Commercial Real Estate Market Remains Balanced

Friday, September 27 at 09:00 AM
Category: Arvest News

Arvest Bank recently released Skyline Reports on commercial and multifamily real estate in Northwest Arkansas for the first half of 2019.

During the first half of 2019, the overall vacancy rate for commercial real estate was 11.0 percent, up slightly from 10.9 percent reported at the end of 2018. During the six-month period, 371,243 square feet of newly constructed commercial space entered the market while 472,451 square feet was absorbed, resulting in positive net absorption of 101,208 square feet.

Researchers at the Center for Business and Economic Research (CBER) at the Sam M. Walton School of Business at the University of Arkansas explained that the vacancy rate rose despite more than 100,000 square feet of positive net absorption due to previously owner-occupied space being vacated by owners and entering the rental market.

The office submarket added 107,766 square feet of newly constructed space and absorbed 110,618 square feet, resulting in positive net absorption of 2,852. The overall vacancy rate for office space rose slightly from 8.4 percent at the end of 2018 to 8.6 percent at the end of the first half of 2019.

Mervin Jebaraj, CBER director and the lead researcher for the Skyline Report, commented on the office submarket, “During the first half of this year and consistently over the past several years, there has been significant addition of new office space in the region, particularly in Benton County, and the market has showed consistent strength by keeping pace with these additions and remaining well-balanced and with a healthy vacancy rate.”

The retail submarket also demonstrated continued strength as the overall vacancy rate for retail space dropped from 11.5 percent at the end of 2018 to 10.8 percent at the end of the first half of 2019.

“As we know, the retail sector across the country has been under pressure as a result of changing consumer preferences, but the retail real estate market in Northwest Arkansas has adapted well as more service-oriented businesses have moved into traditional retail spaces,” Jebaraj said. “Also, the steady population growth of the region has also contributed to a healthy retail market.”

Commercial building permits indicate that the construction of new commercial real estate properties in the region will continue to be strong.

In the multifamily real estate sector, which consists largely of apartments, the pace of construction has been very strong with thousands of new units entering the market, but, like the commercial space, absorption of these new units is more than keeping pace. As a result, the overall vacancy rate for multifamily properties continued to decline and ended the period at 3.1 percent.

Jebaraj said, “As we have said in the past, an overall vacancy rate under 5 percent is very healthy. This time last year, the multifamily vacancy rate was 3.9 percent, and now, a year later, it has fallen even more.

“The most significant decline in vacancy rates happened in Bentonville, which fell from 6.3 percent in the first half of 2018 to 3.1 percent in the first half of this year. Even with many more apartments being constructed and planned, we feel confident that the market will continue to absorb the majority of these new units as they offer proximity to desired services and amenities that are difficult to find in lower-priced single-family homes.”

Craig Shy, executive vice president and loan manager with Arvest Bank of Fayetteville said about the Skyline results, “These two reports clearly show that, as of now, the Northwest Arkansas market continues to grow and remain well-balanced. Our commercial bankers have been extremely active in helping our customers understand the market and the best opportunities for future development, and these developers are obviously hitting the mark as is evident by these indicators of a healthy, vibrant market.”

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 CBER.

In 2004, Arvest Bank contracted with CBER to collect information about the local real estate markets. CBER researchers aggregated and analyzed data from local governments, property managers, visual inspections and the business media to provide a complete picture of the status of property markets in the two counties.

CBER provides excellence in applied economic and business research to federal, state and local government, as well as to businesses currently operating or those that desire to operate in the state of Arkansas. The center further works to improve the economic opportunities of all Arkansans by conducting policy research in the public interest.

Tags: Arvest, Skyline
 

Skyline Report: Home Prices Continue to Rise as Lot Inventory Remains Low

Wednesday, October 10 at 09:00 AM
Category: Arvest News

Arvest Bank has released Skyline Reports on residential and multifamily real estate in Northwest Arkansas for the first half of 2018.

