$990 2Q 2024
2.8%
90.1% 2Q 2024
-110 BASIS POINTS
61 [YTD: 154]
455 [YTD: 565]
QUARTERLY DEMAND
QUARTERLY COMPLETIONS
Little Rock has contended with fluctuating demand over the past year, largely influenced by a substantial wave of move-outs in 2023. Despite these challenges, the first half of 2024 has seen positive absorption in both quarters, although it still fell short of the number of new units introduced during the same timeframe. Notably, demand has been most consistent in Conway, where 72 units were absorbed in the most recent quarter. Yet, this positive trend was somewhat mitigated by setbacks in submarkets closer to the core of Little Rock. In particular, the Midtown/Hillcrest submarket recorded 90 net move-outs in 2Q 2024.
In Little Rock, new construction is currently at a manageable level, with 1,180 units under construction, representing 2.3% of the existing inventory. This controlled pace of development mitigates any immediate risk to occupancy rates or rent growth. Construction is focused within four submarkets: Conway, North Little Rock, Central/East, and Midtown/Hillcrest, which collectively encompass nearly 100% of the market’s total development pipeline. However, the momentum of construction is expected to slow. This trend is highlighted by the fact that developers have not initiated any new projects since mid-2023.
Demand in the Little Rock multifamily market remains fragile, but two consecutive quarters of positive absorption in 2024 offer a hopeful outlook for the latter half of the year. The current average occupancy rate sits at 90.1%, which is below both Little Rock’s 10-year average of 91.6% and the U.S. average of 94%. However, Little Rock has historically maintained a structurally lower occupancy rate compared to the national average and other Southeastern markets. Submarkets with the highest occupancy rates, such as Saline County (98.4%), and Maumelle (95.0%) highlight the relative strength of suburban neighborhoods. In contrast, Southeast/University reported the lowest occupancy rate at 87.2%.
As of Q2 2024, annual rent growth at 2.8% in the Little Rock multifamily market, significantly outpacing the U.S. average of 1.0%. This growth was driven by Little Rock’s robust supply of affordable mid-tier properties, which are somewhat insulated from new supply pressures. Outlying submarkets like Conway and Saline County led all submarkets both registered annual rental growth of 8.0% in the most recent quarter, reflecting favorable demographic trends in these areas. Conversely, the Southwest/University submarket, which added over 700 new units in the past year, experienced a slight 0.3% annual decline in rents. Despite this, it was the only submarket to see a contraction in rents during Q2 2024.
Average Monthly Mortgage Payment
Average Monthly Rent
According to Costar, as of mid-2024, the total value of conventional multifamily transactions in Little Rock reached approximately $49 million, reflecting a 72% decrease compared to the same period in 2023. Only four transactions were reported closed, compared to 22 during the same timeframe the previous year. For historical context, first-half deal volume for conventional multifamily assets in Little Rock over the last 10 years averaged $144.3 million.
* Trailing 4Q average PPU
* Preliminary Data from Costar – Individual transaction $2.5M +
|
Under 35 Years
|
35 to 44 Years
|
45 to 54 Years
|
55 to 64 Years
|
65 to 74 Years
|
75 to 84 Years
|
85 Years & over
|
|---|---|---|---|---|---|---|
|
0.9%
|
-0.6%
|
-0.1%
|
0.8%
|
-0.3%
|
0.1%
|
-0.5%
|
The under-35 age group is the fastest-growing renter demographic in the Orlando metro area, registering a 0.9% increase from 2019 to 2022. This trend indicates a rising demand for rental housing that appeals to a population prioritizing proximity to lifestyle amenities and employment opportunities.
Little Rock appears to be heading in the right direction as demand has stabilized following a period of net move-outs recorded in 2023. While demand in the first half of 2024 did not match the level of new units that came online, the positive absorption is an encouraging sign. Looking forward, with a manageable construction pipeline and a deep pool of mid-tier properties showing consistent rent growth, Little Rock owners and operators can expect steady rent growth moving into 2025.
This optimism is bolstered by nearly a billion dollars in capital investments pledged by public and private entities, anticipated to drive both population and job growth. The local economy is expanding, with significant contributions from the University of Arkansas for Medical Sciences in North Little Rock, which supports high-salaried jobs and creates substantial economic impact. Additionally, the largest employment sectors—state and local government, education, and health services—serve as solid anchors of the regional economy, further supported by recent expansions like those by CARTI and CHI St. Vincent. This confluence of factors suggests a robust future for the Little Rock apartment market.
