Vacancy Rates Dip In Both Multifamily, Commercial Markets

Northwest Arkansas’ multifamily vacancy rate is at its lowest point in nine years, and 544,635 SF of commercial space was absorbed in the first half of 2013.

Those are the highlights of the latest Skyline Report, portions of which were issued Wednesday by Arvest Bank.

The bi-annual analysis of commercial, single-family residential and multifamily residential markets in Benton and Washington counties is conducted by the Center for Business and Economic Research in the Sam. M. Walton College of Business at the University of Arkansas.

The area’s multifamily vacancy rates dropped to 4.0 percent at the end of the second quarter of 2013, down from the 4.3 percent at the end of the fourth quarter of 2012 and much lower than the 5.1 percent reported in the second quarter of 2012.

The 4.0 percent vacancy rate is the lowest reported for any time period in the last nine years.

“Northwest Arkansas is benefiting from positive growth in our job production,” CBER lead researcher Kathy Deck said in a news release. “The area gained 9,000 new jobs last year on top of the 9,000 created in 2011. That kind of growth puts some positive stress on our capacity to house these new workers.”

The average monthly lease price for a multifamily property unit in Northwest Arkansas increased to $545 in the first half of 2013, up slightly from $543.06 in the fourth quarter of 2012. The average monthly lease rate per square foot of a multifamily property remained $0.64, the same as it has been since the fourth quarter of 2011.

Fayetteville’s vacancy rate at the end of the second quarter of 2013 remained the same as the rate reported in the first half of 2012, 5.6 percent, although it is up slightly from the 4.6 percent reported at the end of 2012. 

Rogers continued to have the lowest vacancy rate at 1.3 percent, down from the 2.5 percent reported in the first half of 2012 and from the 2.3 percent reported at the end of 2012.

Springdale, Bentonville and Siloam Springs multifamily vacancy rates for the first half of 2013 declined significantly. Springdale’s vacancy rate of 3.6 percent declined from 7.5 in the first half of 2012 and 5.5 percent at the end 2012. Bentonville’s vacancy rate in the first half of 2013 was 1.9 percent, down from 2.6 percent reported in the first half of 2012 and the 2.4 percent reported at the end of 2012. Siloam Springs had a vacancy rate of 4.1 percent in the first half of 2013, down from 5.9 percent reported in the first half of 2012 and the 8.5 percent reported at the end of 2012.

Job and population growth are having similar effects, meanwhile, on the commercial real estate market, Deck said. 

The area had an overall vacancy rate of 14.6 percent, down from 15.9 percent in the second half of 2012.

The largest gains in absorption came in the warehouse submarket with 162,769 SF, the retail/warehouse submarket with net positive absorption of 66,988 SF and the office/warehouse submarket with net positive absorption of 65,539 SF.

The retail and office/retail submarkets had positive net absorption of 57,680 SF and 50,045 SF, respectively, while the office submarket had positive net absorption of 22,616 SF and the industrial submarket had positive net absorption of 17,000 SF.

Vacancy rates in the first half of 2013 decreased in all submarkets of commercial real estate except for the office and medical office submarkets. The office subcategory vacancy rate held steady at 15.3 percent in the first half of 2013, the same as at the end of 2012. Medical office was the only subcategory that reported an increase in the vacancy rate during the first half of 2013, up to 12.3 percent from the 9.9 percent reported at the end of 2012.

 “There are opportunities for the right kind of commercial construction in the right places in Northwest Arkansas, according to the data we are seeing,” Deck said. “Prime areas will see commercial development in the next couple of years.”