The vacancy rate for commercial real estate space in northwest Arkansas increased to 6.4% in the first half of 2023, according to the Arvest Bank Skyline Report.
The rate is an increase from 5.6% in the second half of 2022, the report said. The commercial vacancy rate was 5.7% in the first half of 2022.
The region, which is centered around the populous Benton and Washington counties and rural Madison County, had more than 528,000 SF of commercial space added in the first half of the year. Approximately 383,000 SF was added in the second half of 2022.
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.
“Commercial real estate in northwest Arkansas is best described as healthy and balanced which is somewhat unique given the national market,” said CBER Director Mervin Jebaraj. “We are still seeing new space come into the market across all submarkets, but the majority of new space is being leased. The only submarkets who have experienced a year-over-year increase in vacancy rates are those in the warehouse category, and we fully expect those to remain healthy.”
The Skyline Report breaks down the commercial real estate market into seven segments. Warehouse vacancy saw a 2% jump from 1.6% in the second half of 2022; office vacancy increased from 8.4% to 8.8% and retail-warehouse vacancy went from 3.9% to 6.3%.
Northwest Arkansas had more than 311,000 SF in new warehouse space added in the first half of 2023. The commercial market overall had 528,940 SF of new space added.
“The largest category of warehouse space had a vacancy rate of less than 1% a year ago, so the increase in that category is actually not bad, as it remains a very low vacancy of 3.6% now,” Jebaraj said.
The Skyline Report said that $193.9 million in commercial building permits were issued in the first half of 2023, down from $240.9 million in the second half of 2022. It said that $168.5 million of those first-half permits were non-Walmart Inc. permits; Walmart is currently building a new headquarters complex in Bentonville.