2015 offered its share of ups and downs as the growing Northwest Arkansas region continued to build out infrastructure for its burgeoning half-million population.
While growing overall jobs faster than any other metro area in the state, Wal-Mart Stores pared down its corporate staff, shook-up its management teams, and putting the local supplier sector on pause. Also, consumer confidence in the region was lifted by surging home prices and commercial investments poured into downtown revitalization projects. These were among the top business stories for Northwest Arkansas in 2015.
Before noting the top five, there were a few notable headlines worth mentioning. In no particular order they are:
• Arkansas Children’s Hospital officials confirmed in July the hospital’s intent to construct a new, 225,000 square-foot campus in Springdale. The initial estimated investment is $184 million during the next five years, with the facility set to open in 2018.
• J.B. Hunt’s plan to add more than 1,000 jobs in a corporate expansion effort was big news for Lowell and the surrounding area in December. Construction began on a third office building at the transportation headquarters in September and the company said recently the hiring of roughly 1,000 new employees will take place over the next five years. Conservative estimates on the impact of this expansion include an additional 1,180 jobs, and combined annual payrolls from all the new jobs would be an estimated $155 million, according to research from the Northwest Arkansas Council.
• Wal-Mart Stores announced starting pay hikes for its hourly workers to $9 an hour in 2015 and $10 per hour in 2016, provided the employee completes the required training. This impacts 16,257 of its employees in Arkansas. Another 39,000 of its hourly workers in Arkansas will see their pay raised to $12.80 per hour for full-time, and $10.37 hourly for part-time in February. The state payroll impact is $63.7 million, the company noted in December.
THE TOP FIVE
Following are the top five stories of the year for the Northwest Arkansas metro area as determined by the editors of Talk Business & Politics.
5. Massive road construction
Orange barrels and concrete barricades have become regular fixtures across Benton and Washington counties as roughly 30 major road projects were underway in 2015 with a overall price tag of well over $698 million. Construction is expected to last until 2019, according Dick Trammel, a member of the Arkansas Highway Commission. The widening of the Interstate 49 corridor that links the region together and to the rest of the state and country entails 25 projects slated through 2017 for a total price tag of $605 million. In 2014, four projects were completed at cost of $40 million. Seven others began in 2015 with a cost of $110 million, with 14 other projects on tap for an estimated $455 million.
4. Entertainment milestones reached across the region
Crystal Bridges Museum of American Art hit a milestone in 2015 when it surpassed 2 million visitors in just 21 months since its Nov. 11, 2011 opening. Roughly 500,000 visitors make their way through the Bentonville museum each year. Through the first two years, around 64% of visitors were from within a day’s drive, but that stat is likely out of date today according to Beth Bobbitt, public relations manager for the venue.
The Scott Family Amazeum also made its opening debut in July 2015 offering families across the region a discovery museum experience. The $24 million children’s wonderland spans roughly 40,000 square feet, half of which is dedicated to indoor exhibits and the other feature outdoor adventures.
The Walmart AMP also celebrated it’s one year anniversary in June, hosting numerous sell-out concerts throughout the year. This venue is also responsible for helping hoist sales tax revenue in Rogers to an an all-time high in 2015. In Fayetteville, the Walton Arts Center also began a $23 million expansion/renovation project in June 2015. This project involves 30,000 square feet for a new and expanded atrium that connects to Dickson Street, significant renovations and expansion of Starr Theater, expanded space for back of house technical and theatrical equipment and new administrative offices for staff.
3. Soaring home prices
Residential real estate values rose sharply in 2015, climbing to nearly $200 per foot in downtown Bentonville, arguably one of the most expensive addresses in the region. For the first time in history Benton County reported total home sale volume in excess of $1 billion for the year, thanks in part to rising home prices. Benton County’s median home price rose to $168,571 or $90.27 per square foot in 2015. This is an increase of 8% year-over-year.
It’s much the same in Washington County. The median home price for 2015 rose nearly $12,000 to $161,900 in 2015. Prices have jumped to $94.42 per square foot, which is up 7.9% year-over-year. Two years ago the median home price in Washington County was $147,950 or 9.4% cheaper than today.
Kathy Deck, director the for the Center for Business and Economic Research at the University of Arkansas, has said home prices in Northwest Arkansas have recovered their losses dating back to 2009 and 2010, the market trough. She expects home prices to continue a steady climb in the coming year, simply based on the supply and demand. With new building being kept in check and continued job expansion and population growth, Deck said the local region’s growth pace is likely sustainable for now.
