Report: Commercial Real Estate Absorption Quickens in NWA

by Arkansas Business Staff  on Wednesday, Apr. 19, 2017 10:01 am  

Craig Rivaldo

The effects of changing consumer shopping habits are starting to show up in northwest Arkansas commercial real estate trends, according to the latest Arvest Bank Skyline Report on real estate.

The report, released Wednesday, details occupancy rates for commercial and multifamily real estate in Benton and Washington counties during the last six months of 2016.

The report shows more than 1 million SF of commercial space  — a combination of new and existing space — were absorbed during the second half of last year. The vacancy rate for all commercial space fell from 12.7 percent in the first half of 2016 to 11.7 percent in the second half.

In all, commercial space in the two counties saw a net positive absorption of 463,941 SF, up from 11,847 SF in the first half of 2016, the report said.

More: Download the report's commercial highlights.

The report also noted changes in the retail and warehouse markets. The report said retail saw an increase in vacancy rates to 9.4 percent, up from from 9.2 percent in the first half of 2016. Warehouse properties, meanwhile, saw a significant decrease in vacancy rates year-over-year, falling to 8.1 percent in the second half of 2016 from 11.5 percent in the second half of 2015. 

Kathy Deck, the lead researcher for the Skyline Report and director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville, said the trend is likely a result of shoppers' changing shopping preferences.

"As consumers have increasingly embraced online shopping, it stands to reason that these new shopping preferences will have an impact on different types of commercial real estate with the retail real estate market softening while the warehouse market begins to tighten," she said. "I think that is what we are likely witnessing here in northwest Arkansas."

The report showed strength in among office properties, which added 155,933 SF in the second half of 2016 and showed a net positive absorption of 115,463 SF.

From July 1 to Dec. 31, there were $137.2 million in commercial building permits issued in northwest Arkansas, down from the $206.5 million in the first half of the year and $112.8 million in the last half of 2015.

"Overall, the commercial real estate market can be described as both very active and well-balanced at this time," Deck said.

Multifamily Vacancy Remains Low



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