The Northwest Arkansas apartment market remains strong with occupancies steady at 98.5% and rental rates up 3.8% at the year-end, according to a survey conducted annually by CBRE’s Brian Donahue.
In his midyear 2015 report, Donahue reported the occupancy at 98.5% as the highest since 2010. The overall occupancy rate was reported at 98% at the end of 2014 and that rate increased by a 0.5%, with the strongest gains recorded in Fayetteville and Springdale. Average occupancy in Fayetteville was 98.5%, up slightly from 97.5 % a year ago. In Springdale, the average occupancy increased to 99%, rising from 97.5% a year ago.
The occupancy rate in Rogers remains unchanged from a year ago, holding at 98.5%. Rogers has two major apartment complexes under construction with more than 400 units joining the mix later this year. Those are Watermark on Walnut Creek on Promenade Boulevard with 220 units, and Palisades at Pleasant Grove with 208 units.
Bentonville, which saw the completion of three multifamily properties in 2015, showed a decline in occupancy from 98% a year ago to 97.5% at the end of 2015. The completed properties were Thrive, The Trails and Woodlands at Creekside, and all with a total of 599 units. A fourth property was completed in Rogers late last year as tenants began moving into the 200-unit Promenade Apartments at Pinnacle Hills on New Hope Road.
Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas, expects vacancy rates will rise later this year in Benton County as nearly 600 new units will come online in two of the hottest commercial centers ripe with retail development – Pleasant Grove Road and the Pinnacle Promenade area. She recently told Talk Business & Politics that there is typically a flight toward the new facilities at the expense of higher vacancy rates in older facilities.
Fayetteville and Springdale didn’t report completions of multifamily apartments last year. One student housing apartment complex, Beechwood Village with 213 units, was completed in Fayetteville.
In 2015, Deck said the revised population data indicated the area is growing at 1.9% annually, or by 25 people a day. This is 2.5 times faster than the rest of the country’s 0.75% average, and includes births and people moving to the area. She said the region must continue to add housing – multifamily and single family units – to accommodate the population growth, but rising vacancy rates will be watched over the next couple of years with the number of projects already approved.
RISING RENTS, FUTURE UNITS
As the apartment occupancy increased in 2015, so did rental rates, on average increasing $23 a month to $621 overall. According to the report, one-bedroom units are up $21 to $523; two bedroom, two bath units are up $47 a month to $753; three bedroom, two bath units are up $63 to $919 a month.
The survey also found rents ranging from $385 to $850 for a one bedroom, one bath apartment in Fayetteville. The average rent was $488 a month. For the same size apartment in Springdale, the average rent was $464 and range from $380 to $715. In Rogers, the average for a one bedroom, one bath unit was $594 and ranges from $370 to $1,025. In Bentonville, a one bedroom, one bath unit rents for an average of $601 with rents ranging from $400 to $835.
Donahue identified six multifamily properties that potentially will be completed in 2016 and 2017, two each in Bentonville, Rogers and Fayetteville.
A multifamily complex under construction in Harbor Meadows will be owner occupied condominiums, according to developer Mike Pennington of Springdale. The complex will feature 10 two-bedroom units sold only to residents age 60 and older according to the plan on file with the Springdale Planning Commission. Another complex of townhouses under construction fronting on U.S. 412 are in Tontitown, although the project is adjacent to Springdale’s western city limits, said Patsy Christy, director of planning and community development in Springdale.
Fayetteville City Planner Andrew Garner expects a building permit to be issued in the next few weeks for Uptown apartments, 308-unit complex on Steele Boulevard across from Malco Razorback Cinema. Land preparation has begun, he added.
A second Fayetteville project on the drawing board is Phase II of The Links of Fayetteville with 516 units north of Wedington Boulevard and east of Rupple Road in West Fayetteville. The Bentonville projects in 2016 and 2017 include The Pointe with 170 units, and The Parc at Bentonville with 216 units.
More student housing is in the works in Fayetteville with three apartment properties offering more than 1,300 bedrooms as the University of Arkansas continues to increase enrollment. They are Sterling Frisco, phase II; Gather on Dickson; and @MOSPHERE (CQ).
CBRE, a commercial real estate company, has been doing the survey since 2010. The survey includes more than 22,000 units of the estimated 32,000 apartment units in Fayetteville, Springdale, Rogers and Bentonville. It does not include apartments built exclusively for students at the University of Arkansas.