The secret success of the growing Northwest Arkansas economy is linked to high paying jobs which fuel population growth and continued investment from cities, schools and businesses trying to keep up.
Such is the opinion of research analysts with CBRE Real Estate and their recent report on the region. Robert Cramp, CBRE’s director of research and analysis for Texas, Oklahoma and Arkansas along with Cody Brandt a senior research analyst, recently compiled a report that looks at how population, payrolls and planning have created a perfect environment for growth over the past decade with no signs of abatement.
“Northwest Arkansas is more than just ‘calling the hogs’ these days. The center of gravity for the region has shifted from rooting for the University of Arkansas (UA) Razorbacks on Saturdays in the fall to becoming a major cultural and economic center of the South Central U.S.,” the pair noted in the opening remarks of their 13-page report.
The researchers said the population growth of 30 new residents per day is one of three significant drivers pushing Northwest Arkansas further into the national spotlight. No longer is the region home to five sleepy little towns nestled in the foothills of the Ozark Mountains. The report attributes a synergy between the five major towns in the region – Fayetteville, Rogers, Bentonville, Springdale and Siloam Springs – saying this gives the region wider appeal when marketed as a cohesive metro area.
Benton County has doubled its population in the last 15 years and Washington County has doubled in the last 25 years – each adding approximately 125,000 residents. The region topped 501,653 residents in 2015, according to the U.S Census data. Between 2000 and 2015, Fayetteville’s population increased 38.8% to 80,621 residents including the University of Arkansas resident enrollment. Springdale has seen its population increase a whopping 67% in the last 15 years rising to 76,565.
Benton County growth has been even more impressive. The population of Rogers has grown 58% since 2000 to 61,464 residents as of 2015. Lowell, which is part of Rogers School District has also seen active growth. The population increased from 5,013 in 2000 to 8,334, a gain of 66%, according to the CBRE report.
Bentonville, the smallest of the four major towns along the Interstate 49 corridor within the region, has seen its population more than double since 2000. Last year the city had a population of 41,613, up 101% from the 19,730 residents in 2000. But it’s not just Bentonville that has exploded. Centerton and Bella Vista, anchoring Bentonville to the north and west have also seen major growth over the past 15 years. Centerton, predominantly a bedroom community to Bentonville, saw its population grow from 2,146 people in 2000 to more than 11,193 residents last year, a 421% growth rate over the 15-year period. Bella Vista’s population grew from 16,582 in 2000 to more than 30,078 residents last year, an 81.3% growth rate since 2000, according to the report which cites U.S. Census Data.
The analysts note that rapid population growth in areas like Bentonville has placed some cost-of-living pressure on municipalities. Bentonville has the fastest appreciation of home prices in recent years in part because of the influx of educated and skilled professionals who have relocated to the city. The average household income in the city is $96,094 annually which is 32% greater than the regional average. Higher incomes can afford more expensive houses and the average home price in Bentonville has risen to $222,803, 13% higher than the regional average.
But many of the service jobs created in recent years still lag in pay which has led to affordability issues for many who might want to live in Bentonville. The researchers said affordability and land area constraints within Bentonville have also contributed to the explosion of single family home construction and a development sprawl into Centerton and Bella Vista where land and home prices are more affordable.
Northwest Arkansas’ income growth has outpaced most other U.S. metros and adjacent metropolitan regions. The U.S. Bureau of Economic Analysis reports that Northwest Arkansas’ per capita income was $50,686 in 2014. Only Houston had a higher per capita income level at $54,820 among metropolitan areas in the South Central U.S. Northwest Arkansas’ income level surpassed Dallas-Fort Worth at $49,506, Oklahoma City at $46,675 and Kansas City at $46,319.
Kathy Deck, director of the Center for Business & Economic Research at the UA, said in January that after years of lagging behind the nation, Northwest Arkansas had finally surpassed the national average for per capita income in 2014. She said this is a bright spot in the local economy as the region continues to add high paying jobs across multiple sectors. The national per capital income rate is rough $45,000 compared to Northwest Arkansas’ $50,685 level. Deck said the overall state still lags the national rate at $38,000.
