Northwest Arkansas building permits down 41.2% in July, up more than 22% year-to-date

Total new construction permits values in Fayetteville, Springdale, Bentonville and Rogers were $55.103 million in July, down 41.2% from the $93.862 million reported in the year-ago period.

There were 160 permits issued among the four cities for new single family residential construction totaling $34.779 million. Residential construction grew 16% in values compared to 137 new units valued at $32.979 million a year ago. It was a spotty commercial sector that kept total permit values down in July.

Sam T. Sicard, president of First National Bank of Fort Smith, parent of First National NWA, said the bank continues to see strong demand from builders and developers in Northwest Arkansas. He said lot prices have gone up considerably in Benton and parts of Washington counties and the number of available lots on bank books have continued to shrink, forcing more new development.

JULY RESIDENTIAL PERMIT VALUES (compared to July 2015)
Bentonville: 67 permits, $15.690 million, up 35.3%.
Fayetteville: 33 permits, $7.925 million, down 12.85%.
Rogers: 40 permits, $6.66 million, up 3.59%.
Springdale: 20 permits, $4.504 million, down 34%.

Commercial construction among the four cities was also mixed in July, and down sharply from a year ago overall. Total commercial permits were valued at $20.324 million in July, down 66.6% from the $60.883 million reported a year ago

Bentonville’s commercial projects totaled $15.956 million, a 1,071% turnaround from the same month last year. The Mount Carmel Retirement Complex valued at $10.349 million was among the city’s July permits, and was the largest commercial permit issued in the region in July.

Springdale did not have a new commercial construction permit issued in July and Fayetteville’s commercial permits totaled just $1.999 million, plummeting from the $45.409 million reported a year ago. In Rogers there were a couple of new commercial permits totaling $2.379 million, which was more than the $780,000 reported in the same period last year.

YEAR-TO-DATE
Total new residential and commercial permits for the first seven months among the four cities was $357.126 million, up 22.48% from the $291.571 million reported in the same period of 2015. The commercial sector has been active with several new multifamily complexes, and the Arkansas Children’s Hospital pushing permits values to $107.437 million through July, a gain of 34.9% from a year ago. Residential building permits through July totaled $259.689 million, up 17.8% from $211.952 million in the year-ago period.

Each of the cities showed growth in the residential sector, but Rogers was the only one of the four cities to see a drop in new commercial activity through the first seven months of the year compared to 2015.

The health of the local construction market is stronger than the national pace of 5.6% growth through July. The Associated General Contractors of America said Sept. 1 there is steady growth in U.S. construction spending despite a growing shortage of skilled workers.

“On balance, there is still strong demand for construction, especially for multifamily and private nonresidential structures, while homebuilding continues an uneven recovery,” said Ken Simonson, the association’s chief economist. “But public investment in infrastructure and educational construction has been tepid.”

He said nationwide construction spending in July totaled $1.153 trillion at a seasonally adjusted annual rate, essentially unchanged from the month before. He said the year-to-date increase of 5.6% for January through July 2016, compared with the same months of 2015, shows continued demand for construction. He said private nonresidential spending reached a record high for the third-straight month at a seasonally adjusted annual rate, while multifamily spending hovered just below the record set in March.

CONSTRUCTION WORKFORCE
The only area of concern voiced by the trade group for the industry is demand outpacing skilled labor in many parts of the country.

“As the construction industry continues to expand, firms in many parts of the country are eager to expand their headcount,” said Stephen Sandherr, CEO of the Associated General Contractors of America. “But without the kind of workforce measures we have been pushing for, our schools will continue to graduate students for careers that don’t exist while firms search for workers with skills that aren’t taught.”

Association officials said as construction demand continues to expand, many firms report having a hard time finding workers – particularly craft workers – to hire. A recent association survey found that two-thirds of firms report difficulty finding craft workers.

Dell Hickman, an electrician in Northwest Arkansas, said his business is growing and he has been picked up by two area homebuilders who can’t keep subcontractors on demand. Hickman closed his business during the real estate downturn and took a job in retail, but said he’s now back up with all he can handle with a limited crew. Hickman said finding good journeyman for his trade is a constant challenge.

“I spend two or three years training them and they are hired away or start their own business. So I have decided to run my business with a smaller headcount this time around. So far I have all the work I want and need,” he added.

Randy Eno, who recently moved the area from Austin, Texas, is a painter and dry wall craftsman who said it’s easy for him to find work by using Craigslist and other ad services for trade professionals. Eno has more than 25 years in the painting and drywall business and said demand is so good for the trades in the region another painter friend is planning to relocate to Fayetteville before the end of the year from south Texas.

BUILDING PERMITS (January through July)
Bentonville
2016: $184.202 million
2015: $130.324 million
up 41.3%

Fayetteville
2016: $214.604 million
2015: $128.999 million
up 66.36%

Rogers
2016: $67.832 million
2015: $82.105 million
down 17.3%

Springdale
2016: $142.239 million
2015: $50.93 million
up 179%