NWA commercial building surge pushes July permits over $101 million

Construction crews across Benton and Washington counties report a busy and productive July with combined residential and commercial permit values exceeding $101.278 million among the region’s four largest cities. This active construction pace raised permit values 42% higher than the $41.092 million recorded in July 2014.

The growth in permit values is linked to commercial expansion as well as more multifamily projects as vacancy rates in these sectors remain attractive for investment, according to Kathy Deck, director for the Center for Business and Economic Research at the University of Arkansas.

Commercial permits, which include multifamily projects totaled $70.092 million, were 69% of the building activity in Fayetteville, Springdale, Rogers and Bentonville last month. The uptick in commercial building helped boost Arkansas to the No. 1 Rank for added construction jobs in July compared to a year ago, according to the Associated General Contractors of America. 

This local shift toward commercial investment is on trend with the nation, according to the trade group who recently reported the highest monthly level of construction spending since 2006.

CONSTRUCTION JOBS
The trade group reports that Arkansas grew its construction jobs by 14.9% or 6,800 in July over a year ago. Association officials said contractors in parts of the country where construction demand is growing report greater shortages of qualified workers to fill available positions. They said that as demand for construction continues to grow, those shortages will only get more severe.

"Education officials need to include high-paying jobs in construction among the career choices they encourage and help prepare students to pursue," said Stephen Sandherr, CEO of the trade group.

Brent Hanby, co-owner of Encore Flooring in Springdale, said all of the local chambers of commerce and the local home builders association are touring and working with high schools to help institute workforce training programs they hope will ready more skilled workers for their industry in the new couple of years.

CONSTRUCTION SPENDING
“Spending rose strongly last month from a year ago for all major construction categories – private nonresidential, residential and public,” said Ken Simonson, the association's chief economist.

In the local region the commercial projects included $44.558 million in multifamily apartments located near the University of Arkansas. The Harvey’s Hill Collegiate Community located on South Duncan, just south of Martin Luther King Boulevard got permits for 219 units and a parking garage.

Also in Fayetteville the city issued permits to:
• Olde Tyme Donuts ($250,000) at 4355 Martin Luther King Blvd.;
• Blue Top Liquor ($375,000) at 2010 Martin Luther King Blvd.;
• Retail lease space ($600,000) at 3581 W. Wedington;
• Spa 810 ($108,580) located at 3379 N. College Ave.; and
• College Market / Alumni House ($120,000) located at 3417 N. College Ave.

Lastly the Chi Omega Sorority House at 940 W. Maple Ave., near the UA is getting an $8.92 million makeover and new addition. The total of commercial permits issued in Fayetteville last month was $54.931 million, well ahead of the $9.72 million from a year ago.

In Springdale, Sam’s Furniture was the only new commercial project issued but the value of this new showroom is $13.333 million, according to the permit. In Springdale commercial permit values rose 181% from the $4.736 million reported in July 2014.

In Benton County, Rogers and Bentonville did not have any million dollar projects but the cities did issue a combined 10 permits, most of which involved remodels at Wal-Mart corporate offices located on Martin Luther King Boulevard in Bentonville, this work was valued at $817,250. There were also a number of vendors remodeling their offices, including Toshiba ($99,416), Best Brands ($52,550), Shearer’s ($154,240). Total Bentonville commercial permits issued in July were valued at $1.361 million, down sharply from the $14.1 million reported a year ago from the large Crossmar Park complex and warehouse space located at 4600 SW Regional Airport Blvd.

In Rogers, the city issued three permits for new commercial space last month with a total value of $780,000. The only new retail space was Pandora Jewelry located at 2203 Promenade, Suite 1135. Rogers’ commercial permits were also down from the $12.279 million reported year ago from the Cavender’s store located at Pleasant Grove Road in southwest Rogers and one of several permits on the Hunt Venture’s 10-story office building still under construction on J.B. Hunt Drive near the Walmart AMP in Rogers.

STEADY RESIDENTIAL
Residential permits among the four cities totaled $30.873 million with 137 new housing starts in July, compared to 135 permits valued at $30.238 million, a year ago. The home building pace has slowed from July 2013 when residential permits totaled $34.278 for 151 new homes.

Residential Permit Values (July)
Bentonville $10.149 million, flat against $10.143 million
Fayetteville $8.91 million, down 1.64% from $9.059 million
Rogers $5.695 million, down 17.5% from $6.908 million
Springdale $6.838 million, up 63% from $4.175 million

Hanby said all of the builders he’s talked to in recent weeks report solid home sales while still in construction phase. He said the region is down to roughly 200 or so completed but unoccupied homes which given the demand from buyers is almost nothing.

“The housing market looks solid for the next few quarters. I know rental space is at a premium and homes are selling at near full asking price today amid multiple offers. My mom just sold her home in Har-Ber Meadows and I told her to take no less than full asking price. This has become a seller’s market,” Hanby said.

Nicky Dou, a broker with Keller Williams, agreed that new homes sales are strong. 

“I represent the builder in the Hyde Park subdivision (Bentonville) and we've been consistently selling all of our new homes before they're finished,” Dou said. “Builders are not having to come off their prices much or give many incentives like they have in past years. Some will do some extras like providing some assistance with closing costs or provide fence and window blinds but it really just depends on what builder.”