Apartment vacancies fell to 7.8 percent in the Little Rock area in the third quarter of 2015 from 8.1 percent in the second quarter, said The Multifamily Group, a firm that tracks the Pulaski County apartment market.
The last time the Little Rock market had a rate as low as it had in the third quarter was in 2012, when the vacancy average for the year was 7.2 percent, said Richard Cheek, co-owner of The Multifamily Group.
Still, Little Rock historically lags the national vacancy rates, Cheek said Monday.
Vacancy rates nationally have been about 5 percent in recent years, Cheek said. The Little Rock market has seen vacancy rates around 7.8 percent to 8 percent, Cheek said.
Nationally, apartment vacancy rates increased to 4.3 percent in the third quarter from 4.2 percent in the second quarter, according to New York-based Reis Inc., which supplies information on the commercial real estate market.
"We're in a time of expansion for the apartment market in Little Rock," Cheek said. "Construction has been fairly high for a couple of years. Construction [units] are being absorbed pretty quickly. And we have modest rental rate growth."
About 550 apartment units were completed in the third quarter.
That's a sign of a strong apartment market, said Michael Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock.
"Anecdotally, you can see a lot of construction of apartments going on," Pakko said. "Even with all the construction, the demand seems to be outpacing the supply."
The average rent in the third quarter was $729, compared with $738 in the second quarter and $728 in the first quarter. The average effective rent, which takes into account discounts and specials on rates, was $708 in the third quarter, up from $707 in the second quarter.
The Multifamily Group primarily surveys apartment complexes with at least 100 units. Of those, there are about 26,200 apartment units in the Little Rock area, Cheek said.
About 1,000 apartment units will be completed this year, Cheek said.
"That often changes," Cheek said. "Construction plans change all the time."
There were about 750 apartment units completed in 2015, Cheek said.
The strength in the numbers reflect two things, Pakko said.
"One is a growing strength in the local economy, which we're seeing in other statistics as well," Pakko said. "And one would hope an increase in the pace of household formation. So that some of the millennials who have been set back by the difficult economic times since the recession are becoming established and creating their own households."
Millennials have been slower in getting to the stage where they want to own a single-family home, Pakko said.
"As a practical economic matter, the increasing burden of student loan debt is one factor," Pakko said. "Clearly if you're loaded up on student loan debt, that leaves less room to take on a mortgage."
Business on 02/02/2016