The commercial real estate market remained strong in Benton and Washington counties in the second of 2020 during the COVID-19 pandemic, according to the latest Arvest Bank Skyline Report, released Tuesday.
"At this time last year, there was some uncertainty as to how the commercial real estate market in northwest Arkansas would hold up during the pandemic," said Mervin Jebaraj, director of the University of Arkansas Center for Business and Economic Research, which compiles the report.
"Through the end of 2020, demand for commercial space has remained strong," he said. "To see so much new office space added and the office vacancy rate to remain at such a healthy level indicates that, so far at least, the market remains strong, balanced and healthy."
The biannual report, sponsored by Arvest, surveys data on the office, retail and warehouse real estate markets in the region's key business areas. It showed the overall vacancy rate was 10.8% in the second half of 2020, the same rate as in the first half of 2020, as 495,676 SF of new space entered the market. In the second half of 2019, the overall vacancy rate had been 10%.
The office vacancy rate rose slightly to 10% in the second half of 2020 from 9.8% in the first half of 2020. It had been below 9% for the three half-year reporting periods before 2020.
More than 325,000 SF of new office space entered the market in the second half of 2020, which is the most new SF since the first half of 2017.
The retail vacancy rate was 11.4%, up from 10.6%. The warehouse vacancy rate was 9.3%, up from 8.3%.
The Skyline Report said commercial building permits totaled $188.8 million for the second half of 2020, up from $196.2 million in the first half. The yearly total of $385 million was the most since the report began in 2004; the previous high was $363.9 million in 2019.
"Commercial real estate in northwest Arkansas has, to date, been able to remain strong throughout the last year," said Kelly Carlson, senior vice president and commercial loan manager at Arvest. "Our commercial lending teams across the region continue to help developers find opportunities for intelligent developments. We are all fortunate to be in an area that has weathered a full year of unprecedented change and challenges."