Northwest Arkansas' office vacancy well under U.S. trend
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Northwest Arkansas' office vacancy rate is up slightly in Q2, but is still slaying with a 5.3% rate, compared to 20.2% nationally, per a new report from Cushman & Wakefield Sage Partners.
Why it matters: Commercial property trends signal momentum, reinforcing Northwest Arkansas as an economic outlier in a soft national office market.
- Yes, but: Tight supply can limit expansion and push rents higher.
By the numbers: The numbers come from Sage Partners' latest market summary, released Monday. Compared with Sage's Q1 report, the midyear snapshot shows a market that is still tight but loosening in spots. Office vacancy rose from 4.9% in Q1 to 5.3% at midyear.
- Retail vacancy rose from 3.3% to 3.5%.
- Industrial vacancy fell from 5.3% to 5.2%.
- Land demand stayed strongest for residential, mixed-use and commercial sites along growth corridors, authors of the report say.
Between the lines: The story is not a slowdown so much as pressure on supply. The report says office tenants are still chasing higher-quality space and that much of the nearly 250,000 square feet of office under construction is preleased.
- Retail space remains limited, even with the vacancy rate being up slightly.
- Land deals are getting harder to make work because of limited development-ready sites, elevated construction costs and seller expectations, the report says.
The caveat: Sage is not a neutral observer. The firm brokers, manages and markets commercial real estate.
What we're watching: The direction of data from Arvest Bank's semi-annual Skyline Report due out this fall generally tracks with the Sage report, though the fine print varies.