The CBRE researchers said higher local incomes had led to a more robust commercial real estate sector as more chain restaurants and retailers look to locate in the growing region. As the progression of commercial real estate explodes throughout the region, city planning in context to infrastructure is becoming increasingly critical for future growth.
“Expanding local payrolls transformed a region of rural farming communities and university town into a steely corporate office magnate,” the report states.
Professional and business services have exploded since 1995, growing by a whopping 313%. Management occupations in Northwest Arkansas command a hefty average annual salary of $112,640 and are sixth in total regional employment. Business and finance occupations have also accounted for a significant portion of Northwest Arkansas’ employment growth being fifth in total employment, with nearly 15,000 workers earning average yearly paychecks of $68,740 – a combined spending power topping $1 billion, according to the CBRE report.
The report also notes that regional payrolls have expanded within service sectors such as healthcare and education. In the past year Mercy Health System’s announced expansion plans of nearly $250 million, creating 1,000 new jobs in the region over the next five years. The Arkansas Children’s Hospital’s new location in Springdale is another $185 million investment in the region. The 225,000-square-foot specialty hospital is under construction and slated to open in 2018. Hospital officials told Talk Business & Politics in May that Arkansas Children’s investment in Northwest Arkansas over five years will total $427.7 million.
PLANNING MAKES PERFECT
The researchers believe the region’s population explosion, along with the proliferation of new and expanding employers has placed pressure on planning efforts from local municipalities, regional organizations and the state government. The region is credited for planning on large projects like the tax funded widening of Interstate 49 and the construction of the Springdale Bypass.
The experts said connectivity to and from the region and within is crucial to the ongoing growth of the Northwest Arkansas. The researchers cite the growth of Northwest Arkansas Regional Airport as one regional amenity that allows many professionals who travel for work to live in the region. Since opening in 1998 XNA has grown to offer nearly 40 daily flights to 14 key destinations including major hubs for American Airlines, Delta and United Airlines. Last year the $107 million airport served about 1.3 million passengers and handled approximately 150 million tons of cargo, according to the report.
The local region has outpaced the state and country in terms of economic growth since 2013 and according to the report the spread between local and national economic growth rates has widened over the past three years.
In addition to the various local city and neighborhood plans throughout Northwest Arkansas, a broader regional plan by the Northwest Arkansas Regional Planning Commission is guiding many critical infrastructure projects which include the widening of I-49 and the construction of the Springdale Bypass, according to the report.
The Regional Planning Commission is studying several corridors that will drive mobility in the region, including the Western Beltway making use of Arkansas 112 and an Eastern Parkway as well which would use Arkansas 265. The Western Beltway would act as a major alternative route to I-49 and would have likely push commercial growth even further west. The Commission has also identified the need to expand I-49’s corridor to 8 lanes in many locations by 2030 as traffic counts are projected to double to over 100,000 cars per day, the report stated.
The researchers compared Northwest Arkansas to other metro areas in Central Texas, noting that Austin has seen its share of traffic congestion and complications because of limited route alternatives. The report noted that regional planners are learning from areas like Austin how important it is to maintain “relatively unfettered mobility” by shoring up alternative north-to-south corridors and future investments in widening of I-49 well before 2030.
While the region enjoys amenities such as Crystal Bridges Museum of American Art, Arvest Ballpark, Walton Arts Center and the Walmart AMP, strategically located in specific cities, the focus on the local municipalities as also been strong. Each of the five major cities have downtown master plans and the researchers commended the municipalities for this effort also noting that as population continues to grow and density increases there will be more community scrutiny.
The report pointed directly at Bentonville’s mature downtown and active expansion plans noting recent residents’ concern over historic buildings and the rising heights of apartment and condo construction. Fayetteville was also cited for its advanced urban planning efforts from a wave of infill construction along Dickson Street, and adjacent areas with retail revitalization within the downtown square area. Springdale, Rogers and Siloam Springs also continue to see outside investment into their downtown areas which the report said is indicative of an overall commercial growth cycle.