2. Downtown renovation, a major theme in the region
The Walton Family, Tyson Family and their foundations were among a host of investors eyeing numerous downtown projects from Springdale to Rogers, Bentonville, Fayetteville and Siloam Springs in 2015. Fayetteville recently opened a 236-space parking garage adjacent to the Walton Arts Center a block south of Dickson Street, the largest project downtown aside from the Walton Arts Center renovations previously discussed. But in Bentonville the Walton Family built a new $20 million three-story commercial complex in the heart of downtown which opened as the Midtown Center in November. A Walmart Neighborhood Market anchors the space.
In Rogers, the city continues its $17.5 million redevelopment around Lake Atalanta, which include 10 miles of mountain bike and hiking trails along with fishing piers, playground and pavilions. This project is expected to be completed in 2017. The Lane Hotel, also located in downtown Rogers, was sold to an affiliate of the Walton Family Foundation. Renovations continue on this large 5-story structure which is reportedly going to be a new home to Haas Hall Academy, a charter secondary school with campuses in Fayetteville and Bentonville.
The efforts in downtown Springdale include a newly adopted master plan and the construction of Turnbow Park along the Razorback Greenway which is funded in part with help from Tyson Foods and as well as Endeavor Foundation. Early in 2015 Tyson Foods committed $1 million to the Downtown Springdale Alliance to jumpstart the revitalization process. Tyson Foods has also recently begun the demo and construction start on its new 44,000 square-foot office building located on Emma Avenue in downtown Springdale.
The $38 million Razorback Greenway which connects Bella Vista to Fayetteville also officially opened in May. The 36-mile paved multi-use trail has been the catalyst for continued developments in downtown Bentonville and Springdale which are each located on the trail. The Walton Family Foundation was the catalyst for the greenway effort pledging $15 million to the effort.
In Siloam Springs, a five-mile mountain bike trail is being developed by John Brown University with financial assistance from the Walton Family Foundation. The city said it’s worked over the past few years encouraging investment. In fact, in the past eight years, more than 20 buildings have been renovated in downtown Siloam Springs, more than 25 businesses have opened (adding a net of nearly 100 new jobs), and an estimated $11 million has been reinvested in property purchases, building renovation, and public improvement projects, according to the Main Street Siloam website.
1. Walmart corporate shake-up, suppliers reduce headcounts
Rumors of Wal-Mart’s corporate downsizing swirled for much of the year until the retailer finally pulled the plug on at least 450 mid-level to higher level management jobs Oct. 2. Wal-Mart Stores CEO Doug McMillon said the cuts were needed to move faster in the dynamic retail environment.
The retailer said this did not include retirements and attrition. Several insiders close to the situation expect another round of corporate layoffs to hit in early 2016 as the company approaches its fiscal year-end. The retailer has neither confirmed, nor denied another round of layoffs are planned.
The local supplier community is somewhat nervous thanks to a round of layoffs at Wal-Mart, several top-level management changes at Wal-Mart, the revamping of merchandising and operational leadership teams at Wal-Mart and Sam’s Club, and higher fees charged to suppliers. Cameron Smith, CEO of Cameron Smith & Associates, said the local supplier community workforce has shrunk by more than 10% this year from consolidations and other streamlining efforts by Wal-Mart.
“Vendorville is shrinking. Whales swallow guppies and always will, but this past year it’s at an all time high. We have certainly felt the impact as well,” Smith said in an email. “Some suppliers are keeping their powder dry with regards to adding headcount.”
Clint Lazenby, co-founder of #Onshelf consulting firm in Bentonville, also said higher fees may have caused some suppliers to push the pause button with their Wal-Mart sales teams in Northwest Arkansas. He said it’s not just the higher fees but also the various restructuring efforts at Wal-Mart that likely have suppliers being cautious with employee levels.
In recent years suppliers have expanded their marketing teams to cover social and digital platforms that have gained prominence, and that has led to an expanding local supplier workforce. Now with a new marketing lead, Lazenby expects suppliers are in a holding pattern until Wal-Mart figures out its next strategy.
One other key change at Wal-Mart Stores in 2015 was board chairman Rob Walton, 70, stepping down from that role at the retailer’s shareholder meeting in June. This is the first time a Walton, or a direct family heir, has not presided over the board. The 45-year-old Greg Penner, Walton’s son-in-law and former Wal-Mart executive, assumed the role of board chairman effective June 5.