Reduced retail vacancies reveal consumers are going out more
The pandemic-related fog that has enshrouded the Central Arkansas commercial real estate market appears to be lifting though the high rises in downtown Little Rock continue to struggle to find tenants.
Improvements are being reported across major areas, with vacancy rates decreasing in the industrial, office and retail sectors. The first three months of the year “saw Central Arkansas vacancy rates decrease across the board and sales activity is growing in a number of submarkets,” reports Colliers International of Arkansas in its first-quarter survey of market conditions.
The industrial sector, which has delivered a solid performance over the past year, continues to be in high demand even as available space shrinks to accommodate new and expanding businesses. Vacancy rates for industrial space — typically large warehouses used to store and distribute goods — essentially dropped by half in the first quarter compared with the same period a year ago. Central Arkansas’ vacancy rate is 3.9% versus 8% a year ago.
Regional retailers are capitalizing on more shoppers returning to stores. Retail vacancy rates fell to 13.2% in the first three months of the year, compared with vacancy of 17.75% a year ago.
“Consumers are once again getting out and going into physical stores, and new retailers in the market are competing for the same corner lots with drive-through accessibility,” Colliers reports.
Corner lots are at a premium — they deliver highertraffic volumes — and prices are soaring for those spaces with Colliers noting there is “high land value for corner locations.”
It’s a different story for larger shopping centers like Park Plaza and McCain malls, Shackleford Crossings and the Midtown Shopping Center, all of which are struggling to fill empty space and are offering aggressive pricing deals to land tenants.
Despite improvements, the region’s retail sector remains far below improvements across the nation, where retail vacancy is at 4.5%.
There also is an “abundance” of small-box retail space — ranging from 10,000 square feet to 30,000 square feet — available for lease in Central Arkansas.
The sector remains far below its pre-pandemic vacancy rate of 4.3%.
Office space improved slightly in the quarter — dropping to 14.1% vacancy compared with 16.3% last year — propped up mostly by gains in suburban markets. Downtown Little Rock remains a mess with foreclosures and lawsuits seeking improvements and upgrades by tenants. Yet the report notes a turnaround could be on the horizon.
Colliers reports that “downtown beautification projects could help promote walkability, community, and ultimately, more destination areas,” it said. “Building improvements are still expensive, but there is growing momentum to revitalize the area.”
Colliers of Arkansas has two offices: Little Rock and Northwest Arkansas. The company provides manage
ment and leasing services to commercial real estate users, owners, investors and developers across the state. The company has more than $553 million in sales in Arkansas and more than $163 million in total leases.
ENVIROTECH UNPLUGGED
Envirotech Vehicles Inc., the electric vehicle manufacturer moving to Osceola, reported a loss of $2.5 million in the first quarter as sales increased in the period ending March 31.
Last year, the company said it was moving production operations and its corporate headquarters to Mississippi County as part of an $80.7 million investment that would create 800 new jobs over five years.
The company, previously based in California, reported losses equivalent to a penny per share, or $2.53 million compared to $658,510 in the same period last year. Envirotech sold 12 vehicles in the quarter, compared to selling five vehicles in 2021. Sales totaled $1.12 million, up from $470,793.
Envirotech reported it had cash, cash equivalents, restricted cash and marketable securities of about $9.1 million. That was a decline from $12.1 million in the fourth quarter ended Dec. 31, meaning the company dropped by about $3 million in a three-month period.
Chief Executive Officer Phillip Oldridge said Enrivotech is moving into the second phase of overhauling the 580,000-square-foot facility in Osceola.
“As we’ve mentioned previously, with this facility, we are currently one of the only EV (electric vehicle) companies with manufacturing capabilities in the United States,” Oldridge said in a new release. “As the only licensed vehicle manufacturer in the state of Arkansas, we have a unique opportunity to gain an early foothold in the region and benefit from the robust business climate and highly capable workforce that Osceola has to offer.”
Envirotech produces three types of electric vehicles: trucks, logistics vans and cutaway vans that are used by customers ranging from plumbers to delivery and construction operations. The Osceola facility also will manufacture lithium batteries for electric vehicles.
The public company’s stock trades on the OTCQX market, the top tier of over-the-counter markets that offers trading in companies that are not listed on traditional exchanges. It has filed a proposal with the Securities and Exchange Commission to hold an initial public offering to raise money and move its stock listing to the Nasdaq exchange.
DARRAGH EXPANDS
Darragh Co. of Little Rock, a family-owned commercial construction supply distributor in business for more than 100 years, has bought the assets of Service Construction Supply (SCS), which has two locations in Alabama. The transaction will be effective June 1 and is an extension of Darragh’s expansion strategy.
The company added three new locations last year.
The Alabama deal will give Darragh 17 locations in six states across all divisions, which include the Darragh, Tool Central, Service Construction Supply, Morgan Tool and Supply Distribution, Arkansas Rebar and Darco Forming and Shoring.
Darragh officials noted the company has built a business relationship with SCS over 20 years and said the acquisition is an ideal cultural fit.
“SCS is a leader in their region, and we are thrilled they will be joining the Darragh family,” said Ted Darragh, company president. “They will help drive our growth in both current and new markets.”
Darragh was founded in 1906 and began operations by supplying cement, in wooden kegs, to help build the Arkansas State Capitol.