Large projects drive Northwest Arkansas construction permit values up 327% in April

Arkansas Children’s Hospital’s $65 million permit along with two new schools in Bentonville ($31.481 million) and a $10.7 million office complex for Washington Regional Hospital helped to push April new construction permit values 327% higher among the region’s four largest cities.

Fayetteville, Springdale, Rogers and Bentonville issued new construction permits valued at $258.244 million in April, compared to $60.383 million in the same month of 2015. The three-fold increase was related to the large projects already mentioned along with an office and storage complex for the city of Bentonville valued at more than $11 million.

Other large commercial projects permits issued in April include:
• Tyson Foods office on Emma Avenue Springdale, $7.651 million;
• Arkansas Portable Toilets office building, $5.256 million;
• CVS Pharmacy at 1749 W. Walnut in Rogers, $1.6 million;
• Whitbeck Labs offices in Springdale, $1.123 million; and
• Arvest Bank on Elm Springs Road, $898,744.

Homebuilders did not see a busier April in terms of permits on new homes. The four cities issued permits for 144 new homes valued at $33.284 million, down compared to 188 homes worth $44.685 million in the same month last year. The 23% decline in home starts and the 25% drop in permit values related in part to homebuilders pausing to do more of their own development in lieu of the lack of affordable lots in some of the most popular areas of the region.

Bentonville issued 34 new home construction permits valued at $10.414, down from 58 permits worth $16.542 million a year ago. Rogers also saw a steep decline in new residential permits for April, issuing 29 compared to 44 last year. The permit values totaled $4.698 million, down 45% from April 2015.

In Washington County homebuilders were slightly less busy as Fayetteville’s 42 new home starts were valued at $9.124 million, down from 46 new homes worth $9.858 million a year ago. In Springdale homebuilding activity was virtually flat with a year ago. The city issued 39 permits worth $9.048 million in April, compared to 40 permits worth $9.686 million a year ago.

WORKFORCE PROBLEM
Brent Hanby, co-owner of Encore Flooring and Building Products in Springdale, said most of the spec home builders he speaks with cite a lot shortage for new construction.

“They are saying there are no more cheap lots (bank owned or otherwise). Of the developers we know who are developing subdivisions, we hear they are not selling them to other builders but are keeping the lots for themselves to build on,” Hanby told Talk Business & Politics.

He said business is fluid for most all home builders and remodelers. There is virtually no supply of new completed houses. Vacancy rates for apartments is also near 0% which is why there has been so much activity in the multifamily sector.

“We do have a serious labor shortage in the area of skilled labor for construction despite the 31 people a day moving to the region. I’m wondering if that is enough to fill all the jobs available in Northwest Arkansas,” he said.

The shortage of skilled labor for construction is not just a local issue. The Associated General Contractors of America Association officials cautioned that many firms will have a hard time finding qualified workers as demand grows through the summer months.

YEAR-TO-DATE TREND
Through the first four months of 2016 the four cities have issued new construction permits – residential and commercial – valued at $418.924 million, up 136%. Multifamily has been a large part of the increase with projects valued at more than $10.75 million issued so far this year, though there were no multifamily permits issued in April.

Building Permits (January through April)
Bentonville
2016: $115.391 million
2015: $76.877 million
up 64.08%

Fayetteville
2016: $146.79 million
2015: $39.917 million
up 267%

Rogers
2016: $72.993 million
2015: $50.182 million
up 45.45%

Springdale
2016: $83.749 million
2015: $10.124 million
up 727%