For two counties, vacancy rates rise

The overall vacancy rate in apartments and duplexes in Benton and Washington counties was 5.8 percent in the last half of 2013, up 1.5 percent compared with the same period the year before, according to the most recent Skyline Report released Tuesday.

The overall multifamily market is tight, but Fayetteville and Bentonville both saw increases in their vacancy rates. The largest areas of supply is around the University of Arkansas at Fayetteville, where several projects providing student housing recently were completed, and the Northwest Arkansas Regional Airport in Bentonville. Other major cities saw declines in vacancy rates, according to the report.

During the first six months of 2013, Northwest Arkansas’ multifamily real estate market vacancy rate hit the lowest reported level in nine years. Vacancy rates in Benton and Washington counties averaged 4 percent for the first half of 2013, down 1.1 percent from 5.1 percent for the same period in 2012.

Kathy Deck, director of the Center for Business and Economic Research at UA, said Tuesday that the report indicated the multifamily sector overall is experiencing restrained growth, with demand from the region’s job market being met by calculated development on the part of builders.

“We’re not seeing the willy nilly growth of the past,” she said, referring to the building bubble before the recession of 2008.

Deck is the lead researcher of the Skyline Report, which on Tuesday released its biannual analysis of the multifamily and commercial sectors in Benton and Washington counties. The report, sponsored by Fayetteville-based Arvest Bank, is compiled by the university center.

The commercial segment saw an overall vacancy rate of 13.6 percent for the last half of the year, down from 14.6 for the first half of the year. The report indicated there were declines in vacancy across all subsectors of commercial property with the exception of medical offices. The report noted commercial development was concentrated, and “hot spots” include Bentonville and the Interstate 540 corridor in Rogers.

Fayetteville’s multifamily vacancy rate was 7.7 percent for the six-month period, up from 4.6 percent for the same period in 2012. The city added nearly 2,000 bedrooms between July and December. Bentonville’s vacancy rate rose to 6.3 percent from 2.4 percent for the second half of 2012. The city added nearly 100 new units during the last six months of 2013.

Troy Galloway, the community and economic development director for Bentonville, said the city saw some additional inventory added near the airport primarily in a development owned by Lindsey Management Co., but noted that in the six previous months, the city added little.

“It was basically no vacancy,” he said.

He said the city needs multifamily inventory, and there is still a great deal of pent-up demand for rental property, including in the city’s downtown. The Thrive development, announced in late March, will be a good test for multifamily housing in the downtown area, Galloway said.

The 44,000-square-foot mixed-use development will go in at Southwest A and Southwest Fourth streets in Bentonville’s Arts District and is expected to be complete in about 10 months. The three story Thrive will include 62 residential units between 520 and 1,000 square feet each, ground-floor parking for residents and some commercial space.

Galloway said similar multifamily projects are likely to spring up in Bentonville’s growing downtown if the Thrive project proves to be successful.

The multifamily vacancy rate for Rogers was the lowest in the two-county area at 2 percent, down from 2.3 percent in the last half of 2012. Siloam Springs saw its vacancy rate fall to 5.7 percent from 8.5 percent in 2012, and Springdale saw its rate at 3.3 percent for the last six months of 2013, down from 5.5 percent for the same period in 2012.

In the two-county area, the average monthly lease price for multifamily units was $556.71 for the last half of 2013, up from $545 for the first six months of the year. The average monthly lease rate was up 2 cents to 66 cents a square foot.

Business, Pages 26 on 04/09/2014

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