During the first half of this year, the average price for homes sold continued to rise and reached record highs in both Benton and Washington counties. The increase in Washington County from the first half of 2017 to 2018 was especially significant at 12.3 percent, moving from $209,899 to $235,618. In Benton County the increase was 4.9 percent, moving from $227,036 to $238,098.

Looking at five-year trends, the average price of homes sold in Washington County has increased from $173,979 in the first half of 2013 to $235,618 in the first half of this year – an increase of 35.4 percent, which is an average annual increase of 7.08 percent. In Benton County the average price of homes sold in the first half of 2013 was $185,500 compared to $238,098 this year – an increase of 28.4 percent, or 5.68 percent annually.

Homebuying activity remained strong in the first half of 2018 with 4,438 homes being sold in the period, up 1.2 percent from the first half of 2017 when 4,385 homes were sold, and up 45.5 percent from the first half of 2013 when 3,051 were sold.

Mervin Jebaraj, director of the Center for Business and Economic Research (CBER) at the Sam M. Walton College of Business at the University of Arkansas, said there are several factors contributing to the rising prices, including labor and material costs and the shrinking supply of available lots on which to build new homes. The supply of remaining lots in active subdivisions, based upon the previous 12-month absorption rate, was 29.6 months in the first half of 2018, up slightly from 28.9 months in the first half of 2017 and down significantly from 94.3 months in the first half of 2013.

“Affordability is becoming an issue in the residential real estate market in Northwest Arkansas as the increase in home prices significantly outpaces both wage growth and inflation,” Jebaraj said. “With our population expected to continue to grow at a rapid pace, we need to continue building new homes to meet demand, but there are far fewer lots on which to build new homes. This is especially true within the larger cities in the region where many people desire to live.

“What we are seeing in the data is that more and more people are choosing to lease apartments instead of buying homes, because the apartments tend to be closer to the amenities they desire and are considered to be more affordable. This, in turn, is fueling the insatiable growth in the multifamily market, which continues to add new multifamily properties at a rapid pace without any sustained increase in the vacancy rate of those properties.”

The multifamily real estate market in Northwest Arkansas has grown, in terms of total square feet, by 22.8 percent during the past five years – from 19,292,047 total square feet in the first half of 2013 to 23,682,495 in the first half of this year – but the vacancy rate has remained very healthy, falling slightly from 4 percent in the first half of 2013 to 3.9 percent in the same period of 2018. The average lease price for apartments has increased 20.7 percent since the first half of 2013, from $538.34 to $660.80.

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 CBER.

In 2004, Arvest Bank contracted with CBER to collect information about the local real estate markets. CBER researchers aggregated and analyzed data from local governments, property managers, visual inspections and the business media to provide a complete picture of the status of property markets in the two counties.

CBER provides excellence in applied economic and business research to federal, state and local government, as well as to businesses currently operating or those that desire to operate in the state of Arkansas. The center further works to improve the economic opportunities of all Arkansans by conducting policy research in the public interest.

Tags: Arvest, Skyline
 

Skyline Report Finds Active, Balanced Residential Real Estate Market in Northwest Arkansas

Friday, March 10 at 07:30 AM
Category: Arvest Community News

Significant increase in absorption matches increase in permits.

FAYETTEVILLE, Ark. – Arvest Bank today released the residential real estate market Skyline Report results for the second half of 2016 in Northwest Arkansas. The report noted an almost equal increase in building permits issued, with a 37.0 percent increase over the same period in 2015, and new homes being occupied showing a 37.6 percent increase.

Significant absorption of new homes led to the lowest level of remaining months of unbuilt lot inventory, 35.1 months, since the inception of the Skyline Report in 2004.

“Given the increase in building permits we’ve seen during the past twelve months, it is quite impressive that the absorption of newly constructed homes has kept pace,” said Kathy Deck, lead researcher for the Skyline Report at the Center for Business and Economic Research at the Sam M. Walton College of Business, University of Arkansas at Fayetteville. “Overall the residential real estate market is as hot as we’ve seen it since the recession. Moving forward we will be paying attention to two issues that could slow down the pace of absorption – the forecasts for slower job growth in the area and the price of lots that are remaining, as this could limit builders’ ability to build the price of homes that are selling.”

