The vacancy rate on commercial property in northwest Arkansas is 12.7 percent, up from 12.4 percent in the second half of 2015, according to the Arvest Bank's Skyline Reports for the first six months of 2016.
Released Tuesday, the reports on commercial and multifamily real estate also said new construction added 462,563 SF of commercial space in northwest Arkansas during the first half of 2016 while 474,410 SF of existing space became occupied, netting a positive absorption of 11,847 SF.
Almost all the new retail space added to the market was immediately absorbed, according to Kathy Deck, lead researcher for the Skyline Report and director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville.
More: See the reports on commercial construction and multifamily real estate in northwest Arkansas.
The absorbed space resulted in a dip in the retail vacancy rate to 9.2 percent. Meanwhile, no new construction added space to the warehouse submarket but the submarket vacancy rate from 11.5 percent at the end of 2015 to 8 percent at the end of June.
"We have been seeing increased consumer optimism in northwest Arkansas and the state in general…" said Chris Thornton, loan manager and executive vice president of Arvest Bank in Springdale. "As consumers feel more confident in spending and buying, businesses are readying themselves to provide the goods and services consumers are looking for."
From Jan. 1 to June 30, there were $206.5 million in commercial building permits issued in northwest Arkansas, an increase from the $112.8 million in commercial building permits issued in the last half of 2015.
Vacancy rates in multifamily real estate remain at dramatically low levels despite substantial building activity in the region. The overall vacancy rate for the northwest Arkansas market during the first half of 2016 was 2.4 percent.
More: Millennials drive a boom in Arkansas' apartment market.
Rogers had the largest year-over-year increase in vacancy rates, up to 5 percent in the first half of 2016 from 0.9 percent in the first half of 2015. Fayetteville experienced the largest year-over-year decrease in vacancy rates with 2.7 percent in the first half of 2016 from 3.6 percent in the first half of 2015.
The average monthly lease price for a multifamily property unit increased to $608.88 in the first half of 2016 from $601.43 in the second half of 2015.
"Since 2011, average lease prices for multifamily units have increased 14.8 percent across the region," Deck said. "While the average price has increased to $608.88, the median lease price has remained somewhat steadier at $550."
More than 6,200 rental units have been announced or under construction in new multifamily projects across northwest Arkansas.