Multifamily Vacancy Up, Development 'Hot' Along I-540 in Bentonville, Rogers

Vacancy rates for multifamily housing in northwest Arkansas rose in the second half of 2013, according to a Skyline Report from Arvest Bank released Tuesday.

Vacancy rates for the area rose to 5.8 percent in the second half of 2013 from 4.3 percent in the same period in 2012. Rates rose from 4 percent from the first half of 2013.

Fayetteville and Bentonville experienced the largest increases from the second half of 2012 to the same period in 2013. Fayetteville’s vacancy rates rose to 7.7 percent in the second half of 2013 from 4.6 percent in the second half of 2012. Bentonville's rose to 6.3 percent from 2.4 percent in the same period.

More: Download the report's commerical highlights (PDF) and multifamily highlights (PDF).

Rates in other cities in northwest Arkansas dropped. Rogers, which has the lowest vacancy rates, dropped to 2 percent from 2.3 percent, while Springdale dropped to 3.3 percent from 5.7 percent and Siloam Springs dropped to 5.5 percent from 8.5 percent.

The Skyline Report is a bi-annual analysis of single-family and multifamily commercial housing in Benton and Washington counties provided by Arvest for the Center of Business and Economic Research (CBER) in the Walton College of Business at the University of Arkansas. The Skyline Report for commercial real estate analysis was also released.

Fayetteville added 1,989 new bedrooms during the last half of 2013 because of an emphasis on student housing for the university. Kathy Deck, the lead researcher of the Skyline Report, said in a news release that Bentonville's vacancy rate increase was concentrated in areas surrounding the Northwest Arkansas Regional Airport.

"The multifamily market continues to be very tight in northwest Arkansas, and that will continue until new units are added across the region," Deck, the director of the Center of Business and Economic Research at Arkansas, said. "A tight market presents opportunities for developers across the communities of the region, and we expect to see continuing announcements of additional units in the coming months."

The average lease price for a multifamily unit rose from $545 in the first half of 2013 to $556.71 in the second half of the year.

The report also showed that vacancy rates for commercial properties dropped slightly in northwest Arkansas. But Deck said there remains a lot of unused space.

Vacancy rates dropped to 13.6 percent in the second half of the year from 14.6 percent in the first of 2013. There was 492,006 SF of commercial space used while 106,399 SF was created, resulting in 385,607 SF total absorbed for use.

The one area vacancy rates increased was in the medical official field, which saw an increase to 12.8 percent in the second half of 2013 from 9.9 percent in the second half of 2012. The rate was 12.3 percent  in the first half of 2013.

"We continue to see new development happening in the hot spots of activity — Bentonville and the I-540 corridor in Rogers," Deck said. "We know that the activity is concentrated, but we are seeing increasing levels of building from more than just a couple of development companies." 

Elsewhere in the report:

  • Fayetteville has 15,932 rental units with more than 4,000 planned.
  • Six multifamily housing projects were granted 21 building permits worth more than $33 million in 2013.
  • Nearly $63 million in commercial building permits were issued during the second half of 2013, an increase of $22 million from the same period in 2012