Report: Business vacancies rise in 3Q

Square-footage sales still falling

Vacancy rates continue to increase in the Central Arkansas commercial real estate market as the pandemic weighs on the economy, according to a report from Colliers International of Arkansas.

"Vacancy rates have gone up across the board," Colliers reports, noting that the retail sector saw the largest increase, rising to 17.5% in the third quarter from 12.3% in the second quarter.

Colliers conducted a third-quarter survey of the commercial real estate market in Central Arkansas, examining key sectors such as retail, office, industrial and multifamily.

"The overall state of the market has continued in the direction we anticipated," the report said. "In Q3, the total square footage sold was nearly half of what was sold in Q2."

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Though retail vacancies are climbing, there are some positive changes.

"Restaurants without drive-thrus are perfecting curbside orders and seeking permits for outdoor dining," the company reported. "Little Rock and North Little Rock have both added outdoor canopy seating to help their downtown restaurants provide safer environments."

The area's office market remained relatively unchanged -- vacancies increased to 20.3% from 18.33% -- and Colliers predicted vacancy rates would continue increasing into 2021 because of changes in staffing. "The future trend for office space requirements remains unclear with many corporate users still operating with limited staff and large numbers working from home," the study said.

Industrial office vacancies increased 3.5% in the quarter but rates remain stable. Large businesses like Amazon that have announced new facilities have boosted construction and Colliers projects that will continue.

The retail sector, however, remains troubled and has faced some of the biggest job and revenue losses during the pandemic. "The retail sector is experiencing perhaps one of the most uncertain times in our nation's history," Colliers wrote.

Essential services in the retail sector, however, are showing positive momentum. Essential services include automotive repair and detailing, grocery stores, wireless service providers, banking institutions, medical and pharmacy.

"All signs point to the continued expansion of these services within central Arkansas," the report said, noting that JPMorgan Chase has announced that it will open bank branches in the region.

The multifamily sector is also showing sings of growth. "Developers remain bullish with units under construction and out-of-state investors continue to scour the state in search of lucrative yields," the study said.

Canada-based Colliers is a $3.5 billion professional services and investment brokerage firm that is heavily involved in commercial real estate. The company has offices in Little Rock and Rogers and it manages $17.1 million square feet of office space in the state.

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