Report: NWA's commercial real estate is "remarkably healthy"
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Northwest Arkansas' overall commercial real estate vacancy rate rose to 7.2%, according to the biannual Arvest Skyline Report, released Tuesday. It was up from 5.8% at the beginning of the year.
Why it matters: Commercial property is an indicator of an area's economic vitality. Low vacancy rates often signal strong economic demand but can drive up rents and limit space for businesses.
- The market remains "remarkably healthy," according to Mervin Jebaraj, director of the University of Arkansas' Center for Business and Economic Research (CBER), which does the research.
By the numbers: The 7.2% rate combines all commercial real estate, from premium (or class A) office space to warehouses.
- Vacancy rates also rose slightly in the area's three largest submarkets —
warehouse (7.6%), retail (6.6%) and office space (6.8%).
The big picture: Nationwide, vacancies hit a new high in 2024, with 20.4% of office space in the country's top 50 metro areas empty, per a Moody's analysis.
What they're saying: "One comment we have heard from conversations with real estate professionals is that while low vacancy rates are generally considered positive, in a growing and dynamic market like ours, very low vacancy rates can also create challenges with limited availability," Jebaraj said in a statement.
The intrigue: Local medical office space dropped from an already low 1.9% vacancy rate at the end of 2024 to 1.5%.
- Yes, but: That space depends somewhat upon larger institutions being completed — such as the Heartland Whole Health Institute and Alice L. Walton School of Medicine. Adjacent office space likely won't be built until the full scope of the need is understood, CBER's Jeff Cooperstein previously told Axios.
The fine print: A Cushman & Wakefield/Sage Partners analysis in July indicated NWA's office vacancy rate was about 4% at the end of the second quarter.
- That report combined all office space as a single dataset, while the Skyline report pulls submarkets (medical office, office-retail and office-warehouse) out of its "office" calculation.
What we're watching: The value of building permits — an indicator of commercial space being developed — was up to $276 million in the first half of 2025, a 41% increase from the end of 2024.
- It's the third-highest value of permits (excluding Walmart Home Office construction) since the Skyline report was launched 21 years ago.