2016 first quarter Northwest Arkansas building permit values up 108%

The residential building and commercial construction projects across the Northwest Arkansas’ four largest cities continue to rally ahead of the building pace a year ago. Bentonville, Rogers, Springdale and Fayetteville issued new residential and commercial permits valued at more than $264.962 million in the first three months of 2016.

The single family, multifamily and new commercial construction permit values are up 108% over the $127.049 million reported in the same period last year. The construction growth is fairly distributed between new commercial projects which includes multifamily and single family home permits. The permit values in this report do not include additions or alterations unless they are deemed large scale projects $500,000 ore more in size.

The local residential building sector continues to ramp up through March with 464 new home home permits valued at $122.68 million for the three-month period ending March 31, well ahead of the 361 homes valued at $54.637 million in the year-ago period.

The demand for new homes continues to be steady, according to local homebuilders like Mark Marquess of Riverwood Homes as well as Buffington homes who are each actively building in Fayetteville. Marquess said he’s built and sold more than 350 homes in the past couple of years finishing out two or three subdivisions begun before the housing market collapsed in 2008. Now he’s turning to his own new development as lot prices have risen by as much as 50% in the past year.

Fayetteville builders started 120 new homes this year, which is twice the 78 new permits issued by the city in the same period last year. Fayetteville’s residential building pace is up 102% year-over-year, more than any of the other four cities in this report. The city has issued new residential permits worth $27.707 million in the first quarter of 2016, compared to $13.649 million in the same period of 2015.

Springdale also reports substantial growth year-over-over. Permit values total $18.655 million through March 31. The city issued 76 new home permits compared to 46 in the year-ago period. Permit values rose 55% over the $12.013 million reported a year ago.

Rausch Coleman is one of the builders active in the Springdale market with 12 of the 28 permits issued by the city in March. A nationally ranked homebuilder, Rausch Coleman has two active subdivisions in Springdale – Springhill in the northern part of the city near Interstate 49 and East View located near Butterfield Coach Trail and U.S. 412 E. Homes in East View range from $128,000 to $137,000, according the company’s website. The sales price per square foot is roughly $95 in this subdivision. Springhill development prices range between $195,000 for a four-bedroom home that is 2,315 square feet and $160,090 for 1,479-square-foot three bedroom.

Builders are also active across Rogers as the city issued 38% more permits in the first quarter compared to last year. There have been 129 new home permits issued in the city in the first three months of the year, compared to 95 a year ago. Permit values for the first quarter were $24.432 million, compared to $17.596 million a year ago. Rogers saw residential building permits rise 19% in January, up 43% in February and 49% in March over the same months last year.

Bentonville has led the region’s residential building pace for the past few years and while builders are still active across the city the annual growth rate in the first quarter was 2.19%. The city issued 139 new residential building permits, three less than issued a year ago. Permit values rose 2% to $41.886 million as through March 31, up slightly compared to $40.988 million in the year-ago period.

Nicky Dou, executive broker with Keller Williams in Bentonville, said new home prices are “continuing to rise primarily because there is so much demand and so much going on that the builders are having to pay more for land and building materials and contract labor than in previous years.”

COMMERCIAL APPETITE
Multifamily building has helped to buoy commercial permits to $152.28 million in the first quarter of this year. Multifamily projects represent 58% or roughly $89 million of the new commercial projects permitted in the first quarter. The bulk of that total has been in Fayetteville in two new multifamily housing projects underway near the Northwest Arkansas Mall.

The Uptown Apartments call for 308 units that will be located at 3889 N. Steele Blvd. Golden & Associates of Birmingham Ala., is the builder. This large scale development was valued at $38.032 million. Thompson Thrift Construction out of Terre Haute, Ind., secured permits to build 118 units in the same vicinity at 255 Van Asche Dr., which were valued $41.288 million. Their subsidiary development firm – Watermark Residential – acquired the 17.7 acres at the northeast corner of Steele Boulevard and Van Asche Drive for $4.3 million in early January. This project, “Watermark at Steele Boulevard,” is slated to have 306 units when all phases are completed.

Local real estate experts predict multifamily projects will continue to be announced through the first half of this year given that occupancy rates rose to 98% at the end of 2015. CBRE analyst Brian Donahue of Fayetteville reported recently that even with the potential for more than 1,900 units (6% of existing supply) to be built over the next two years he does not expect occupancies to drop below 95% thanks to pent up demand and population growth in Northwest Arkansas.

He said the shortage of available units has allowed property owners to increase rents 8.6% over the last three years – 3.3% in 2013, 1.5% in 2014 and 3.8% in 2015.

“As new units come online we expect rental rate increases to decline to around 2% with increased occupancy causing rent specials to become more prominent,” Donahue said.

In February, multifamily projects in Fayetteville, Rogers and Bentonville contributed $4.66 million to the 2016 commercial totals, In March there was $8.09 million in new multifamily permits issued in Fayetteville.

Other large scale commercial permits issued in the region in the first quarter of 2016 include:
• $12.375 million: Primrose retirement in Rogers;
• $7.5 million: Office complex in the Pinnacle Hills area of Rogers;
• $6.9 million: Marshalltown Tool expansion, Fayetteville;
• $5.55 million: Large banquet hall in Bentonville; and
• $5.25 million: The Fields office building in western Rogers.

MARCH SNAPSHOT
All of the cities except Bentonville reported a sizeable uptick in March residential building. Bentonville permit activity was down slightly in March compared to the year-ago period. The region’s residential values totaled $45.591 million in March, up 30% from the $35.075 million reported a year ago.

Following are the March numbers for the cities.
• Bentonville: $15.267 million, compared to $15.950 million, down 4.28%
• Fayetteville: $12.706 million, compared to $7.179 million, up 76.9%
* Rogers: $11.128 million, compared to $7.448 million, up 49.4%
* Springdale: $6.490 million, compared to $4.498 million, up 44.28%

Commercial building in March totaled $41.388 million, compared to $14.953 million a year ago. The bulk of that activity was in Rogers with a reported $24.520 million in permit projects in March.

Building Permits (January-March)
Bentonville
2016: $68.039 million
2015: $54.553 million
up 24.72%

Fayetteville:
2016: $121.551 million
2015: $23.149 million
up 425%

Rogers:
2016: $52.912 million
2015: $35.64 million
48.46%

Springdale:
2016: $22.46 million
2015: $13.707 million
63.85%