Record-setting construction of commercial property in Northwest Arkansas kept pace with demand, the latest Arvest Skyline Report shows.
Commercial building permits issued in the second half of 2023, not including Walmart Stores Inc.'s new headquarters project, "reached its highest level since the inception of the Skyline Report, coming in at $287.1 million, indicating continued growth in the near future," the report released Tuesday says.
"This was up significantly from the first half of 2023 when $168.5 million in non-Walmart building permits were issued," according to the report.
The Skyline Report started in 2004.
Yet the overall vacancy rate for commercial property in Benton and Washington counties stayed the same, "remaining at a healthy 6.4%, despite 623,288 square feet of new space entering the market," the report says.
The Arvest Skyline Report is a biannual analysis of the latest commercial, single-family residential and multifamily residential property markets in Benton and Washington counties. The report is sponsored by Arvest Bank and conducted by the University of Arkansas' Center for Business and Economic Research.
The region's growth in commercial real estate bucks a trend in other parts of the country, said Mervin Jebaraj, director of the center and the lead researcher for the Skyline Report.
"Commercial real estate in the region remains very healthy," Jebaraj said in a news release accompanying the report. "We continue to see new space enter the market and get leased fairly quickly. While many regions in the country are experiencing rising vacancy rates, the Northwest Arkansas region has remained very balanced in terms of supply and demand."
The region added 203,815 square feet of new office space within the overall commercial sector in the second half of 2023, the report found. Yet the vacancy rate stayed at 8.8%, unchanged from the previous report and up slightly from 8.4% in the second half of 2022. For all of 2023, 277,228 square feet of office space opened in the market with 147,962 square feet added in Bentonville and 91,153 square feet added in Fayetteville, representing 86% of the total.
Available warehouse space tightened despite new construction, the report shows.
Businesses added 575,000 square feet of space in 2023, but the vacancy rate fell from 3.6% in the first half of 2023 to 3.2% in the second half. A total of 574,175 square feet of new space opened up in the warehouse market since the end of 2022 according to the report.
"The vast majority of the new warehouse space, 562,415 square feet, was added in Springdale," the report says.
In the retail sector, 10,898 square feet of new retail space entered the market in the second half of the year, according to the report. This compares to 69,898 of retail space added in the first half of the year. The vacancy rate remained unchanged throughout the year at 7.9% according to the report. Other sectors such as medical offices also showed increases meeting sustained demand, the report found.