The 28,340-unit Little Rock area apartment market remains strong, with a surge of new supply only temporarily denting its low vacancy rate. The second quarter saw the rate fall 20 basis points to 5.4%, down 130 from a year earlier. The Class A rate was 4.8%, down 40 basis points from the prior quarter, while the Class B/C rate was 5.8%, unchanged. Net absorption, after totaling more than 700 in both 2010 and 2011, was at 185 units through mid-year 2012, with just 72 units completed. The vacancy rate had peaked at 8.7% in the second quarter of 2010.
More than 900 units are expected to complete construction in metro Little Rock in 2012, the most since 2006 and the second most on record. The 312-unit The Ridge at Chenal Valley apartment project completed construction in Reis’ West submarket in August, and the 264-unit Riverside at Rockwater followed in the north Little Rock submarket in September. Little Rock area tenants also gained the choice of the 360-unit The Fairways at Nutters Chapel, which completed construction outside Reis submarket boundaries in August. The vacancy rate increased 60 basis points in the third quarter, yet remained low at 6.0%, and with construction slowing Reis predicts it will be back below 6.0% by the end of 2012.
Rents show the strength of the market. In the second quarter the average asking rent increased 0.9% to $672 per month with the average effective rent up 1.0% to $654 per month. First Glance data shows a 1.4% increase in the asking average for the third quarter, while the effective average was already up 0.8% in July and August alone. Reis predicts gains of 2.8% asking and 3.2% effective for all of 2012, followed by similar or even larger annual increases through 2016. The second quarter asking averages for Class A and B/C units, meanwhile, were $800 and $590 per month, respectively.