Apartment occupancy hits record high in Fayetteville

Construction continues this week on the Uptown Apartments project at the southwest corner of Joyce and Steele boulevards across from Razorback Cinema and Academy Sports in north Fayetteville.

Todd Gill, Fayetteville Flyer

Apartment occupancy has reached an all-time high in Fayetteville.

Despite the continued addition of new bedrooms in 2015, Fayetteville’s average apartment occupancy rose to 98.5 percent, the highest ever recorded in the findings of the biannual market survey conducted by commercial real estate brokerage firm CBRE Northwest Arkansas.

In its latest report, CBRE surveyed just over 22,000 of the area’s approximate 32,000 units in complexes with at least 50 units.

Apartments aren’t just full in Fayetteville, though. Average occupancy across the region is also at 98.5 percent, up from 98 percent reported one year ago.

New Construction

Student Housing Construction

Student complexes that have opened or are planned near the UA campus (since 2010):

The Grove – 632 beds, 2012
University House – 654 beds, 2013
The Vue – 656 beds, 2013
Sterling Frisco – 640 beds, 2013
The Cardinal – 470 beds, 2014
Beechwood Village – 670 beds, 2015
Gather on Dickson – 238 beds, 2016
Sterling Phase II – 559 beds, 2016
@MOSPHERE – 628 beds, 2016

Non-student Construction

Non-student complexes that have opened or are planned in Northwest Arkansas (since 2010):

Copperstone Phase II (Bentonville) – 96 units, 2013
The Trails at Bentonville – 487 units, 2015
THRIVE Bentonville – 62 units, 2015
Woodlands (Bentonville) – 50 units, 2015
The Promenade (Rogers) – 200 units, 2015
The Pointe at Bentonville – 170 units, 2016
Towne Park (Springdale) – 157 units, 2016
The Links at Fayetteville Phase II – 484 units, 2017
Uptown (Fayetteville) – 308 units, 2017
Watermark (Rogers) – 220 units, 2017
Watermark (Fayetteville) – 306 units, 2017
Palisades (Rogers) – 208 units, 2017
The Parc (Bentonville) – 216 units, 2017
Source: CBRE Northwest Arkansas

The lack of market rate construction over the past few years has led to all-time highs in occupancy, which has spurred new construction in the non-student sector.

Seven multifamily properties have been announced so far for potential completion in 2016 and 2017, including three in Fayetteville: The Links at Fayetteville Phase II (516 units); Uptown Apartments (308 units); and Watermark at Steele Boulevard (306 units).

Student housing construction seems to have tapered around the University of Arkansas campus for the first time since 2012.

Beechwood Village, a 213-unit, 670-bedroom student complex was completed in 2015, while three others are expected to open sometime in 2016: Sterling Phase II (250 units, 559 bedrooms); Gather on Dickson (124 units, 238 bedrooms); and @MOSPHERE (226 units, 628 bedrooms).

Once complete, the area surrounding the campus will have seen the addition of nine new student complexes with over 5,100 bedrooms since 2012.

No other student properties have been announced.

Supply and Demand

Rental rates in Northwest Arkansas rose $23 per month, or 3.8 percent, on average in 2015, according to the study. Rent specials were virtually non-existent across the region, with the only concessions quoted being some form of employee or student discounts – typically 5 percent off the market rent.

“With such a minute number of vacant apartments across the Fayetteville, Springdale, Rogers and Bentonville markets, it is no surprise landlords have begun increasing rents,” said Brian Donahue, an apartment specialist with CBRE. “With population gains and strength of the overall economy, apartment market fundaments in Northwest Arkansas look solid moving forward.”

What’s Next?

As more units become available in 2016, Donahue said rental rate increases should decline to around 2 percent with increased occupancy causing rent specials to become more prominent.

However, despite the potential for over 1,900 new units to come online over the next two years, Donahue said he does not expect occupancies to drop below 95 percent due to the confined demand and population growth seen throughout Northwest Arkansas.

Northwest Arkansas occupancy rates

Average rates at year-end 2015.

NWA as a whole: 98.5% occupied, up from 98% a year ago

Fayetteville: 98.5% occupied, up from 97.5% a year ago
Springdale: 99% occupied, up from 97.5% a year ago
Rogers: 98.5% occupied, unchanged from a year ago
Bentonville: 97.5% occupied, down from 98% a year ago

Northwest Arkansas apartment rents

Rogers and Bentonville carry the highest average rents for apartment complexes with 50 or more units.

 1 bed/1 bath2 bed/1 bath2 bed/2 bath3 bed/2 bath

Source: Northwest Arkansas Apartment Market Survey (PDF) for year-end 2015. CBRE surveyed just over 22,000 of the area’s approximate 32,000 units. The survey does not include complexes with less than 50 units.