NWA residential building pace tapers, commercial heating up

Northwest Arkansas’ construction pace has flipped in recent months with fewer residential projects and more commercial work. Overall the permit values of new residential and commercial building projects among the region’s four largest cities totaled $97.313 million in August, up 115% from the same month last year. 

The 109 new single residential permit values issued among the region’s four largest cities were valued at $30.156 million in August. The permit values were down 26.4% compared to $40.986 million from the same month last year. The number of permitted projects for the month declined 33.9% year-over-year.

This marked back-to-back monthly declines in residential activity from the year-ago period for the growing region. That said, several homebuilders interviewed by The City Wire in recent months have said the pace of new home sales is good and they are building as needed to keep up with buyer demand.

Bentonville issued 37 new residential permits valued at $11.843 million, down 41% year-over-year.

Fayetteville issued 34 permits for single family homes valued at $9.294 million, down 14.1%.

Rogers issued 22 new residential permits in August with a combined value of $4.369 million, down 36.1% from a year ago.

Springdale bucked the trend issuing 16 new residential permits which were valued at $4.649 million, an annual gain of 48.5%.

The unsold new home inventory stood at 483 homes at the end of August, up from 340 homes in the same month last year and 298 new homes in August 2012, according to Paul Bynum, market analyst with MountData.com. He reports the new unsold home inventory has risen 20% since January of this year. This compares to a 9.6% increase in existing home inventory so far this year.

COMMERCIAL SURGE
Bentonville is seeing a flurry of commercial activity across the city from a large vendor office building at 209 S.E. 34th St., valued at $7.15 million, to the new Neighborhood Market at 1703 W. Central with a permit value of $3.69 million. Construction on two large retail/office strip centers also continues along South Walton Boulevard. Both are spec projects by local investors.

Bentonville issued 4 new commercial projects in August valued at a total of $11.905 million. A year ago the total commercial projects from the four cities combined was just $6.23 million, Bentonville’s part was $2 million of that.

Commercial building permits in Fayetteville totaled $16.45 million, compared to zero new commercial starts a year ago. Multifamily projects on tap with August permits totaled $33.488 million, also a 100% gain from a year ago. 

City officials said the largest of the new commercial permits issued in August went to NAPA Construction for two-story dental office/retail space for Brady Dental. The upper floor is tagged as the dentist office with a retail shell space on the ground floor. The permit was valued at $2.09 million. Another 14,600-square-foot spec office building also was permitted with a value of $1.31 million. Both of the projects are located on Augustine Lane near Mellow Mushroom. 

The multifamily projects included a new six-story parking garage for the Sterling University Apartments. That project was valued at $5.012 million.

Springdale issued three new commercial permits in August totaling $2.328 million. Those include:
• CVS Pharmacy at 2001 S. Thompson St. ($1.433 million);
• Casey’s General Store at 4751 W. Don Tyson Parkway ($336,500); and
• A new McDonald’s at 4762 Elm Springs Road ($538,889).

A year ago the city has new commercial permits of $4.45 million.

In Rogers there were five new commercial permits totaling $2.987 million in August. Those included a large foundation permit for the new 10-story office building project by Hunt Ventures. The foundation permit was valued at $1.99 million. The Indian Motors service center at 2505 Dixieland was permitted with a value of $200,000. There were two other office buildings for end users issued permits valued at $200,000 and $440,000 as well as some small tenant finish out projects.

Commercial building activity has increased 10-fold from a year ago, spurred in part by some large multifamily projects in Fayetteville with speculative office development going up in both Benton and Washington counties. Commercial permits totaled $67.15 million in August, up from $6.7 million in August 2013 among the four cities in this report.

CONSTRUCTION JOBS
The local metro area employed roughly 9,000 people working in construction in August. This sector employment rose by 600 jobs year-over-year, according to the Bureau of Labor Statistics. That 7% increase puts the metro area ranking at 68 out of 339 regions tracked by the Association of General Contractors of America.

“Even as construction employment continues to rebound in many parts of the country, other areas continue to lose ground or backslide,” said Ken Simonson, the association's chief economist.

Fort Smith, for instance, saw its construction’s sector shed 400 jobs year-over-year, a 6% decline and among the bottom ranking at 319 of 339. Simonson said while construction spending has been increasing overall in the past year, the gains remain uneven. The industry appears likely to experience mixed results by segment and region for the rest of 2014 and into next year.

Association officials said the industry overall continues a slow and sometimes inconsistent recovery from its years-long downturn. They cautioned that many firms report having a hard time finding enough qualified workers. One in four firms report having to turn down projects because of worker shortages.