The vacancy rate for commercial real estate space in northwest Arkansas fell below 6% in the first half of 2022, according to the Arvest Bank Skyline Report.
The report, released Tuesday, said the vacancy rate for commercial real estate fell to 5.8%, down from 8.9% in the first half of 2021. That 8.9% rate was the first time vacancy had gone below 10% since the second half of 2017.
The Skyline Report is sponsored by Arvest Bank with research conducted by the Center for Business and Economic Research at the University of Arkansas’ Sam M. Walton College of Business.
There was more than 520,000 SF of new commercial space in the first half of 2022, which the report said was more than twice the amount that was created in the first half of 2021. The report said more than 1.7 million SF was leased in the first half of this year.
The commercial real estate market is broken down into seven segments. The report said that six of the seven segments saw vacancy rates decrease with only the medical office space seeing a rise in vacancy.
The most significant vacancy drop from the first half of 2021 was in the warehouse segment where the rate fell from 6.6% to 0.8%. The retail-warehouse segment saw vacancy drop from 11.4% to 4%.
Vacancy rates for office space fell from 11.2% to 9.1%, office-retail vacancy fell from 10.9% to 8.2% and retail space vacancy dropped from 10.8% to 7.9%.
“This report shows strong resiliency and strength coming out of the pandemic and indicates that northwest Arkansas companies across many business sectors are experiencing continued growth,” said CBER Director Mervin Jebaraj. “This report shows that employees are returning to working from their offices and that new office space is being absorbed as a result of continued growth in the region. This report also continues to support the idea we have discussed previously that ecommerce growth is requiring more and more warehouse space. A vacancy rate of less than 1% for warehouse space means there is virtually no leasable warehouse space in the region.”
While space is getting harder to find, commercial building permits dropped from the previous year. The report said there was $293.7 million in permits in the first half of 2022, a drop from $647.1 million in the same period of 2021; there had been nearly $400 million in commercial permits in the second half of 2021.
Of the $293.7 million in permits, more than 64% of it was issued in Bentonville. The report said 18% was issued to Springdale, 9.9% to Rogers and 3.7% to Fayetteville.