Several large commercial projects boosted Northwest Arkansas area building permit values more than 302% in July over a year ago. New residential and commercial projects among the region’s five largest commercial districts totaled more than $96.498 million in value, compared to $23.949 million in July 2011.
The total permits got a major shot in the arm — to the tune of $59 million — from a burst of new multifamily building projects in Fayetteville. The uptick in multifamily construction centers around higher enrollment at the University of Arkansas and the new projects under way cater to the student demographic.
The UA says enrollment for this fall semester topped 25,000 for the first time in history, more than 20,000 are undergraduates that include 4,500 new freshmen students.
A recent report from marketing firm C.B. Richard Ellis indicates the tightest multifamily occupancy rates in several years across Northwest Arkansas — 94.4% in complexes with 50 or more units.
New retail space near Pinnacle Promenade also totaled roughly $2.2 million in new permits as Warren’s shoe store will relocate from Scottsdale Center to the Pinnacle Promenade area and Mojitos restaurant expands into Rogers.
In Siloam Springs a 17,000-square-foot banquet hall is under construction at John Brown University. The Simmons Great Hall permit was valued at $3.755 million and is scheduled for completion in August 2013.
Commercial Permit Values (July)
2012: $60.495 million
2012: $2.228 million
2012: $3.755 million
Tom Reed, appraiser and partner at StreetSmart Data, says the commercial construction scene is mixed. He said there is some room for multifamily expansion, but cautions that builders often construct more than needed. He said office space vacancies are too high to support more speculative building and retail is holding its own with a flurry of activity in recent months after a tepid year or so.
“We know the residential market is returning to a healthy state, and the commercial sector will lag a year or so behind, if the national economy doesn’t worsen,” Reed said.
Home builders in Bentonville, Rogers, Siloam Springs, Springdale and Fayetteville started 148 new houses in July, compared to 108 in the year-ago period. The new residential permits had a cumulative value of $30.005 million, up 40.2% from July 2011.
More than 62% of these new residential permits were issued in Benton County. Rogers had the most with 47, Bentonville issued 41 and Siloam Springs had 3 — all them busier than the same month last year.
Residential Permit Values (July)
2012: $10.149 million
2011: $8.216 million
2012: $7.868 million
2011: $8.005 million
2012: $4.116 million
2011: $3.690 million
2012: $7.604 million
2011: $1.389 million
Home builders report the new inventory is selling well and keeping any surplus concerns at bay for now.
MountData.com reports the new home inventory listed for sale at the end of July in the two county area totaled 292 homes, that compared to 333 new home listings in July 2011 and 442 a couple of years back.
Three out of four the new home listings in July were priced between $88 and $105 per square foot across nine markets in the two-counties. Bentonville, Fayetteville and Rogers averaged $105 per foot, while new home prices in Springdale and Siloam Springs homes were roughly $95 per foot, according to MountData.com.
Builder confidence continued to improve in August, according to National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released last week. A 2-point gain in August added to a 6-point increase in July brings the index to its highest level since February of 2007.
“From the builder’s perspective, current sales conditions, sales prospects for the next six months and traffic of prospective buyers are all better than they have been in more than five years,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB).
“While there is still much room for improvement, we have come a long way from the depths of the recession and the outlook appears to be brightening,” he added.
NAHB Chief Economist David Crowe says some builders still express concerns about credit availability and unpredictable appraisals in some areas of the country.
Real estate veterans in Northwest Arkansas say local appraisals are starting to come in higher.
“I recently had some homes appraise well above the asking price, and rarely see one appraise too low these days, which has been a major turnaround in the last six to nine months,” said Vickie Briolat, agent with Crye Leike Real Estate.
George Facuette, president of the local Coldwell Banker franchise, also says appraisals appear to have stabilized as the foreclosure activity has diminished from two years ago.
(January through July)
2012: $210.691 million
2011: $87.001 million
2012: $104.301 million
2011: $84.657 million
2012: $44.268 million
2011: $23.181 million
2012: $52.697 million
2011: $46.937 million
2012: $5.729 million
2011: $24.981 million
(Permits are for new construction, additions and remodels are not included.)