The overall commercial property vacancy rate in Benton and Washington counties in the second half of 2022 plunged to a record low of 5.6%, according to the Skyline Report released Tuesday.
Strong leasing in the office and office/retail submarkets helped tighten the overall vacancy rate, down from 8.3% in the previous measurement, to the lowest rate since the report debuted in 2005.
The strongest activity was found in Class A and medical office submarkets.
In all, 274,414 square feet of new office space was added in the second half of the year. The retail submarket's vacancy rate dropped to 7.9% from 9.5% even as it added 47,845 square feet of new, all Class A space.
The Skyline Report, released twice a year, covers the commercial and residential real estate markets in Benton and Washington counties. The Center for Business and Economic Research compiles the data for the report, which is prepared exclusively for Arvest Bank.
Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas and the report's head researcher, said the region's commercial real estate market "is extremely healthy right now."
"To have the lowest vacancy rate since we began tracking this data in 2005 despite the emergence of remote and hybrid work options is a testament to the market's performance," Jebaraj said.
"The commercial market never really took any long-term hits from the pandemic," he said, "which is something almost no other market in the U.S. can say."
Nearly $241 million in commercial building permits were issued in the back half of 2022. And even without the permits issued to Walmart Inc., which is building a new headquarters in Bentonville, the remaining $218 million was the highest non-Walmart total since the second half of 2005.
Gene Gates, a loan manager with Arvest Bank of Fayetteville, said in reference to the Skyline Report that "it is obvious from the historically low vacancy rate in Northwest Arkansas commercial properties that there are opportunities for commercial real estate developers to take on new projects."
The warehouse vacancy rate fell 1.6% from 5.3% in the second half of 2022 because of one vacancy. And 50,171 square feet of new office/warehouse space was added to meet increasing demand.