Photo: Kirkpatrick Plaza in west Little Rock has vacancies, but has been filling up recently. Courtesy of Colliers International.
Who would have guessed that after the recession of 2008, Little Rock office vacancies would be at their lowest level in decades just seven years later?
Back then, our office market was struggling with vacancy levels around 15 percent for the roughly 15 million square feet of improved space in Little Rock and North Little Rock. Today, those vacancies have decreased all the way down to 7.5 percent, with downtown space becoming filled most quickly.
Why the big drop? One word: jobs.
The Bank of America building downtown has vacancy now, but is positioned between the Main Street Creative Corridor and the up-and-coming Financial Quarter and is therefore poised to lease.
As companies began to recover and hire again, the need for space followed suit. The Little Rock market really began gaining momentum in 2011, but suffered a setback when the bulk of the former Alltel campus in Riverdale hit the market for lease in 2012 with approximately 400,000 square feet of Class A space.
Today, I’m happy to report that nearly all of that space has been filled with companies such as Blue Cross Blue Shield, NovaSys, TME, Cognosante and others. In fact, a lot of the regional growth can be attributed to health-care and health-care-related insurance providers, most likely a direct result of the Affordable Care Act.
New construction in this market has been very limited during the most recent three-to-five-year period. There are currently a few speculative projects in the western suburban market, properties west of Interstate 430, including one that is under construction and a couple in the planning stages. While west Little Rock continues to be a strong office space contender, the Creative Corridor and Little Rock Technology Park on Main Street have begun to increase demand for the downtown market which is great news for our city as it absorbs long-vacant urban space.
The development along Main Street is creating energy as long vacant buildings are becoming hot prospects for office locations. It will also attract new business to the area.
So what can we expect now?
Assuming the economy continues its gradual improvement and there are no major mergers or acquisitions that would require relocation or consolidation to other cities, the Little Rock office market should remain stable for the foreseeable future. That’s positive news for all of us and an indicator that our local economy is on the right track.
