Vacancy rates during the first six months of 2014 in the northwest Arkansas commercial real estate market were down nearly 1 percent from a year ago, while multifamily vacancy rates were up more than 2 percent, according to the Skyline Report from Arvest Bank.
The report attributed the fall in commercial vacancy rates in Benton and Washington counties to positive absorption of existing space. The largest gains took place in the office/warehouse and warehouse submarkets. Vacancy rates were down 4.1 percent to 7.5 percent from last year in the office/warehouse submarket, and down 4 percent to 13.8 percent in the warehouse submarket.
More: View the report for commercial real estate in northwest Arkansas here (PDF).
The medical office was the only submarket to see an increase from last year, going up 1.2 percent to 13.5 percent.
In all, there was a net absorption of 656,523-SF, resulting from 713,186-SF becoming occupied and 56,663-SF being added to the market.
Through June 30, $78.2 million in commercial building permits were issued in northwest Arkansas, which is up from $35.5 million in permits in the first half of 2013.
“Slow, steady improvement has been what we have observed in the commercial real estate market,” Kathy Deck, lead researcher for the Skyline Report and director of the Center for Business & Economic Research, said in a news release. “The increased level of new building permit activity reflects local optimism that the absorption of the last few years has created opportunities for new development.”
Among other highlights from the report on commercial property:
- In the office submarket there was a net positive absorption of 125,675-SF, while 14,294-SF was added in the first half of this year. The office vacancy rate declined to 14.5 percent.
- The office/retail submarket saw a positive net absorption of 50,256-SF, while 36,369-SF was added to the market.
- In the retail submarket, there was a net positive absorption of 50,256-SF, while 36,369-SF was added.
- The warehouse submarket had a net positive absorption of 351,011-SF, while 36,369-SF was added to the market.
Multifamily Vacancy Rates Up
The 2.5 percent rise in multifamily vacancy rates to 6.5 percent in the first half of 2014 was blamed on the recent construction of rent-by-the-bed style student apartment complexes near the University of Arkansas.
Fayetteville had the highest multifamily vacancy rate in northwest Arkansas at 7.2 percent. That’s up from 5.6 percent last year and down from 7.7 percent in the second half of 2013.
The market includes 16,194 units in 340 apartment complexes.
More: View the report on multifamily real estate in northwest Arkansas here (PDF).
“The new purpose-built student multifamily housing in Fayetteville made local vacancy rates higher, but the rest of the market continues to be quite tight in northwest Arkansas,” Deck said. “There are still opportunities for new complexes in both Benton and Washington counties and we expect to see continuing announcements of additional units in the coming months.”
The average rent was up to $568.80 from $556.71 in the second half of 2013. That comes to $0.67 per square foot, compared to $1.36 per square foot for by-the-bed units.
Among the highlights of the multifamily report are:
- More than 3,000 rental units have been announced in new multifamily projects.
- Bentonville saw an increase in vacancy rates from 1.9 percent in the first half of 2013 to 3.7 percent this year.
- The multifamily vacancy rate in Siloam Springs rose from the first half of 2013 to this year by 1.2 percent to 5.3 percent.
- Springdale saw a decline in its vacancy rate from 3.6 percent in the first half of last year to 2.3 percent this year.
- The median monthly lease price for a multifamily property remained at $500 in the first half of 2014.
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