Northwest Arkansas Democrat-Gazette
Demand steady for apartments
Occupancy rate around 98 percent; rents increase
Anyone moving to Northwest Arkansas is likely to find an apartment that suits their taste, whether it’s a studio or a complex with abundant amenities.
Apartment occupancy in the region has hovered around 98 percent since 2014, according to real estate firm CBRE. The firm counts 31,500 units throughout the region.
CBRE keeps track of market-rate apartments in complexes of 100 units or more. It doesn’t factor in new developments until a few months after a certificate of occupancy is issued. Market rate refers to apartments without rent restrictions, meaning a landlord can rent the space at whatever price the local market allows.
Rents went up 1.5 percent since last year and 25 percent over the past seven years, which averages out to about 5 percent year over year, said Brian Donahue, senior associate with the investment properties group of CBRE Multifamily. There are about 1,900 units under construction or set for development.
Rogers has the highest average rental rate for all sizes of apartments among the four major cities at $841 per month. Bentonville is next at $762 monthly. Fayetteville’s average rent is $686 and Springdale is the least expensive at $576, according to CBRE’s findings.
About 30 people move to Northwest Arkansas each month and they have a variety of prices and sizes to choose from when finding an apartment, Donahue said.
“It’s going to be a very healthy apartment market for the foreseeable future,” he said.
An area typically will have a steady stream of new construction when occupancy surpasses 95 percent, Donahue said. Close to 3,000 units likely will be in development by 2019, which means supply should come closer to catching up with demand, he said.
The region has gained national recognition as far as growth and success. The Milken Institute earlier this year listed Northwest Arkansas as No. 25 on its list of best-performing economies. U.S. News and World Report last year put the metro area at No. 5 on its list of best places to live. The Census Bureau tabs Northwest Arkansas as the 22nd fastest-growing region in the country.
Home ownership rates are going down as people move to the region and want to be close to amenities, said Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas. Young professionals who move to the area typically don’t want to invest in a house and want to be close to downtown, he said. Developers have responded.
“All that combined means the people who put apartments close to these amenities tend to do a lot better,” Jebaraj said.
Student-housing development serves a separate market, according to Jebaraj. How fast enrollment grows dictates what gets built, he said. Fall 2017 enrollment was 27,500 students at the university, up from 21,400 for fall 2010.
As far as what’s being built where, CBRE lists at least nine major apartment projects completed or in development in Bentonville since 2013. Walton Crossings, with 600 units at Southeast 28th and Southeast C streets, is set to wrap this year.
Jebaraj said Bentonville and Rogers have a lower base to work off of than Fayetteville. When considering announced projects for the next few years, Bentonville and Rogers should add 40 percent to 50 percent of their current inventory of apartments, he said. Fayetteville likely will add about 12 percent to 15 percent of its current inventory, Jebaraj said.
Bentonville and Rogers each have about 5,000 units, according to the Skyline Report from the economic research center. Fayetteville has more than 19,000. Springdale has about 6,400 units. The center counts more than 36,000 units throughout the region because it factors in complexes with fewer than 100 units as well, unlike CBRE.
Lindsey & Associates is building a complex with 31 three-story buildings on more than 25 acres along Southeast C Street between Southeast 22nd and Southeast 28th streets in Bentonville, just over two miles south of the downtown square. The city approved building permits for the complex in January.
Brick Avenue Lofts is another new Bentonville development set to bring 252 units off Southeast J Street, near Walmart’s new home office. Sarah King with Specialized Real Estate Group, which is behind the Brick Avenue Lofts project and Uptown Fayetteville Apartments on Steele Boulevard, said developers see opportunities when new economic ventures attract more people to the area.
A need for housing exists across Northwest Arkansas, especially in walkable pockets of cities, King said. Building within a city’s core, rather than out on its edges, leads to a higher quality of life, she said.
A growing population means more development and housing, King said.
“It’s going to go somewhere,” she said. “It’s time for us to be smart about where it goes and to understand that by saying yes to responsible development we’re also protecting the countrysides that we all love so much.”