Skyline Report reveals continued growth in Northwest Arkansas’ commercial real estate market
by March 27, 2024 2:14 pm 1,021 views
According to a new Skyline Report, the commercial real estate market remains healthy in Northwest Arkansas as more space continues to be leased. The commercial vacancy rate remained unchanged at 6.4% as 623,288 square feet of new commercial space were added to the market in the second half of 2023.
Fayetteville-chartered Arvest Bank released Tuesday (March 26) the Skyline Report for commercial real estate in Northwest Arkansas for the second half of 2023 compared to the first half of the year. Researchers at the Center for Business and Economic Research (CBER) in the Sam M. Walton College of Business at the University of Arkansas produce the biannual reports that provide a statistical analysis of the real estate market in Northwest Arkansas.
“Commercial real estate in the region remains very healthy,” said CBER Director Mervin Jebaraj, the lead researcher for the Skyline Report. “We continue to see new space enter the market and get leased fairly quickly. While many regions in the country are experiencing rising vacancy rates, the Northwest Arkansas region has remained very balanced in terms of supply and demand.”
According to the report, the office vacancy rate was flat at 8.8% in the second half of 2023 from the first half of the year. The market added 203,815 square feet of new office space amid “solid leasing activity in the class A office submarket.” The retail vacancy rate also remained flat at 7.9% in the second half of 2023 from the first half of the year. The market added 10,898 square feet of new space amid “strong leasing activity in the class B retail submarket.”
The office/retail vacancy rate rose to 6.7% in the second half of 2023 from 5.8% in the first half of the year, the report shows. The increase was attributed to 102,622 square feet of new office/retail space being added to the market. Leasing was strong in the class B submarket.
The warehouse vacancy rate declined to 3.2% in the second half of 2023 from 3.6% in the first half of the year. The rate declined as 262,415 square feet of new space was added to the market. The market added 43,538 square feet of new office/warehouse space but no new retail/warehouse space. According to the report, demand continues to rise for new warehouse and flex warehouse space.
The Skyline Report has distinguished between Walmart and non-Walmart-related building permits as the Bentonville-based retailer continues to build its new headquarters. The value of commercial building permits issued in the second half of 2023 rose to $287.6 million from $193.9 million in the first half of the year. Walmart-related building permits comprised $500,000 of the value, down from more than $25 million in the first half of 2023.
According to the release, the $287.1 million in permits not related to Walmart is a record high for the Skyline Report, “indicating continued belief that regional growth in the business sector will remain strong.”
Click here for a PDF of the report.