The vacancy rate for office space in northwest Arkansas hit an all-time low of 8.4 percent in the second half of 2018, down from 9.1 percent in the first half of 2018, and the value of commercial building permits hit an all-time high of $359.9 million for the entire year.
But the northwest Arkansas commercial real estate market's overall vacancy rate increased slightly in the second half of 2018 to 10.9 percent from 10.8 percent during the first half of 2018, according to Arvest Bank's latest Skyline Report. The market had a positive net absorption of 17,966 SF.
Retail and warehouse submarkets drove the increase in overall vacancy rates with negative net absorptions of 79,442 SF and 172,653 SF, respectively, the report said.
The report showed the office space vacancy rate at the lowest it's been since the report began in 2004. A total of 136,394 SF of office space was added to the market, but 201,456 SF was absorbed.
The value of building permits was down from the first half of 2018 and down year-over-year. The value for the second half of the year was $169.8 million, compared to $188.5 for the first half of 2018 and $212.2 million for the second half of 2017.
The previous record for the annual value of business permits was $350.7 million, recorded in 2005.
"The office submarket in Northwest Arkansas has demonstrated over the past few years the ability to absorb new space coming online with relative ease," Mervin Jebaraj, lead researcher for the Skyline Report, said in a news release.
Jebaraj, who is also director of the Center for Business & Economic Research at the University of Arkansas' Walton College of Business, said the report also shows the pace of development in the warehouse submarket overtaking the market's immediate demand for space.
"In the long run, we believe that the growth of online shopping, which requires warehouse space, will eventually increase the pace of demand for leasable warehouse space," he said.