Little Rock 2Q23
Multifamily Market Report
$1,028
average rent
94.3%
average occupancy rate
$216.2M
ytd sales volume
5.6%
YoY rent change
-2.1 POINTS
yoy occupancy change
12
ytd individual transactions
Supply & Demand
2Q23
404 Units
QUARTERLY DEMAND
YTD: -32
46 Units
QUARTERLY COMPLETIONS
YTD: 86
Annual Demand vs Completions
-
Completions
-
Demand
Demand Trends
In Q2 2023, the Little Rock apartment market demonstrated robustness with renters absorbing over 400 net units.
All four submarkets recorded positive net absorption, with the West Little Rock / Saline County submarket leading the way by absorbing 171 units.
Completion Trends
Q2 2023 witnessed an expansion of Little Rock’s apartment inventory by 46 units. The West Little Rock / Saline County and Downtown Little Rock submarkets were the sole contributors to this supply, adding 36 and 12 units, respectively.
Over the past year, new supply has been primarily concentrated in the West Little Rock / Saline County and North Little Rock / Jacksonville / Conway submarkets, accounting for 85% of the newly delivered units.
Demand Outlook
Little Rock’s demand outlook for the coming four quarters is quite optimistic, especially considering that absorption has lagged in recent quarters. The anticipated absorption of 819 units underscores a promising market outlook for the upcoming period.
The West Little Rock / Saline County submarket is projected to be a significant demand hotspot, with expected annual demand comprising more than 47.3% of overall absorption.
New Supply Outlook
The Little Rock apartment market is poised for a substantial expansion of its inventory over the next four quarters, with an anticipated increase of 1,229 units.
The West Little Rock / Saline County submarket is set to contribute significantly to this new supply, with expected additions of 434 units.
Occupancy & Rent Trends
RENT VS OWN
MONTHLY PAYMENT
$1,296
Average Monthly Mortgage Payment
$1,028
Average Monthly Rent
Occupancy trends
The Little Rock metropolitan apartment market, renowned for its consistently strong occupancy rates averaging 95.1% over the past five years, experienced a year-over-year decline of 210 basis points but improved by 60 basis points quarter-over-quarter, resulting in a current occupancy rate of 94.3%. Class C units led with the highest occupancy level at 95.6%, followed by Class B and Class A at 94.0% and 93.1%, respectively. Occupancy levels across submarkets showed minimal variation, with the strongest reading observed in Downtown Little Rock at 94.8%, while North Little Rock / Jacksonville / Conway had the weakest readings at 94.0%. Looking ahead, Little Rock’s market is projected to record an occupancy rate of around 92.8% in the next year.
RENTAL TRENDS
During the 2nd quarter of 2023, rents in the Little Rock metro experienced a significant year-over-year increase of 5.6%, reaching $1,028 per month. This growth outperformed the market’s five-year average of 4.5%. Notably, Class A units led the rent performance among product classes during this period, showing a 6.9% annual effective rent change. Meanwhile, Class B and C units saw annual changes of 4.5% and 5.3%, respectively. Among submarkets, North Little Rock / Jacksonville / Conway stood out with the strongest rent performance in the second quarter, recording increases of 7.8%. Conversely, Downtown Little Rock experienced the weakest performance, with an annual rent change of 2.5%. Looking ahead, the same-store effective asking rent change in the Little Rock market is expected to further normalize as the market adjusts to the anticipated influx of new supply.
