FAYETTEVILLE, Ark. (KNWA/KFTA) — Arvest Bank released its Skyline Report on commercial real estate in Northwest Arkansas for the first half of 2023 showing the addition of 347,827 square feet of new space in 12 months and a decline in vacancy rates.

According to a press release from Arvest Bank, the overall vacancy rate for commercial real estate in Northwest Arkansas was 6.4%, up slightly from 5.7% in the first half of 2022 and 5.6% in the second half of 2022.

The release says the increase in the overall vacancy rates over the past year is concentrated in three specific submarkets: warehouse, retail/warehouse and office/warehouse.

The office submarket vacancy rate has fallen in the past year, according to the report, from 9.1% in the first half of 2022 to 8.8% in the first half of 2023. Arvest says this is a sign of continued strength in Northwest Arkansas as nationally the vacancy rate has reached 16.4%, according to a report from Colliers International, the highest rate since the global financial crisis of 2007-08.

According to the release, the retail submarket has remained steady with vacancy rates remaining unchanged at 7.9% from the first half of last year.

“Commercial real estate in Northwest Arkansas is best described as healthy and balanced which is somewhat unique given the national market,” said Mervin Jebaraj, CBER director and the lead researcher for the Skyline Report. “We are still seeing new space come into the market across all submarkets, but the majority of new space is being leased. The only submarkets who have experienced a year-over-year increase in vacancy rates are those in the warehouse category, and we fully expect those to remain healthy. The largest category of warehouse space had a vacancy rate of less than 1% a year ago, so the increase in that category is actually not bad, as it remains a very low vacancy of 3.6% now.”

According to the report, the total value of commercial building permits issued in the first half of 2023 was $193.9 million which was down from $293.7 million in the second half of 2022 and from $397.9 million in the first half of 2022.

“As we read headlines about stress in the commercial real estate market nationally, it is good to see that the market here in Northwest Arkansas remains strong. Working with commercial real estate developers in the area, our commercial lending teams remain upbeat about the health of this important sector and continue to help customers with the financing they need,” said Isaac McKinney, EVP and Loan Manager with Arvest Bank in Siloam Springs.

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.