FAYETTEVILLE, Ark. (KNWA/KFTA) — Arvest Bank today released Skyline Reports on commercial real estate in Northwest Arkansas for the first half of 2021.
According to Arvest, during the first half of 2021, the overall vacancy rate for commercial real estate dropped to 8.9% as 1,153,353 square feet of space was absorbed.
Arvest said combined with 246,735 square feet of new space being added, the market saw net positive absorption of 906,618 square feet, which was the largest amount of net positive absorption in almost a decade.
The vacancy rate for commercial real estate for both the first and second halves of 2020 had been 10.8%, and this is the first report since the second half of 2017 where the vacancy rate has been below 10%.
Arvest says more than half of the total net positive absorption came from the warehouse submarket where 558,572 square feet of space was absorbed, while no new properties were added.
The vacancy rate in the submarket fell from 9.3% at the end of 2020 to 6.6%.
The office submarket absorbed 1,052 square feet of space from January through June and with 165,424 new square feet of space being added to the market, the vacancy rate rose from 10.8% in the second half of 2020 to 11.2%.
Mervin Jebaraj, CBER director and the lead researcher for the Skyline Report commened on the office submarket.
“The office market is dealing with pandemic-related factors as companies in the region adjust their office space to accommodate more employees working remotely,” Jebaraj said. “From our discussions with area developers and property managers, we know this includes companies consolidating what were multiple leases or locations. We feel that this is a temporary situation and should have no long-term negative impact, as the need for office space continues to be strong as the region continues to grow.”
The report says the retail submarket demonstrated continued strength as the overall vacancy rate for retail space remained 10.8% at the end of the first half of 2021, the same as the second half of 2020.
Commercial building permits rose in the current reporting period with more than $647 million in permits issued, but around $435 million of that total was associated with Walmart’s new headquarters project.
The report says this still left around $212 million in other commercial building permits being issued which was an increase from $189 million in the second half of 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 CBER.