Apartment Occupancy in Pulaski County Heads Up Again.
The occupancy rate tightened 0.4 of a percentage point over 1998's 91.9 percent, the lowest figure since 1989 according to the 1999 Pulaski County Apartment Market Survey.
The 360-page publication is a cooperative effort of Richard Cheek, vice president of Rivercliff Co. in Little Rock Metrotrends, the Arkansas Apartment Association and the Arkansas chapter of Accredited Residential Managers.
The increased occupancy in 1999 coincides with the two most active years for apartment construction in a decade. Nearly half of all building permits issued in 1990-99 (1,940 units came during 1998-99.
More building permits for apartments (1,044 units) were issued during 1998 in Pulaski County than any other year during the 1990s. That was followed up by 896 units worth of apartment building permits in 1999, the second most active year during the past 10 years.
The slight increase in 1999 occupancy in the face of so many new units indicates a healthy appetite for apartments. More apartments are on the way, too.
At least 423 units are in various stages of construction in the market. The biggest of the bunch is the 145-unit Block 2 Lofts project in downtown Little Rock.
This Vanadis Group development should be completed in two months. The Little Rock group expects to begin construction on the 41-unit Eastside Lofts project at 1401 S. Scott St. by year's end.
Construction of the 128-unit Chapel Ridge complex in west Little Rock is in full swing on Chenal Parkway between Highways 10 and 300.
The 73-unit Riverview project at 810 North St. in downtown Little Rock will be completed in September. An additional 36 units are expected to open by year's end' at Eagle Nest in southwest Little Rock.
Two other projects completed earlier in 2000 include 132 units at Lindsey Management's Eagle Nest project and 56 units at Timberwood in Jacksonville.
"The market's in good shape," said Jerry Webster, president of Little Rock's Webster Corp. "Equilibrium is a good word. We have good supply and good demand. Things are very stable."
Webster, whose commercial realty firm is dominated by apartment sales, believes the market is ripe for 1,000 more units based on the investor demand he's encountering.
"I have four clients looking to build luxury apartments," Webster said. "I have six looking to build low-income tax-credit deals. Everyone wants to build luxury or low-income tax-credit deals. There's nothing in between.
"Developers tell me it's almost as expensive to build middle-of-the-road projects, B-plus properties, as it is to do top-end apartments. But the return for those A-plus properties is so much greater."
Like the overall market, the largest submarket in the county experienced an occupancy rebound after a five-year year decline.
Occupancy in the northwest Little Rock sector, home to a third of the 23,531 units included in the 1999 survey, improved from 88.9 percent in 1998 to 90.3 percent in 1999.
This growing submarket is losing one of its properties. Wentwood Valley Apartments, originally developed as a condominium project, is going condo again. The 68-unit project converted to apartments after a chilly reception greeted its inaugural sales pitch.
"People are going to watch that to see how successful it is," Webster said. "I think there is a real market out there for some more condo conversions or a new condo development."
Two new projects joined the northwest Little Rock sector's roster of properties last year: Bristol Park, 224 units, and Carrington Park, 202 units.
Rounding out the 1999 class of new apartments are Parkcrest in Sherwood, 216 units; Eagle Nest in southwest Little Rock, 168 units; West Wood II in southwest Little Rock, 144 units; Madison Heights, 140 units in West Central Little Rock; and Tuf-Nut Lofts in downtown Little Rock, 23 units.
The West Wood expansion boosted the overall size of that development to 312 units, while Squire Court project at 5201 Geyer Springs Road grew to 156 units with the renovation of 40 units by the Catlett & Co.
The turnaround of the southwest Little Rock submarket remains in motion after many of its units suffered through years of neglect by absentee owners.
The 3,598-unit submarket continues to enjoy a combination of new investment rehabing overlooked projects and new construction. Southwest occupancy climbed from 89.2 percent in 1998 to 91.6 percent last year, the biggest single gain of any submarket.
"We have nine vacancies out of 384 units at Eagle Hill," said Roy Stanley, president of Lindsey Management Co. "That's not too bad."
Leasing, activity is in full swing for 300 new units at the neighboring Eagle Nest project. How quickly these apartments fill up will be a measure of the submarket's continued resurgence.
Occupancy in the 3,345-unit Central Little Rock submarket inched from 94.2 percent in 1998 to 94.4 percent last year. The sector is dominated by projects in the Riverdale area and a cluster of properties near Cantrell Road and Mississippi Avenue.
The 3,263-unit North Little Rock submarket actually took a slight dip in occupancy, moving' from 95.2 percent in 1998 to 94.1 percent. Apartment development in North Little Rock has been practically non-existent since 1986.
Two areas identified for future projects are the historic downtown district and the Baucum/Scott area in the east part of North Little Rock.
Some view the performance of the Block 2 Lofts and Riverview Apartments in downtown Little Rock as test cases for future projects in the downtown areas on both sides of the Arkansas River.
While North Little Rock has remained dormant, the neighboring Sherwood apartment market has doubled to more than 1,300 units since 1995. Occupancy was a firm 97.2 percent last year, compared to 96.9 percent in 1998. Such high figures assure future development in Sherwood, which passed the 1,254-unit Jacksonville submarket in size.
Optimism about future operations at the neighboring Little Rock Air Force Base prompted some new construction in Jacksonville. The new units caused a slight dip in occupancy, which went from 96.4 percent in 1998 to 95.5 percent last year.
Apartment watchers won't be surprised to see more activity in Jacksonville. The same can't necessarily be said for Maumelle.
This 577-unit submarket appears especially primed for more apartments, with the county's highest occupancy rate of 97.4 percent. However, would be developers have been frustrated in attempts to bring new projects online.
Neighborhood opponents have successfully thwarted efforts to develop any rent-subsidy units. The result has been pricier units and an average rental rate of $591 per month -- also the highest of any submarket in Pulaski County.
The west central Little Rock submarket, featuring projects scattered south of Interstate 630 and north of Asher Avenue between Pine Street and Interstate 430, remained firm at firm at 93.9 percent.
The pool of downtown Little Rock apartments surveyed is deemed to be too shallow for meaningful data.
PULASKI COUNTY APARTMENT OCCUPANCY 1985-99 1985 89.0% 1986 86.0% 1987 82.0% 1988 86.8% 1989 91.4% 1990 92.5% 1991 93.4% 1992 94.4% 1993 95.7% 1994 95.1% 1995 95.0% 1996 93.9% 1997 [*] 92.9% 1998 91.9% 1999 92.3% (*.)1997 data extrapolated from trend 1996-1998. Source: 1999 Pulaski County Apartment Survey. Apartment Census Year Total Units 1995 20,662 1996 21,514 1997 21,514 1998 22,684 1999 23,531 Average Apartment Rents 1995-99 Sector 1995 1999 Change % Change Downtown $323 $299 -$24 -7.4 Southwest 360 425 65 18.1 West Central 424 445 21 5.0 Central 496 561 65 13.1 Northwest 490 549 59 12.0 North LR 441 478 37 8.4 Sherwood 391 472 81 20.7 Jacksonville 350 375 25 7.1 Maumelle 572 591 19 3.3 Pulaski County 447 508 61 13.6