During the second quarter of 2007, there was a 35.7 percent decline in the number of commercial building permits issued from the first quarter of 2007 and a 34.9 percent decline from the second quarter of 2006, according to the Arvest Bank commissioned Skyline Report.
From March to May 2007 there were a total of $62 million in commercial building permits issued in Bentonville, Fayetteville, Lowell, Rogers, Siloam Springs and Springdale.
The dip in commercial building permits was accompanied by a negative absorption rate of 297,184 SF. All sub-groups saw negative absorption rates with the office sub-group recording the largest negative absorption rate of 592,934 SF of unoccupied space.
Increased vacancy rates accompanied the negative absorption rates with a vacancy rate increase of 0.6 percent to 21.9 percent for the second quarter, up from 20.3 percent in the first quarter of 2007.
Kathy Deck, associate director for the Center for Business & Economic Research at the University of Arkansas, oversees the quarterly Skyline Reports and said the dip in commercial building permits, coupled with the increase in vacancy rates, was “not surprising” given the number of projects under way in Northwest Arkansas.
“The numbers are above the national average vacancy rates,” Deck said. “But they are not surprising for a dynamic economy like this. The key will be finding an equilibrium, which will take an adjustment.”
Deck said the decline in the number of commercial building permits indicates a slowdown in the Northwest Arkansas economy, but only time will tell whether the absorption rates will continue to decrease or will begin to trend to the positive side.