Local developers point to low unemployment, high-paying jobs and local amenities as signs Northwest Arkansas' multifamily residential market will remain strong through 2020.
About 1,900 new units are set to open this year across both counties, according to Brian Donahue, a senior associate at CBRE Northwest Arkansas, the local branch of an international real estate and analysis firm. That's more than double the number of units opened over the past six years, he said.
At a glance
Apartment complexes in Northwest Arkansas that are expected to be completed this year.
Watermark at Steele CrossingFayetteville308
The Parc at BentonvilleBentonville216
The Pointe at BentonvilleBentonville170
Source: CBRE Northwest Arkansas
"There is a pent-up demand for apartments," Donahue said. "To say we're building some new units is an understatement."
Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas, called the area's multifamily market strong.
"You can't look left or right and not see a multifamily being built," she said.
Spurred in part by the region's "thriving local economy and unprecedented population growth," occupancy rates across Benton and Washington counties hovered around 98 percent halfway through 2016, according to CBRE's midyear market survey of more than 22,000 apartments.
Northwest Arkansas' occupancy rate outranked Tulsa and Oklahoma City, both at 92 percent, and had higher average rents.
The average cost of a two-bedroom, two-bathroom apartment in 2016 in Northwest Arkansas was $778, according to CBRE. Similar units in Tulsa averaged $726 and fluctuated between $572 and $918 in Oklahoma City.
Lindsey Management Co. is betting on an increase in demand through the end of the decade despite Northwest Arkansas occupancy rates dropping a half a percentage point compared to the same period in 2015.
"This area will continue to grow," said Hugh Jarratt, an attorney for Lindsey Management, which manages more than 40,000 units in Arkansas and six other states. "There will be a need for multifamily housing. We don't see that demand going away."
The population in Benton County rose from 153,406 in 2000 to 249,672 in 2015, a roughly 63 percent increase, according to the U.S. Census Bureau. In Washington County, the population grew by about 43 percent, from 157,715 in 2000 to 225,477 by 2015.
Jarratt said the quality of life in Northwest Arkansas has drawn national attention. The spotlight spurred increased development and construction of apartment complexes, he said.
U.S. News and World Report ranked Northwest Arkansas in the top five best places to live in the country in 2017 thanks to its low unemployment rate, affordable housing and natural amenities.
The region's 2.9 percent unemployment rate in 2016 is below the national average of 4.7 percent and the state's average of 3.9 percent, according to the Arkansas Department of Workforce Services.
U.S. News reports the median income for Northwest Arkansas is $43,570, $2,000 more than the state's median income of $41,371. Strong wages combined with a median housing cost of $182,508 -- nearly $30,000 below the national average of $211,731 -- are "enticing real estate developers to build," according to U.S. News.
Northwest Arkansas consists of the metropolitan statistical area that includes Benton, Madison and Washington counties in Arkansas and McDonald County in Missouri.
CBRE lists four complexes set to open this year -- two in Fayetteville and two in Bentonville -- that will account for more than 1,000 units.
In Fayetteville, Watermark at Steele Crossing and Uptown Apartments are being built less than a mile apart. Each complex will have about 300 units. Both complexes are being built on Steele Boulevard in the northwest section of the city, referred to as Uptown Fayetteville by area promoters.
Corey Runnels is the vice president of Specialized Real Estate Group, the company overseeing development of Uptown Apartments. Runnels said "the secret about Northwest Arkansas is getting out."
"We see it as being a strong play over the next coming years," Runnells said. "That area has the highest employment density in Washington County (and) where the jobs are is a good place to be."
Runnells said his company is "bullish" the market will be strong through the end of the decade.
"A big driver of construction is jobs and the local economy," Runnels said, adding as long as the growth is there, the trend will continue.
NW News on 03/26/2017
Print Headline: Developers optimistic about apartment market through 2020