Skyline Report: Commercial Real Estate Tightens Slightly in NWA

Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas' Sam M. Walton College of Business.

The vacancy rate for commercial real estate in northwest Arkansas dropped to 5.6% in the second half of 2022, according to the Arvest Bank Skyline Report. 

The report said the rate is a slight decrease from the 5.8% vacancy rate in the first half of 2022; the commercial vacancy rate was 8.9% in the second half of 2021.

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 383,628 SF of new commercial space in the second half of 2022, down from 521,750 SF in the first half of 2022. Nearly 450,000 SF of commercial space was absorbed in the second half of 2022.

The Skyline Report breaks down the commercial real estate market into seven segments. The report said that five of those seven segments saw vacancy rates decrease; only office-warehouse and retail-warehouse saw vacancy rates increase.

“The commercial real estate market in [the] northwest Arkansas region is extremely healthy right now,” CBER Director Mervin Jebaraj said. “To have the lowest vacancy rate since we began tracking this data in 2005 despite the emergence of remote and hybrid work options is a testament to the market’s performance. The commercial market never really took any long-term hits from the pandemic, which is something almost no other market in the U.S. can say.”

The Skyline Report said that $240.9 million in commercial building permits were issued in the second half of 2022, down from $293.7 million in the first half of 2022. It said that $218 million of those permits were non-Walmart Inc. permits, the most issued since the second half of 2005. The publicly traded retailer is currently building a new headquarters complex in Bentonville.