NW enduring, real estate report says
Posted on Wednesday, August 13, 2008
Commercial and multifamily real estate in Northwest Arkansas is holding steady in the face of a rough national economy, said the director of the research center that tracks the markets.
Second-quarter results of the quarterly Skyline Report real estate survey show commercial vacancy rates down in the medical office and office / warehouse submarkets, but mixed in other areas.
The commercial and multifamily portions of the report were released Tuesday by Arvest Bank Group of Fayetteville.
Arvest commissions the study of the Northwest Arkansas real estate market from the Center for Business and Economic Research at the Sam M. Walton College of Business, which is part of the University of Arkansas at Fayetteville.
Building permits issued during May, June and July totaled $ 13 million — the lowest amount in a quarter since the report began in the second quarter of 2004.
Multifamily real estate continues to have higher vacancy rates than the market is accustomed to seeing, said Roy Stanley, president of Lindsey Property Management in Fayetteville.
Kathy Deck, the research center’s director, said low building permit totals are a good indicator that developers are waiting for the market to catch up with the supply of commercial space available.
“It is pretty obvious that the market players in every sphere are holding back,” she said, referring to the financial, real estate and construction industries.
Deck said the national economy is at a low point that is reflected in the local retail market.
“National-level retailers are scaling back expansions and in some cases shuttering existing stores,” she said. “But for the most part, those looking for space in Northwest Arkansas are looking for long-term growth.”
The retail submarket of commercial property added 15, 076 square feet during the second quarter, and another 25, 367 square feet became vacant.
The vacancy rate for Northwest Arkansas retail increased to 14. 3 percent over the revised first-quarter rate of 13. 2 percent, the report states. Fayetteville, Lowell, Rogers and Springdale all saw increases in the retail vacancy rate during the quarter.
Tommy Van Zandt, managing partner of Sage Partners commercial real estate brokerage in Fayetteville, said the market has been very stable.
“When you look at the big picture, that amount of space is nothing. Really, what that is saying is — from an absorption standpoint — the market is fairly flat,” he said.
Past growth in outlying residential neighborhoods is pushing demand for some segments of the market, he said. Neighborhood retail and businesses that provide goods and services like gasoline, groceries and other necessities are in good demand, he said.
“There is no new product coming on the market, which is good. So we should start gaining on the oversupply of space,” Van Zandt said.
The multifamily vacancy rates for the second quarter declined to 12. 8 percent from the first-quarter rate of 13. 1 percent. But it was higher than the 9. 9 percent reported in the same quarter of 2007.
“Northwest Arkansas, for the first time in a long time, is our soft spot,” Stanley said of the vacancy rates at Lindsey Property Management. The company manages more than 29, 000 apartments in more than 100 communities in Arkansas and seven other states.
Stanley said both supply and demand are to blame for the growth of vacancy rates.
Construction has started on 10 multifamily projects valued at more than $ 1 million since June 1, 2007, the report states.
Demand has softened for apartments because anyone who wants to own a home and has a down payment can find a house to buy in the current real estate market in Northwest Arkansas, Stanley said.
To contact this reporter: sroberts@arkansasonline. com
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