% 898 SF $747 -0.8%
1980s (6,347 units) 94.5% 813 SF $674 -2%
Pre-1980 (9,477 units) 91% 846 SF $609 0.8%
Total (23,181 units) 93.7% 866 SF $689 -0.3%
        *Since Dec. 31, 2011

Pulaski County Apartment Occupancy
1985 - 2012

1985 89%
1986 86%
1987 82%
1988 86.8%
1989 91.4%
1990 92.5%
1991 93.4%
1992 94.4%
1993 95.7%
1994 95.1%
1995 95%
1996 93.9%
1997* 92.9%
1998 91.9%
1999 92.3%
2000 94.4%
2001 93.7%
2002 94.1%
2003 93.9%
2004 93.8%
2005 93.8%
2006 92.6%
2007 92.3%
2008 92.2%
2009 91.5%
2010 93.6%
2011 93.1%

*1997 data extrapolated from trend 1996-1998.

Source: The Multifamily Group LLC of Little Rock



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