There were 1,561 building permits issued in Benton and Washington counties in the first six months of 2016 and 1,574 new homes sold in the last six months of the year indicating good balance between the number of new homes being constructed and the number of new homes being purchased. In the second half of the year there were 1,638 permits issued, a 37.0 percent increase from the 1,196 permits issued during the same period of 2015.

The average sale price of homes sold during the period increased 7.4 percent from the same period in 2015 in Benton County, from $206,575 to $221,944. In Washington County, it increased 6.7 percent, from $189,093 to $201,804.

Centerton, in Benton County, has emerged as a hotbed of building activity. The number of building permits issued in Centerton from July through December was 208 – a 49.9 percent increase year-over-year and the third highest total of all cities in Northwest Arkansas. On the same note, there were 288 houses sold in the city during the period, a 46.9 percent increase over the same period in 2015.

“It is good to see the residential market being so active while also remaining well-balanced in terms of supply,” said Deck. “The market was equally hot prior to the recession, but at the end of 2006 there were more than 2,500 complete but unoccupied houses on the market and now there are fewer than 300. We hope that this balance is sustainable moving forward.”

“As Northwest Arkansas has continued to experience strong growth, we at Arvest have had the opportunity to help thousands of customers get into homes,” said Craig Shy, executive vice president and loan manager for Arvest Bank in Fayetteville. “During the next several years, expectations are that interest rates will rise slightly, but we keep reminding customers that even if rates increase slightly, they will still be very, very low from a historical perspective. The best news is that, in a balanced market like this, it is generally good for both buyers and sellers, as is evidenced by the large number of both new and existing homes that sold during the last half of 2016.”

The total number of new and existing homes sold in the last half of 2016 was 4,772 – a 12.1 percent increase from the 4,257 sold in the last half of 2015.

The Arvest Skyline Report is a biannual analysis of the latest commercial, single-family residential and multi-family residential property markets in Benton and Washington counties. The report is sponsored by Arvest Bank and conducted by the Center for Business and Economic Research (CBER) in the Sam. M. Walton College of Business at the University of Arkansas.

In 2004, Arvest Bank entered into a contract with CBER to collect information about the local real estate markets. CBER researchers aggregated and analyzed data from local governments, property managers, visual inspections and the business media to provide a complete picture of the status of property markets in the two counties.

The CBER provides excellence in applied economic and business research to federal, state and local government, as well as to businesses currently operating or those that desire to operate in the state of Arkansas. The center further works to improve the economic opportunities of all Arkansans by conducting policy research in the public interest.

Tags: Arkansas, Arvest Benton County, Bentonville, Fayetteville, Northwest Arkansas, Prairie Grove, Press Release, Siloam Springs, Skyline, Springdale
 

Multifamily Vacancy Rates Rebound Slightly; Strong Absorption In Commercial

Tuesday, March 15 at 11:40 AM
Category: Arvest Community News

Arvest Bank releases second half of 2015 Skyline Report results.

SPRINGDALE, Ark. – Arvest Bank today released its Skyline Reports on commercial and multifamily real estate in Northwest Arkansas for the last six months of 2015.

Vacancy rates in the second half of 2015 rose in Northwest Arkansas from previous record lows as new units were completed and entered the market, according to Kathy Deck, lead researcher for the Skyline Report and director of the Center for Business and Economic Research. Even with a slight increase however, vacancies were still lower than they were at the same time last year. Vacancy rates for Northwest Arkansas overall were 3.0 percent in the second half of 2015, down from the 3.7 percent reported in the same period of 2014 and up from the 2.3 percent reported in the first six months of 2015.

