Office Vacancy Rate Drops in Third Quarter

In the Northwest Arkansas office market, 400,000 SF was purchased and taken out of the market as leasable space, according to the Skyline Report.

The report is commissioned by Arvest Bank Group Inc. and compiled by researchers at the Walton College of Business at the University of Arkansas.

As a result, the vacancy rate dropped to 16.6 percent, from 20.5 percent in the previous quarter and 20.7 percent in the third quarter of 2007.

The third quarter commercial and multifamily report said there were about $21.7 million in commercial building permits issued in Bentonville, Fayetteville, Lowell, Rogers, Siloam Springs, and Springdale. The value is an increase of 67.5 percent from the second quarter of 2008 but a decline of 62.7 percent from the third quarter of 2007.

In the third quarter, 64,414 SF of competitive commercial space was added to the Northwest Arkansas market, about 43,814 SF of new office space and 20,600 SF of new retail space.

A total of 20,600 SF of new retail space was added to the Springdale market, while 22,739 SF became vacant. The retail vacancy rate increased to 14.5 percent in the third quarter, from 14.3 percent in the second quarter of 2008. No new office/warehouse space was added in Northwest Arkansas, while 8,101 SF became occupied. The vacancy rate decreased to 17.5 in the third quarter.

The warehouse submarket experienced negative net absorption of 9,885 SF while no new space was added. As a result, the vacancy rate increased from 27.9 percent in the second quarter to 28.3 percent in the third quarter.

The multifamily market remained fairly stable with a slight decrease in vacancy rates from 12.8 percent to 12.2 percent. Bentonville has the highest vacancy rate of 15.7 percent, a decline from the previous quarter’s rate of 17.4 percent.