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Tracking the numbers.

Little Rock Commercial Realtors Keep Up With 28 Million Square Feet Of Industrial Space

It appears 1992 will be an above-average year for industrial space demand in the Little Rock market. Demand remains moderately strong, with growth from existing industry accounting for most of the absorption.

Much of the upward movement of occupancy is categorized by deals like Interstate Highway Sign Co., which moved into a new 300,000-SF facility at the Little Rock Port.

Parkin Printing bought Interstate's old 43,500-SF facility in southwest Little Rock and will relocate from its 26,000-SF location on Asher Avenue.

These sorts of domino deals produce an atmosphere for a steady absorption of empty space.

Gene Lewis, president of Lewis Realty & Associates of Little Rock, has taken the lead in tracking the market during the past five years.

Lewis gathers information on the Little Rock market and reports it to the Society of Industrial and Office Realtors (SIOR), based in Washington, D.C.

Data is assembled from dozens of other markets by SIOR in a joint venture with Landauer Real Estate Counselors Inc. of New York.

The results are published in an annual guide entitled "Comparative Statistics of Industrial and Office Real Estate Markets."

But that publication is merely a quick reference tool for commercial Realtors across the nation.

"We try to run monthly numbers so we can have up-to-date information for prospects," Lewis says.

SIOR's soon-to-be published assessment of the area market notes that the local economy is in good shape. Little Rock is limited by the availability of space and the cost of energy.

Comments on new speculative development in 1993?

"Forget it!" is the response, with a backdrop of tight lending practices.

New developments include R&G Sloane Co. breaking ground on its corporate headquarters and plastics manufacturing complex containing more than 450,000 SF, which will create about 500 jobs for the area.

The Kimberly-Clark Corp. facility in Maumelle is also nearing completion on a 163,000-SF expansion.

Available industrial space and occupancy rates in the Little Rock market have tracked this way during the past four years:

* 1992 -- 1.12 million SF.96 percent.

* 1991 -- 1.05 million SF, 90 percent.

* 1990 -- 1.13 million SF, 89.3 percent.

* 1989 -- 740,000 SF, 91.8 percent.

Total space in the market has radically changed in 1992 because of a format change that includes manufacturing and warehouse properties operated by owner-users.

This was the catalyst for total space in the market jumping to 28.3 million, compared to 10.55 million last year. Totals in 1990 and 1989 were reported at 10.6 million SF and 9 million SF, respectively.

"The majority of my listings have sold over the last six to eight months, and I'm looking for properties to list," says Bill McClard, president of McClard Commercial Realty of Little Rock. "Brokers in Tennessee, Mississippi, Oklahoma, Texas and Louisiana are telling me the same thing."

What's hot?

"There is a real demand for 15,000-SF and less free-standing properties to buy and lease," says McClard. "I've got four or five people lined up looking for buildings, and they may have to develop their own project."

Retrospective Analysis

Here are some observations made in the SIOR market surveys for the Little Rock area 1989-91:

* 1992 Forecast: Little Rock enjoys a strong base of major companies to support its industrial base. Future expansions may be constrained by the cost of energy and the availability of desirable facilities.

The bankruptcy of several prominent local developers has caused banks to tighten lending policies. In 1992, this industrial market will experience another year of positive growth with historically strong warehouse-distribution space.

* 1991 Review: Little Rock's industrial sector slid backward in 1991. Vacancy rates rose to an overall rate of 9.5 percent. However, the stock of available space is not considered sufficient by SIOR's reporters who characterize the market as moderately undersupplied.

Several existing industries continued to prosper and to expand primarily in the suburbs. The aircraft industry has contributed to activity with the entry of British Aerospace Inc. and the growth of Dassault/Falcon Jet. Investors in the market included Babcock & Wilcox Co.

* 1990 Review: Leasing activity diminished the available inventory of high-quality space creating a shortage for all property types. Overall absorption was 1.5 million SF in the suburbs but a negative 50,000 SF in the city despite the absence of new construction. Growth occurred among existing owners who expanded their facilities.

* 1991 Forecast: The local economy has been flat and is threatened to decline due to the national slowdown. Although most property types are undersupplied, tight lending policies will delay all speculative development.

For the moment, it appears that year-end conditions in the industrial market will persist through 1991. Taking a longer perspective, the need for refrigerated warehousing is expected to increase as Arkansas finds its market share in poultry production rising.

Also, AT&T is a major employer and high-tech/research and development facilities should see demand firming into the middle 1990s.

* 1989 Review: Conditions in the Little Rock industrial market shifted from general oversupply in 1988 to a moderately space-short situation in 1989.

Demand, largely stemming from the expansion of local firms, pushed the absorption to nearly 700,000 SF and drove the overall vacancy rate down to 8.2 percent.

Rents were still at depressed levels, influenced by the soft market of the past several years. As 1989 drew to a close, the firming market began to see an upward trend in rents.

* 1990 Forecast: There is no speculative construction planned for 1990, and none on the horizon until building values come into alignment with construction costs.

Land prices will be feeling the lagging effects of the local real estate recession and are expected to be off 15 percent over the year.

Improvement in the retail trade picture for the mid-South is expected to make the warehousing picture in Little Rock stronger during the early 1990s.
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Article Details
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Title Annotation:Strictly Commercial; Little Rock, Arkansas' industrial real estate
Author:Waldon, George
Publication:Arkansas Business
Date:Oct 19, 1992
Words:992
Previous Article:Taxation is the real issue.
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