Springdale reported the lowest vacancy rate for multifamily real estate with 1.0 percent in the second half of 2015, up from 0.9 percent in the first half of 2015. Bentonville and Siloam Springs reported vacancy rates of 2.0 percent and 2.7 percent, respectively, while Fayetteville’s rate was 3.6 percent. Rogers reported the highest vacancy rate at 4.8 percent. At the end of the first half of 2015, Bentonville had a vacancy rate of 0.4 percent, Siloam Springs had a vacancy rate of 2.4 percent, Fayetteville had 3.6 percent and Rogers had 0.9 percent. 

“Although the amount of construction in the multifamily sector is high, the extremely low vacancy rates seen throughout Northwest Arkansas are sending strong signals to developers that there is demand for additional apartments. The increase in average prices is partly due to two factors: that the new units are on the higher end of the scale and that the complexes are raising leases as they have tight vacancy rates,” Deck said. “Continued strong job growth indicates further population increases in Northwest Arkansas and more multifamily units are needed for a segment of that workforce.”

In Bentonville, more than 570 new rental units have been announced or are under construction. In Fayetteville, more than 4,400 new rental units have been announced.

Increased demand has had an influence on the cost of rental space. The average monthly lease price for a multifamily property unit in Northwest Arkansas increased to $601.43 in the second half of 2015 from $581.72 in the first half of 2015. The average monthly lease rate per square foot was $0.71, up two cents from the $0.69 reported in June 2015.

The second half of 2015 saw robust new construction in the commercial real estate market in Benton and Washington counties, but the absorption rate was even stronger, Deck said. There were 836,033 square feet of commercial space that became occupied, while just 550,331 square feet of new space was added to the market in the last six months of 2015. 

Commercial construction will continue as $112.8 million of commercial building permits were issued between July 1 and December 31, 2015. In comparison, there were $153.4 million in permits were issued in the second half of 2014 and $75.2 million issued in the first half of 2015.

The overall vacancy rate for commercial real estate in Northwest Arkansas was 12.4 percent, up from the 12.0 percent reported in the first half of 2015.

The largest gain in absorption was in the warehouse submarket with 131,082 square feet. The retail/warehouse submarket had positive net absorption of 41,411 square feet and the office/warehouse submarket had positive net absorption of 24,856 square feet in the Northwest Arkansas market. The retail submarket had positive net absorption of 23,257 square feet with 82,715 new square footage added and 105,972 square feet absorbed. The office/retail submarket and the office submarket both showed negative net absorption of 44,692 square feet and 38,992 square feet, respectively, in the second half of 2015. 

“The commercial real estate market is beginning to reflect the overall optimism we have been seeing in the economy in Northwest Arkansas,” said Tammy Engle, senior vice president and loan manager with Arvest Bank in Siloam Springs. “At the same time, we are pleased to see that optimism tempered by careful consideration of the needs of the market. Everyone is letting the experience of the last 10 years wisely govern their decision-making processes.”

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 Center for Business and Economic Research in the Sam. M. Walton College of Business at the University of Arkansas (CBER).

In 2004, Arvest Bank entered into a contract with CBER to collect information about the local real estate markets. CBER researchers aggregated and analyzed data from local governments, property managers, visual inspections and the business media to provide a complete picture of the status of property markets in the two counties.

The Center for Business and Economic Research at the Sam M. Walton College of Business provides excellence in applied economic and business research to federal, state and local government, as well as to businesses currently operating or those that desire to operate in the state of Arkansas. The center further works to improve the economic opportunities of all Arkansans by conducting policy research in the public interest. 

Tags: Arkansas, Arvest Benton County, Bentonville, Fayetteville, Prairie Grove, Press Release, Rogers, Siloam Springs, Skyline, Springdale
 

Absorption of Unoccupied Houses Jumps 60 Percent in Northwest Arkansas

Wednesday, March 26 at 11:05 AM
Category: Arvest Community News

The recently released Skyline Report shows the Northwest Arkansas real estate market absorbed unoccupied houses in the second half of 2013.

