Metroplan’s 2013 Economic Review and Outlook, an annual review of economic data for the Little Rock-North Little Rock-Conway metropolitan statistical area (MSA), shows a changing economic and employment landscape with e-commerce taking an ever-growing share of the retail market and perhaps changing real estate development.
Metroplan is an association of local governments with members in five counties of the six-county MSA; Lonoke County, Austin, Cabot, Jacksonville, Lonoke and Ward are members.
Metroplan serves as the central Arkansas metropolitan planning organization (MPO) and as a commons for issues affecting the region; it develops transportation plans required by federal law, gives members a forum for environmental issues, and provides information and staff resources to member governments, the business community and the public.
Slow housing market
Overall regional housing construction was up marginally during the first half of 2013. Compared with the first half of 2012, single-family housing construction increased by a small fraction, while multi-family housing rose more quickly.
The slow trend probably reflects continuing weakness in housing markets, and a slowdown of in-migration to the region as well.
Cabot saw the fastest up-tick in single-family housing construction to 65 units, rising 35 percent in the first half of 2013 over the same period in 2012.
The second fastest growth was in Benton, which rose nearly 16 percent to 117 new units.
Little Rock saw the largest total of new single-family permits (188), and the third-fastest increase over the previous year at 12 percent. Sherwood also gained nearly 6 percent.
Jacksonville and Maumelle were flat, while North Little Rock saw a 37 percent decline in new single-family permits.
Bryant, Conway and Hot Springs Village also saw some fall-off in housing construction.
Multi-family construction was limited to the region’s three largest cities.
Little Rock added a total of 259 new multi-family units; the largest of these was the Pointe at Brodie Creek, which will add 186 units when completed.
Other projects include an assisted living center in western Little Rock and the mixed-use Mann on Main project, which adds 19 units to the downtown market.
Arkansas Baptist College also began construction of a new dormitory with 192 beds, although this is not counted with the multi-family tallies.
North Little Rock added a new 96-unit complex east of the US 67-167 freeway.
Conway saw a new 88-unit complex commence construction in March.
While the overall figures show little change over the recent past, one surprise is the prominence of Little Rock within the early 2013 figures.
While it accounts for under 29 percent of the four-county region’s population, Little Rock saw 39 percent of the new housing units under construction during the first half of 2013.
As recently as 2006, Little Rock accounted for about 26 percent of regional housing construction.
The region is running just a bit above average for U.S. housing construction, although when seasonally adjusted, local single-family housing seems to be dipping toward the U.S. average; the housing recovery remains tenuous.
Construction value trends
The latest data on construction values suggest a continuing slow regional climb- out from the Great Recession.
In 2012, local construction climbed 21 percent from the year before.
Adjusted for inflation, local construction remains well below its levels from the 2002-2008 construction boom but now roughly matches levels from the late 1990s.
The biggest gains were in nonresidential construction, which climbed 37.5 percent. New residential construction rose by a more modest 10.8 percent.
The figures for 2012 mark an up-tick from the previous year’s performance, but since 2011 construction values were the lowest since 1993, this was a modest achievement.
Weak local income growth may be correlated with the soft construction trend.
The latest figures available from the U.S. Bureau of Economic Analysis show that regional incomes grew a modest 0.9 percent from 2008 to 2011, compared with 1.5 percent income growth at the national level.
The median value for new single-family homes climbed in 2012, but remained below levels from the housing boom in 2004-2008.
Square footage was also up, roughly matching the national average of about 2,300 square feet per single-family home in 2012.
Any economic prediction must acknowledge uncertainties, like Federal Reserve policy, a growing risk of deflation, possible housing market bubbles after years of quantitative easing, and uncertainties from the Affordable Care Act and the continuing threats of government shutdowns.
Slightly different, yet broadly similar, unknowns were present last year and the year before, yet slow growth continued.
Railroad carloadings continue upward, a promising leading indicator for economic growth.
The challenge in 2014 will probably be more about uneven growth than no growth.
Economic disparities have deepened while many sectors are failing to produce the reliable growth of years past.
Opportunities will be found in recognizing emerging patterns in a reconfiguring economic landscape.
Lack of dynamism in single-family housing demonstrates demographic and cultural shifts already well underway.
The new normal in housing will include fewer detached single-family housing units, and a greater share of multi- family.
This data trend remains steadier and clearer than most in the post-Great Recession economic environment.
Slow job growth and lack of real income growth are probable causes behind a rise in the average number of U.S.
persons per household in recent years, reducing housing demand growth.
As the chart below shows, rising household size has been even more pronounced in Central Arkansas in recent years, a sharp reversal for an indicator that trended down relentlessly during 60 years of post- World War II prosperity.
Central Arkansas remains an economy spread across numerous industries, anchored in “eds and meds” and government.
This reliable, but less-than-dynamic, industry mix will yield steady but slow growth for 2014.
The key to faster growth lies in the developing creative economy.
Successful innovation requires scientific knowledge, risk-taking, and investment capital. Environmental waste can be a metric for cost-savings and innovation opportunities.
The local area seems to be running ahead of the curve in establishing home-grown creative/entrepreneurial initiatives, as shown by cases conveyed in this newsletter and other developing programs.
Central Arkansas has seen better-than-average success at urban re-invigoration in all three of its largest cities, a promising sign in an emerging economy in which high-quality urban environments seem to provide the backdrop for innovation culture.
Information in this article is from the Metroplan 2013 Economic Review and Outlook, prepared by Jonathan Lupton, Lynn Bell and Judy Watts.