Submarket Rent & Occupancy
| Submarket | Average Occupancy | Annual Occupancy Change | Average Monthly Rent | Annual Rent Change |
|---|---|---|---|---|
| Central Little Rock/Southeast Pulaski County | 94.5% | 1.4% | $843 | 5.4% |
| Downtown Little Rock | 94.8% | -1.2% | $1,143 | 2.5% |
| North Little Rock/Jacksonville/Conway | 94.0% | -3.2% | $1,044 | 7.8% |
| West Little Rock/Saline County | 94.5% | -2.5% | $1,088 | 3.6% |
| Little Rock-North Little Rock-Conway, AR | 94.3% | -2.1% | $1,028 | 5.6% |
Units by Submarket Delivering in 2023
1,604
Units Under Construction
1,229
Units UC Delivering In the Next 4 Quarters
Percentage of Units Under Construction
Percentage of Units Delivering Next 4Q
Sales Activity
Broadly speaking, the apartment investment sector has experienced a significant slowdown due to the impact of rising interest rates on capital markets. However, Little Rock has bucked this trend, witnessing a substantial increase in annual volume compared to 2022. In the first half of this year, transaction activity was 42.8% higher than the same period last year. According to Real Capital Analytics, sales in Little Rock totaled $216.2 million, positioning it as one of the leading markets nationwide in terms of annual volume growth. The average pricing of apartment units also grew by 15.2% in the last year, but Little Rock continues to remain an affordable market for investors, with an average price per unit of $112,600.
- Forge Partners
- Canyon View Capital
- Isaac Z Gutman
- Passco Companies
- Moline Investment Management
- Covenant Capital Group
- Burkhalter Com’l Group
- Carter Haston
- SJA Investments
- Peak Capital Partners
TRANSACTION VOLUME
YTD Transaction Volume
Y-O-Y Change
Individual Transaction Count
Price Per Unit
Annual Price Change
* Trailing 4Q average PPU
* Preliminary Data from RCA – Individual transaction $2.5M +
Economy
The Little Rock area added 11,300 jobs in May 2023, representing a 3.0% increase in employment. The unemployment rate dropped by 80 basis points to 2.7%, which is significantly lower than the national benchmark of 3.4%. The leisure and hospitality sector saw the most significant job gains, with 3,900 positions added, reflecting an 11.5% expansion. The mining, logging, and construction sector realized the second largest job gains with 2,900 jobs added and a sector expansion of 4.8%. North Little Rock-Conway’s current employment base now sits roughly 20,900 jobs or about 6% above the pre-pandemic level in February 2020.
11.3K
May Annual Jobs Created
3.0%
May 23 Employment growth
2.3%
May 23 Unemployment rate
3.4% us may rate
Top 5 Employment Sector Annual Change
Hover over icons to view data
| Sector | Change from May 2022 to May 2023 | Percent Change |
|---|---|---|
| Leisure and hospitality | 3,900 | 11.50% |
| Education and health services | 2,900 | 4.80% |
| Mining, logging, and construction | 1,400 | 7.50% |
| Professional and business services | 900 | 1.90% |
| Other services | 800 | 4.30% |
| Trade, transportation, and utilities | 600 | 0.80% |
| Manufacturing | 300 | 1.50% |
| Financial activities | 200 | 0.80% |
| Government | 200 | 0.30% |
| Information | 100 | 1.80% |
Major Economic Developments
Little Rock Port
5K Acres Size
45 Tenants
$400M Trex Co. Facility Investment
500 New Jobs Created
2024 Operational
Logistics Hub Expansion
3 Fortune 500 Companies Logistical Hubs Under Construction
$400M In New Logistical Hub Space
Dollar General, Lowe’s Home Improvement, Tractor Supply Tenants
775 New Jobs Created Collectively
2024 Operational
UAMS Expansion
$210M Facility Expansion
200+ New Jobs Created
New Surgical Hospital Now Open
Orthopedic & Spine Hospital Opening Soon
Radiation Oncology Center Opening Soon
Market Outlook
Despite a nationwide slowdown, investor demand for the Little Rock market remains robust. In Q2 2023, 1,604 housing units were under construction, with 1,229 units slated for completion within a year. The West Little Rock/Saline County submarket will see the majority of new deliveries, with 434 units, while all submarkets will receive a significant portion of the anticipated new supply. As rent growth and occupancy rates are projected to normalize, the outlook for Little Rock is cautiously optimistic. Class B properties are likely to see improved performance, driven by several ongoing economic development projects that will boost demand. North Little Rock, in particular, stands to benefit from the substantial expansion being undertaken by the University of Arkansas for Medical Sciences, bringing high-paying jobs to the area.
Sources: RealPage; BLS; MSCI; Little Rock Business Journal; Little Rock Economic Development Council.
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