More jobs, people send NWA apartment occupancy rates higher

Apartment living remains popular in Northwest Arkansas with the mid-year occupancy rate averaging 98.5%, up 0.05% from the average reported at the end of 2014, probably because of more jobs and more people in the region in last year.

A year ago, the average mid-year occupancy rate was 96.5%, according to the survey released last week by CBRE associate Brian Donahue. CBRE, a commercial real estate company, has been doing the survey since 2010. It’s highest occupancy rate recorded in the last four years.

The survey includes more than 22,000 units of the approximate 32,000 apartment units in Fayetteville, Springdale, Rogers and Bentonville. It does not include apartments built exclusively for students at the University of Arkansas.

The average occupancy showed modest increases over a year ago. in Fayetteville the average occupancy is 98%, up from 95.5% a year ago; Springdale, from 97% year ago to a current rate of 98 percent now; Rogers, at 99.5% from 98.5% last year; and Bentonville, at 98.5%, up from 97% last year.

The average rental rate overall rose about $8 per month to $608, up 1.3% increase. The average rent for a two-bedroom, two-bath unit rose $24 a month to $737.

“A solid local economy across Northwest Arkansas continues to provide support for the strong performance of the multifamily market,” Donahue said in the report.

Northwest Arkansas added 10,000 jobs representing a 4.56% increase in job growth in 2014. This increase ranked the region 26th among the nation’s 381 largest metro areas outpacing benchmark cities such as Austin, Texas, Raleigh, N.C. and Madison, Wis., according to the study.

Another factor for the rising occupancy rate is an estimated 8.3% growth in regional population since 2010, which now surpasses 500,000.

“As Northwest Arkansas continues to grow, we expect apartment fundamentals to remain strong in the coming year, despite the predicted increase in market rate apartment construction,” Donahue concluded in the review.

As occupancy rates rise, construction announcements have picked up, according to the review. Four multifamily properties should be completed sometime this year totaling 799 new units. They include Bentonville’s Thrive, 62 units, and The Trails, 487 units; and Woodland at Creekside, 50 units; Also, the Promenade at Rogers with 200 units is expected to be finished this year.

Three more multifamily properties may be finished in 2016: The Uptown, 308 units in Fayetteville; The Links, phase II, 516 units in Fayetteville; and The  Pointe, 170 units in Bentonville, for a total of 994 units.

Additionally, four more student housing complexes are expected to be completed in Fayetteville later this year or next: Beachwood Village, 670 bedrooms; Gather on Dickson, 233 bedrooms; Sterling Frisco, phase II, 559 bedrooms and @MOSPHERE, formerly Harvey’s Hill, 628 bedrooms.

Sales of multifamily properties (50 units or higher) also are expected to remain active as seven transactions have occurred in Northwest Arkansas so far this year, the review states. That compares to 12 transactions in all of 2014 and seven transactions in 2013. The average sale price was just under $90,000 per apartment unit. Five of the seven properties sold were built since 2000.

“We expect multifamily transactions to continue at an above average pace due to the low interest rate environment and continued strong investor demand,” Donahue wrote in the review. 

“Lending rates continue to be a driving force behind the number of apartment communities actively for sale as sellers look to capitalize on these historic pricing levels while investors can lock in long-term attractive fixed rate debt,” Donahue wrote.