FAYETTEVILLE, Ark. – Arvest Bank today released the residential real estate market Skyline Report results for the second half of 2013 in Northwest Arkansas, which noted that the number of new houses that became occupied jumped by 60.7 percent over the number occupied in the first half of the year.

“The balance between absorption of the existing houses in new subdivisions and the small increase in building permit activity across Benton and Washington counties is exactly right,” said Kathy Deck, lead researcher for the Skyline Report at the Center for Business and Economic Research at the Sam M. Walton College of Business, University of Arkansas at Fayetteville. “We are seeing the market move forward without undue concern with oversupply that we have seen in the past.”

Approximately 1,279 new houses in active subdivisions became occupied during the second half of 2013, up 60.7 percent from the 796 new houses that became occupied during the first half of the year.

Residential building permits issued in the last six months of 2013 showed a modest increase over the same period of 2012. There were 1,094 building permits issued in Benton and Washington counties from July to December in 2013, an 11.4 percent increase from the 982 building permits issued during the same period of 2012 but a 4.8 percent drop the 1,149 building permits issued in Benton and Washington counties from January to June 2013. Benton County accounted for 725 of the residential building permits, while Washington County accounted for 369.

The average value of all building permits in Northwest Arkansas from July to December 2013 was $244,575, up 3.3 percent from the average value of $236,731 reported in the same time period of 2012 and up 4.7 percent from the average value of $233,539 reported from January to June in 2013.

“It gives us great comfort that the level of new construction is appropriate to the level of growth we are seeing in the area,” Deck said. “This shows us that we are sustaining reasonable growth.”

Sales of existing houses on the market were up in both Benton and Washington counties but the sold prices are mixed compared with the first half of the year. From July 1 to December 31, 2013, there were 3,407 houses sold in Benton and Washington counties, an increase of 14.3 percent from the 2,982 sold in the same time period of the previous year.

The average sold price of Benton County homes during the second half of 2013 was $183,983, down 0.8 percent from the average sold price of $185,500 during the first half of 2013. In Washington County, the average price of existing homes sold was $186,493, up 7.2 percent from the average sold price of $173,979 in the first half of 2013.

Home values, as measured by the average cost per square foot of existing homes sold at during the second half of 2013, decreased by 0.2 percent in Benton County to $82.29 from $82.43 during the first half. In Washington County, the average cost per square foot of existing homes sold in the second half of 2013 was $87.87, up 4.7 percent from the average cost per square foot of $83.94 reported during the first half.

Johneese Adams, senior vice president and mortgage loan manager for Arvest Bank in Fayetteville, said that the slight decrease in some housing prices is almost negligible and should be considered as a temporary stabilizing of the local market.

“We are experiencing a recovering housing market in Northwest Arkansas. Small fluctuations of less than 1 or 2 percent are to be expected at almost any time during the year and especially during the winter months. It just gives the market a chance to collect its breath, so to speak,” Adams said.

A total of 28,336 lots were in the 393 active subdivisions identified by Skyline Report researchers in the second half of 2013. Of these lots, 10,162 were classified as empty, 216 were classified as starts, 727 were classified as being under construction, 193 were classified as complete but unoccupied, and 17,038 were classified as occupied. In 102 of the 393 active subdivisions, no new construction or progress in existing construction has occurred during the last year.

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 Center for Business and Economic Research in the Sam. M. Walton College of Business at the University of Arkansas (CBER).

In 2004, Arvest Bank entered into a contract with CBER to collect information about the local real estate markets.  CBER researchers aggregated and analyzed data from local governments, property managers, visual inspections and the business media to provide a complete picture of the status of property markets in the two counties.

The Center for Business and Economic Research at the Sam M. Walton College of Business provides excellence in applied economic and business research to federal, state and local government, as well as to businesses currently operating or those that desire to operate in the state of Arkansas. The center further works to improve the economic opportunities of all Arkansans by conducting policy research in the public interest.
 

Tags: Arkansas, Arvest Benton County, Home Loans, Mortgage, Press Release, Skyline

Choose one or more categories to subscribe to:




Cancel