Recession Rattles but Hardly Breaks NWA (Jeff Hankins Publisher's Note)

While driving around much of Benton County during a recent trip to northwest Arkansas, I couldn't help thinking about the region's evolution over the past 30 years.

My first trip to Bentonville was in 1980, where as a 14-year-old I wrote a few sports stories about my brother's Little League baseball team in the state tournament and basically launched my journalism career. We had heard of Wal-Mart and knew it was based up there, but we didn't have one in Pine Bluff so it didn't mean much to me at the time.

After becoming editor of Arkansas Business in 1993, my first task was to hire a reporter in northwest Arkansas and research the region for a series of special sections highlighting the region's growth. The development and growth we saw were stunning, and most of the focus was on the impact of the "Big Three" - Wal-Mart, Tyson Foods and J.B. Hunt Transport Services.

The "Vendorville" phenomenon, created by Wal-Mart CEO David Glass' call for vendors to establish offices in the region, began in the late '90s and fueled a population explosion. To support Vendorville, the region needed millions of square feet of office space, thousands of new houses and apartments, hotels, restaurants, retailers and the like.

A longtime Rogers business leader was in some ways lamenting how the city and county have changed. The rural community where everyone knew everyone is long gone. Short-time residents rise to prominent community leadership positions and then disappear. But would he trade the explosive growth and development? No way.

The recession rattled northwest Arkansas but didn't devastate the region in the way it did, say, Las Vegas. NWA prospered greatly during the lead-up to the housing bubble, then was among the hardest hit in the country from a construction and real estate perspective. Commercial office space development screeched to a halt, and speculative projects left commercial developers bankrupt, contractors and subcontractors out of work, and several banks reeling.

I had heard about all the unfinished residential neighborhoods that went dormant when the recession hit. On a six-mile stretch between the Lowell exit on Interstate 540 and the Northwest Arkansas Regional Airport, I counted at least four "pasture neighborhoods." That's my description of pastures in the middle of nowhere with big entry walls and street development, but only four or five houses built.
Sounds bad, huh? Not so fast.

Unemployment in the region, which for years was in the 2.5 percent to 3 percent range, topped out at 6.7 percent in October and has already fallen to 5.9 percent. I'll predict NWA's rate generally will fall faster than the rest of the state and nation.

While virtually every company, including Wal-Mart, downsized during the recession, the numbers were relatively small in the big picture. The fact that there were job cuts of any kind in NWA was simply shocking because reductions were so rare, and the news underscored the depth of the U.S. recession.

NWA benefits tremendously from Wal-Mart, Tyson and J.B. Hunt being at the top of the corporate food chain. That stability from strong companies with good-paying jobs is invaluable and will enable the region to work through the real estate challenges quicker than most metro areas.

En route to visit the Crystal Bridges Museum of American Art - which is spectacular and exceeded even my lofty expectations - I saw Wal-Mart or Sam's Club buildings everywhere I turned. Literally. After checking Benton County assessor records I know why: Wal-Mart has 10 parcels covering 48 acres with more than 2 million SF of commercial space. Its property tax bill last year was $12.4 million.

While NWA suffered a major case of hiccups the last four years, the region remains poised to recover and return to its success as a significant driver of economic growth in Arkansas and across the country. The Northwest Arkansas Council, which successfully led development of the regional airport and I-540, is focused on the next set of infrastructure needs that will support and attract the next population boom.

(Jeff Hankins can be reached via email at JHankins@ABPG.com, followed on Twitter @JeffHankins and connected with at Facebook.com/Jeff.Hankins and LinkedIn.com/in/JeffHankins.)