Finding an apartment in Northwest Arkansas is no easier than it was a year ago.
Despite all of the new construction, the apartment market continues to remain strong with occupancies holding relatively firm, according to findings of a year-end survey conducted by commercial real estate brokerage firm CBRE Northwest Arkansas.
Average occupancy was down a half a percent from 2012, but still remained strong at 96.5 percent in the four major cities. Average rents are $591 per month, an increase of $19 from last year.
Developers added 687 units to the Northwest Arkansas apartment market in 2013. Of those units, 591 were student apartments built near the University of Arkansas campus in Fayetteville.
Two more student projects are planned near the university, including The Cardinal at West Center, a 150-unit complex under construction at the corner of Center Street and Duncan Avenue, and Harvey’s Hill, a recently approved 130-unit complex across Duncan Avenue from The Cardinal.
Both projects are from Fayetteville-based Specialized Real Estate Group, which has at least two more complexes in the works — Eco Downtown on Lafayette Street and another on Martin Luther King Jr. Boulevard.
The growth spurt in student housing comes after the university recorded a 54 percent increase in enrollment in just a decade. The university added 8,936 students from fall 2003 to fall 2013, according to the UA Office of Institutional Research.
With all the competition, move-in deals and discounted rates were up slightly. Approximately 15 percent of the properties surveyed were running some form of special or rent concession – up from 8 percent six months ago and 12 percent a year ago.
Market rate construction still slow
Apartment construction in 2013 for market rate units (non-student complexes with more than 50 units) produced just one completion – Lindsey Management’s expansion of the Copperstone Apartments complex in Bentonville, which added 96 units.
Lindsey will soon begin construction on the Trails at Rainbow Curve in Bentonville. The complex, which will add 487 market rate units to Bentonville, may hamper occupancy but should be absorbed at a reasonable pace, said Brian Donahue, an apartment specialist with the CBRE. Donahue said he expects additional developments to be announced throughout 2014, which could lead to an overall increase in market rate construction and some slight softening in occupancies, but not for a while.
“It does not appear the boom in student housing in Fayetteville has affected market rate apartment rental rates or occupancies, but instead has kept in line with demand brought on by the jump in U of A enrollment,” said Donahue. “As market fundamentals continue to hold strong we expect all classes of multifamily product to trade at a premium in 2014 as apartments continue to remain the prized asset class for commercial real estate investors.”
With the single family housing recovery in full swing, a potential tourism bump with the completion of the Crystal Bridges Museum of American Art, steady job growth and an unemployment rate expected to continue to outperform the state and nation, Donahue said Northwest Arkansas’ apartment market will maintain its upward momentum for the foreseeable future.
Northwest Arkansas occupancy rates
Average rates at year-end 2013.
NWA as a whole: 96.5% occupied, down from 97% in 2012
Fayetteville: 97.5% occupied, down from 98% in 2012
Springdale: 95% occupied, up from 94.5% in 2012
Rogers: 98.5% occupied, up from 97.5% in 2012
Bentonville: 93.5% occupied, down from 97% in 2012
Northwest Arkansas apartment rents
Rogers and Bentonville carry the highest average rents for apartment complexes with 50 or more units.
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Source: Northwest Arkansas Apartment Market Survey for year-end 2013. CB Richard Ellis surveyed just over 22,000 of the area’s approximate 28,500 units. The survey does not include complexes with less than 50 units.