Overall second quarter NWA building activity slows, housing starts up

Northwest Arkansas homebuilders and commercial contractors slowed their pace of work during the second quarter of 2015 compared to a year ago. This comes on the heels of a flat first quarter.

The four largest cities in the region issued combined new residential and commercial permits valued at $307.476 million in the first half of 2015, down 5.4% from the $320.822 million reported in same period is 2014.

Total permits issued by Fayetteville, Springdale, Bentonville and Rogers were lower in three of the past six months than in the same periods last year. The bulk of the decline was related to reduced commercial construction in the back part of the second quarter compared to last year.

While commercial construction ebbs and flows, the local residential sector remains busy as builders work to keep up with buyer demand.

RESIDENTIAL SECTOR
Throughout the second quarter of 2015 there were 474 new home starts across the four largest cities in the region, up 35% compared to 351 in the same period last year. The second quarter residential permits totaled $116.944 million, up 34% from $87.1 million in the same period of 2014.

Each of the four cities reported gains throughout the quarter over last year’s results.
April was the strongest month in quarter, tapering off some in May and June. 

Second Quarter residential permits (Fayetteville, Rogers, Springdale, Bentonville)
April 
2015: 196 permits valued at $46.443 million
2014: 142 permits valued at $34.686 million

May
2015: 137 permits valued at $34.128 million
2014: 104 permits valued at $28.4 million

June
2015: 141 permits valued at $36.373 million
2014: 105 permits value at $24.014 million

CITY RESULTS
Bentonville continues to lead the region with new home construction as the city issued 135 new home permits in the second quarter, well ahead of the 93 in the year-ago period. The permit value for new residential construction totaled $39.796 million in the second quarter, up 51% from the $26.221million reported a year earlier. Through June residential building permits activity in Bentonville is up 21% with 250 new permits valued at $78.546 million.

Home sales and properties values remain high in Bentonville around solid buyer demand according to local real estate agent Vicki Briolat of Crye-Leike Real Estate.

Briolat told The City Wire that new home construction is going under contract nearly as soon as the foundation is poured throughout the Bentonville school district. Bentonville and Centerton are among the fastest growing small cities in the nation which has led to a second high school in Bentonville that will open this fall. 

She said there is active home construction near the new high school is as well as in the southwest part of the city, but there is limited inventory in the $175,000 to $200,000 price range.

Springdale homebuilding, while the lowest level in the region this year, has had a robust rebound in second quarter. The city issued 113 new home permits in the second quarter compared to 52 a year ago. Permit values rose to $29.413 million, up 65% compared to $14.383 million a year ago.

June was a particularly busy month for residential permits in Springdale with Rausch Coleman and Riggins Brothers active with new developments in the city. For the full six-month period builders started 155 new homes in Springdale compared to 126 new home starts a year ago. Springdale’s residential permits totaled $41.244 million, up 26.8% from the $32.514 million reported a year ago.

Fayetteville had mixed results in the second quarter with 125 new residential permits issued. Permit values totaled $29.045 million in the three-month period ending June 30, up 12.4% from the $25.822 million reported a year ago. 

The city’s residential permits were down 24% in April, up 73.7% in May and 27.2% higher in June over the same time last year. The first half of the year Fayetteville’s residential building pace included 204 new permits valued at $45.345 million, down 3.87% compared to the $47.172 million reported by Fayetteville a year ago.

In Rogers, homebuilders started 102 new single family homes in the second quarter, compared to 97 a year ago. The permits totaled $18.871 million, up 4% from the $18.02 million issued a year ago.

As more commercial development is underway in southwest Rogers, there are also more visible residential rooftops sprouting up between Interstate 49 and U.S. 71-Business near Pleasant Grove Road. There also is some infill homebuilding near the downtown region of Rogers.

For the first six months of 2015, the city of Rogers issued 211 permits compared to 176 in the same period of 2014. Permits values are up 15% to $37.51 million through June.

COMMERCIAL UPDATE
For the first half of 2015, new commercial permits issued by the four cities in this report totaled $141.747 million, up 6.6% from $132.887 million in the same period last year.

The commercial projects were up slightly in the first quarter to $45.825 million, but rose to $95.918 million in the second quarter, up from $87.322 million in the second quarter of 2014.

Some of the larger projects permitted in the first half of 2015 include:
• Fellowship Bible Church in Fayetteville, $10 million;
• Pinnacle County Club Office Plaza in Rogers, $7.5 million;
• Benton County Sunshine School, $7.251 million;
• Today’s Bank in Springdale and office complex, $4.54 million;
• Dr. Roller Weight Loss offices in Fayetteville, $4.25 million;
• Northwest Health Clinic in Springdale, $3.827 million;
• Burlington Coat Factory in Rogers $3.6 million;
• Stabil-Loc Springdale, $2.279 million;
• Industrial Warehouse in Fayetteville, $2.249 million; and
• Wal-Mart Neighborhood Market on Bentonville Square, $2.746 million.

Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas, told The City Wire that commercial building has picked up around the region with some retail filling in southwest Rogers and North College Boulevard in Fayetteville as well as west Wedington in Fayetteville. This retail is following rooftops or residential building in those areas that filled out some time ago. 

She said the multifamily housing sector is also adding units as is class A office space. The one concern she had about the new office space being added in Rogers is that vacancy rates will rise in some of the older properties once the $30 million, nine-story office building opens near Pinnacle Hills. 

“I am not sure where the demand is to backfill those properties that will be vacated with the new office building opens. It will take some time to fill that up space,” Deck said.