NWA commercial real estate vacancy hits record high in 2021
FAYETTEVILLE, Ark. (KNWA/KFTA) – In the second half of 2021, the overall vacancy rate for commercial real estate properties in northwest Arkansas fell to 8.3%, its lowest level since the Skyline report was created.
According to a press release from Arvest Bank, this figure was down from 8.9% in the first half of 2021, which was the lowest on record at the time. During this period, 636,552 square feet of new commercial rental space was added to the market while 862,106 square feet were absorbed, resulting in a positive net absorption of 225,554 square feet.
This report indicates that commercial real estate developers in the area are doing a good job of developing the right kind of space in the right places. I know our commercial lending group works closely with Arvest customers to provide the capital needed for the region to pursue smart development that will meet growing needs as Northwest Arkansas continues to grow. and expand.
Gene Gates, Senior Vice President and Director of Commercial Lending at Arvest Bank of Fayetteville
The most significant changes occurred in the warehouse submarket, where the vacancy rate fell from 6.6% in the first half to 5.3% in the second half. While 445,365 square feet of warehouse space was added, 578,544 of space was absorbed, resulting in a positive net absorption of 133,179 square feet.
Mervin Jebaraj, Director of CBER and Principal Investigator of the Skyline Report, said, “The warehouse sector in northwest Arkansas appears to be benefiting from continued e-commerce growth, as nearly 2 million square feet of new space have been added in the past. five years, while maintaining a low vacancy rate. Seeing the vacancy rate well below 10% indicates a healthy sector.
In the office submarket, the vacancy rate fell from 11.2% in the first half of 2021 to 10.0% in the second half, as 116,280 square feet of space were added and 235,032 were absorbed, resulting in a positive net absorption of 118,752 square feet. All of the new spaces added belonged to the doctor’s office category.
Commenting on the office sub-market, Jebaraj said: “Since the onset of the pandemic, there has been a great deal of uncertainty surrounding the office space market as businesses have adapted to the realities of a workforce. more distant work. What the data shows about the Northwest Arkansas office market is that this submarket remains strong and balanced.
The other large category is the retail submarket, which showed strength as a relatively small amount of new space, only 25,720 square feet, was added to the market and 127,304 square feet of were absorbed resulting in a positive net absorption of 101,584 square feet.
Commercial building permit data over the past twelve months has also been historically high, with more than $1 billion in permits issued, but 69.4% of that total is permits issued for Walmart facilities, primarily the new corporate campus development.