The vacancy rate for Pulaski County apartments was 8.3 percent in the third quarter this year, almost double the national rate, owners of a company that tracks the apartment market in central Arkansas say.
That was down from about 8.8 percent in the second quarter this year, said Richard Cheek and Ted Bailey, co-owners of the Multifamily Group.
Nationally, the apartment vacancy rate was 4.2 percent in the third quarter, Bloomberg News reported. That was up from 4.1 percent in the second quarter.
Cheek and Bailey acknowledged that the Pulaski County vacancy rate is "one of the softer rates in the country right now."
"You would hope that we would have a [lower vacancy] rate," Bailey said.
One reason for the higher vacancy rate for Pulaski County is likely the housing crisis in recent years, said Michael Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock.
"You saw a decline in homeownership [nationally] during that period," Pakko said. "That meant that, relatively speaking, more people [than usual] were choosing rental housing instead of homeownership. That affected the demand for rental housing."
There also was an increase nationally in construction of rental housing, which affected the supply of the units, Pakko said.
But in central Arkansas, the housing crisis and foreclosures weren't as big an issue as in other parts of the country, Pakko said. Because of that, not as many homeowners were forced out of their houses and into apartments. That contributed to the higher vacancy rate in the central Arkansas apartment market, he said.
The Little Rock market also saw 1,060 new rental units open in the third quarter.
From 2006, when construction of apartment complexes in Pulaski County began to pick up, through last year, vacancy rates began to rise, peaking at 8.5 percent in 2009, Cheek said.
The 14-year average vacancy rate through 2012 was 6.4 percent, Cheek said.
The average monthly rental rate in Pulaski County for the third quarter was $721, up about 1 percent for the year.
Cheek and Bailey expect more than 820 new apartment units to open next year.
When new apartments open in a market, it triggers several things, Cheek said.
First, apartment developers continue to raise the bar in terms of amenities and finishings, Cheek said.
"There is a lot more emphasis on upscale amenities," Cheek said, citing nicer fitness centers. "And apartment [finishings] improve. It used to be that granite countertops were in luxury homes only. But now you find those in Class A apartment communities, too."
Second, new construction is a good thing for residents because it creates competition, Cheek said.
And third, new construction often triggers renovations at older apartments, Cheek said.
"As they attempt to compete with [new complexes] in their neighborhood, older apartments have to do renovations to keep up," he said.
The number of apartment complexes sold also has risen this year.
Through September this year, about $112 million has been paid for apartment complexes in Pulaski County, averaging about $60,000 per unit, the Multifamily Group said. Sales amounted to about $28 million in 2013.
Among the bigger sales were: Phase three of the Foothills Apartments in North Little Rock, which sold for about $28 million or $94,500 per unit; and Carrington Park apartments in Little Rock, which sold for about $21.5 million or $106,400 per unit.
Business on 12/31/2014