Apartment Action Continues: Multifamily Market Draws Buyers, Builders and Sellers

The average occupancy rate for Pulaski County apartments hit a seven-year low in 2006. But that low is still 92.6 percent, and the market is active with a roster of sales and new construction projects.

More than a dozen apartment sales, topping a combined $131 million, closed during the past 12 months. Sellers cashed out on properties while hungry investors bought a menu of projects that ranged from the high end to rehabs.

The same favorable conditions of low interest rates and demand for income-producing real estate that are pushing sales activity also are driving continued development of new apartments.

"Quite honestly, our market is probably one of the most stable markets in the country," said Jerry Webster, president of Little Rock's Webster Corp.

"There is no question there will be new projects next year. You can book that. The question is, who's going to build them and where are they going to build?"

How many new units?

"I'd be surprised if you didn't have 800 to 1,000," Webster said.

Nearly 1,400 new units opened in the Pulaski County market during 2006, and more than 1,600 are expected for completion this year.

"A story we're going to have next year is new construction," Webster said. "The market is very stable and borderline strong. There are developers looking to expand into new markets. I'd be surprised if you didn't see at least three projects built next year."

Two Maumelle projects opened during the past 12 months are 168 units in phase three of RiverPointe and 240 units at The Parc at Maumelle. Joining the conga line of new apartments are Foothills Phase II in North Little Rock, 300 units; Palisades at Chenal Valley, 248 units; HighlandPointe of Little Rock, 216 units; and ChapelRidge of Sherwood, 160 units.

Mixed in with the new is the conversion of old projects into condominiums. The 74-unit Riverview complex in downtown Little Rock went condo, a transformation that is in process at the 113-unit Riviera project in Little Rock's Riverdale area.

In the rental wars, those moves are removing competitors from the field.

Another variable at play is the interest-rate creep for single-family mortgages. That financing factor is said to be a good thing for converting would-be homeowners into tenants.

Apartment owners who took advantage of favorable refinancing opportunities are positioned to reap a windfall sale for well-maintained properties.

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