NWA construction sector gets boost from Walton family project

January was laced with some bitterly cold, snowy days but city permit offices across the region report steady activity in residential building and a smattering of commercial projects on tap with the Walton family commercial mixed-use space in downtown Bentonville being one of the largest projects.

Another interesting permit – issued Wednesday (Feb. 26) – in Bentonville was to Walgreens for a store at 1311 S. Walton Blvd., directly across from a Wal-Mart Convenience Store and gas station which is slated for completion later this spring.

While Walgreens is no stranger to Northwest Arkansas, the company has stayed away from Bentonville until now. Walgreens already operates 13 stores in Benton and Washington counties.

The region’s four largest cities in Northwest Arkansas issued permits valued at $46.087 million in January, up 77% from the year-ago period. The bulk of that increase —$20.356 million — is linked to the multi-story, mixed-use development and parking garage project by the members of the Walton family. This new Midtown Center will be anchored by a 31,000-square-foot Walmart Neighborhood Market, that first announced by city leaders in the fall of 2012.

New commercial projects issued by the cities of Fayetteville, Springdale, Rogers and Bentonville were valued at $25.968 million in January. This compared to $5.054 million in new commercial permit values reported a year ago.

There were three new projects slated for Fayetteville:
• Northwest Health Clinic, 3399 W. Black Forrest, $2.288 million;
• Butterfield Trail wellness center, 1923 E. Joyce Ave., $1.219 million; and
• Butterfield Trail assisted living center, 2073 Overland Loop, $2.104 million.

Springdale and Rogers did not issue commercial permits last month. Bentonville’s new commercial permits were the three projects connected to the Walton family.

Troy Galloway, director of economic development for the city of Bentonville, recently said he expects the commercial sector to pick up some steam this year, following on the heels of robust residential activity recorded since the start of 2012.

Western Rogers is a flurry of construction with the Longhorn Steakhouse slated to open by April, the Walmart AMP looking at a summer opening and Great Southern Bank hoping to move into their new location by early fall.

Other proposed permits made to the Arkansas State Health Department in recent weeks include:
• DWS Designer Shoe Warehouse, 2203 Promenade Blvd, Rogers;
• La Favorita Michuaca, 1803 S. Eighth Street, Rogers;
• Mercy of Northwest Arkansas clinic, 1225 E. Centerton Blvd., Centertown;
• One Eyed Jack’s Fine Tobacco Lounge, 2308 S.E. 28th St., Bentonville;
• Popeye’s Chicken, West Sunset Ave., Springdale;
• MedExpress, 1160 S. 40th St., Springdale; and
• Dickey’s Barbeque Pit, 3316 W. Grove Rd., Suite. 4, Fayetteville.

Permits made with the health department generally precede official city issued construction permits by two to three months and provide a forward look.

FLAT RESIDENTIAL PACE
Homebuilders across the regionstayed busy since 2012 and they don’t see that changing this year. The local residential building sector has likely reached a sustainable pace, according to contractors interviewed by The City Wire in recent months.

The region’s four largest cities issued 70 new construction permits last month, down from 90 issued in the year-ago period. That decrease was linked to just 5 new permits issued in Rogers during January, plummeting from the 33 issued a year ago. The other three cities reported flat activity year-over-year.

Permit values among the reporting cities totaled $20.119 million for new residential single family homes. This compared to $20.888 million a year ago. The values were flat year-over-year in spite of the 20 fewer home starts.

The value numbers were skewed slightly during January because of a few custom homes in Bentonville valued between $617,000 and $756,000. In addition, there were more homes valued above $400,000 in Fayetteville and Bentonville than a year ago.

Residential Permit Values (January)
• Bentonville: $8.914 million, up 47%
• Fayetteville $5.170 million, up 23%
• Springdale: $4.979 million, up 6.9%
• Rogers: $1.056 million, down 82.3%

SENTIMENT, RISING COSTS
Local builder Tim McGuire and some of his peers told The City Wire late last year that building costs were rising, and land prices linked to new development would likely produce sticker shock for some consumers looking to buy new in 2014 and beyond.

The Associated General Contractors of America, reported last week that prices for construction materials rose 0.6% in January. The trade group also noted that materials used by contractors such as gypsum jumped 7% and diesel rose 2%. They also warned that the higher prices on a sustained basis could squeeze margins for homebuilders.

“Although contractors on average were able to raise bid prices in line with material cost increase, the results varied widely by commodity, building type and specialty trade,” said Ken Simonson, chief economist for the trade group.

That said, the national builder sentiment survey released last week indicates that harsh winter weather has been a hinderance in many ways. No only are crews unable to work in frigid conditions, many report constraint issues in the supply chain for building materials, a shortage of developed lots and heightened competition for skilled labor. The culmination of these concerns resulted in a huge dip in builder sentiment as reported by the National Association of Home Builders, last week.

Confidence fell 10 points, according to the monthly sentiment index, from 56 to 46 — the largest drop in the history of the survey, which started in 1985.

Building Permit Comparisons (January)
Bentonville
2014: $29.27 million
2013: $6.062 million
382%

Fayetteville
2014: $10.782 million
2013: $5.588 million
92.9%

Springdale
2014: $4.979 million
2013: $4.988 million
0%

Rogers
2014: $1.056 million
2013: $9.305 million
-88.6%