Northwest Arkansas commercial real estate remains steady
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Northwest Arkansas' commercial real estate vacancy rate dropped slightly from 7.2% to 6.3% in the second half of 2025, according to the biannual Arvest Skyline Report released Tuesday.
Why it matters: Commercial vacancy rates are an indicator of the area's economic vitality. Low rates often signal strong demand but can drive up rents and limit space for businesses.
- Generally, rates between 5% and 10% are considered healthy, Skyline authors note in the report.
By the numbers: The 6.3% rate combines all commercial real estate, from premium office space to warehouses. Three submarkets make up nearly three-quarters of the commercial space in NWA, according to the report. Here's how they fared:
- Office vacancy rose to 7.5% from 6.8% in the first half of 2025 as new and newly available space entered the market.
- Retail vacancy fell from 6.6% to 6%.
- Warehouse vacancy dropped sharply from 10.4% to 6.1%, driven by strong absorption.
The medical office vacancy rate edged up to 2.1%, still among the tightest segments in the market.
The big picture: Overall, demand outpaced new supply. The region added nearly 400,000 square feet of new commercial space during the second half of 2025, but nearly 616,000 square feet were absorbed.
- National office vacancy rates closed 2025 between 18.2% and 20.5%, per real estate companies Colliers and Cushman & Wakefield.
What they're saying: "The market for commercial real estate in the region is extremely stable… a clear sign of strong demand," said Mervin Jebaraj, director of the University of Arkansas' Center for Business and Economic Research, which does the research.
The fine print: The numbers aren't exactly aligned with a similar Cushman & Wakefield Sage Partners report from February. Both reports show that strong demand continues in NWA, but the Skyline Report shows a little more softness in the office market.
What we're watching: The value of commercial building permits dropped to $140.4 million in the last half of the year, the lowest since 2017. This suggests developers may be pulling back.
- "We are expecting a slight lull in new commercial construction in the months ahead," said Jebaraj.