Northwest Arkansas' apartment market remains hot

FAYETTEVILLE -- Ryan Quattrocchi was confident he chose the right place to live for his sophomore year even though the apartments were under construction when he signed the lease last summer. He trusted Beechwood Village would be a good fit.

"We signed up early, but liked what we saw based on the floor plans and what we could get here," he said.

Beechwood Village is the only rent-by-the-bedroom student apartment complex to open in Fayetteville this year, but that isn't a sign the apartment construction market is slowing down, said Brian Donahue, senior associate with CB Richard Ellis, a commercial real estate brokerage firm.

Three student apartment complexes are set to open next year adding 1,420 bedrooms to the Fayetteville housing market. Five projects opened over the past three years and added more than 3,000 bedrooms to the Fayetteville market.

The rent-by-the-bedroom complexes are all inclusive from utilities to cable, and each resident has his own bedroom. The majority of apartments have four bedrooms, and all residents share a common area. The developments also include amenities from pools to tanning beds.

Growth in the student housing market over the past few years isn't hurting the overall apartment rental market.

CB Richard Ellis reports the occupancy rate in the area's four largest cities was 98.5 percent during the first of the year, up from 96.5 percent a year ago. Fayetteville's occupancy rate was 98 percent, up from 95.5 percent a year earlier.

The national occupancy rate hit a high at 95.3 percent in May, according to Axiometrics, a real estate analytics firm.

"The big scare was how student housing was going to effect market-rate apartments, and it hasn't happened," said Brian Donahue. "For the last five years, I've been beating the drum on the need for more market-rate construction."

Four market-rate complexes, or apartments for the general public, have either opened or are set to open by year's end, adding 799 units. Three of the complexes are in Bentonville, and one is in Rogers.

Another 994 apartments are slated to open in 2016 in two Fayetteville complexes and one Bentonville project.

Kathy Deck, director of the Center of Business and Economic Research at the University of Arkansas, said the multifamily housing market is set for continued growth that seems justified.

"If you look right now at the market, it's tight, tight, tight," she said. "When you look at the whole market, it paused during the recession from adding any units of any kind, and we find ourselves now in a very tight market."

One of the Fayetteville market-rate projects is Uptown Apartments by Specialized Real Estate Group. The Fayetteville firm spent the past several years developing many of the student projects, but that was never its core business, said Corey Runnells, the company's vice president.

"We've always aspired to be conventional housing guys," he said.

Construction on Uptown Apartments is scheduled to start this fall and take 15 to 16 months to finish. The 308-unit complex will be on the southwest corner of Steele and Joyce boulevards, across from the Malco Razorback Cinema.

"It will be geared toward the young professional, both in the uptown area and people who are working in Benton County who still want to live in Fayetteville and have quick access to the interstate," Runnells said.

The Fayetteville-based company entered into the student housing market because there was a need driven by the university's growing enrollment and lack of new apartment construction, Runnells said.

Enrollment at the University of Arkansas reached 25,341 students last year including 21,009 undergraduates. Enrollment was about 17,000 students in 2005. Steve Voorhies, university media relations manager, said first-day estimates last week showed enrollment close to 26,600.

Laura Jacobs, associate vice chancellor of University Relations, said the growth has been deliberate.

"It remains to be seen how big we will grow," she said. "With growth of a certain amount, you have to start looking at infrastructure, facilities, so many things. It's exponential."

The growth has also caused a squeeze in on-campus housing despite the university opening two dorms in 2013 that added 630 beds. There were 72 students living in temporary quarters because they did not have a room Monday.

The university can house 5,732 students on campus. Single freshman under age 21 must live on campus or with a parent.

Samantha Fehr, coordinator of traditional commuter programs at the university, said three sorority houses under construction is making this year's student market even tighter.

"Expect to see more empty beds next fall than this year," she said. "It's been a little crazy this year."

Quattrocchi moved into his new apartment last weekend. He and three fellow sophomores, all from Tulsa, Okla., were among the 178 students able to take up residence. Construction is ongoing at the complex on Beechwood Avenue just south of Martin Luther King Jr. Boulevard and a half block north of the UA Tyson Track Center and Baum Stadium.

Brent Little, president of Fountain Residential properties, the Dallas-based developer of Beechwood Village, said 400 of the 671 bedrooms are leased for the fall semester.

Displaced lessees were offered a stipend to find other housing accommodations. Little said some wanted to stay in a hotel and others just wanted the money so they could find their own place. Students will move in as units are finished.

Little said he doesn't expect to have problems filling the complex. He said heavy rain in the spring and changing contractors slowed construction.

"The last buildings will be turned over in October, and we will be working very hard to get January leases started," he said.

He said the complex's unique design is helping draw residents. The project is cottage-style and consists of individual two- and three-story buildings with one to three units each. The majority of apartments have four bedrooms.

Chad Hall, leasing assistant manager, said the complex offers 12 floor plans. The apartment Quattrocchi and his roommates share is called The Draper and is a two-story unit featuring a pool table. Hall said the complex has eight Drapers and Quattrocchi got the last one.

"They were gone in one day," Hall said.

The clubhouse and pool are not built yet, but Hall said hasn't received any complaints.

Kyle Pumphrey, one of Quattrocchi's roommates, said the construction doesn't bother him.

"They have to get it done," he said. "It's worth it."

NW News on 08/30/2015