Report: Commercial real estate vacancy rate unchanged; building permits at all-time high

Justin Trobaugh
·2 min read

FAYETTEVILLE, Ark. (KNWA/KFTA) — A report says the overall vacancy rate for commercial real estate was unchanged from the first half of 2023 as 623,288 square feet of new commercial space entered the market.

According to the Arvest Bank Commercial Skyline Report, the vacancy rate is 6.4%.

The report says in the office space submarket, there were 203,815 square feet of new space added to the market in the second half of 2023, and the vacancy rate was 8.8%, unchanged from the previous report and up slightly from 8.4% in the second half of 2022.

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For all of 2023, 277,228 square feet of office space was added to the market with 147,962 square feet added in Bentonville and 91,153 square feet added in Fayetteville, representing 86% of the total.

“Commercial real estate in the region remains very healthy. We continue to see new space enter the market and get leased fairly quickly. While many regions in the country are experiencing rising vacancy rates, the Northwest Arkansas region has remained very balanced in terms of supply and demand,” said Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas and the lead researcher for the Skyline Report.

When it comes to the value of commercial building permits, the report distinguishes between those for Walmart’s new headquarters and those for the new projects not related to Walmart. In the second half of 2023, the value of permits not related to Walmart reached an all-time high in the history of the report at $287.1 million, indicating a continued belief that regional growth in the business sector will remain strong.

Report shows fewer homes being sold as rent prices increase

The report says in the warehouse submarket, almost 575,000 square feet were added to the market in 2023, but the vacancy rate for warehouse space decreased from 3.6% in the first half of 2023 to 3.2% in the second half.

“The market for commercial real estate properties in the region remains healthy and robust as we continue to see growth in the business community,” said Kelly Carlson, senior vice president and loan manager with Arvest Bank of Benton County.

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.

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