$1,040 4Q 2023
$1,084 4Q 2024
4.2%
95.1% 4Q 2023
94.9% 4Q 2024
-20 POINTS
308.2K 2023
312.8K 2024
2.1% 2023
2.6% 2024
* Please note that these employment figures have been adjusted for seasonal variations and are based on Moody’s Analytics forecast as of January 1, 2024.
** Please note that these unemployment rates are estimates that have not been adjusted for seasonal variations, and they are derived from Moody’s Analytics forecast as of January 1, 2024.
In 2024, the Northwest Arkansas apartment market is poised for a rebound, with net absorption expected to exceed 1,000 units, surpassing the slightly lower levels observed in 2023.
Bentonville, the location of Walmart’s global headquarters, has been a catalyst for the development of nearly 10,000 housing units over the past five years, fueled by the region’s rapid population growth.
Rent growth in Northwest Arkansas is expected to recover to 4.2% by the end of 2024, showing promising and consistent growth across all submarkets.
The anticipated opening of Walmart’s new billion-dollar headquarters, along with the forecasted addition of 4,600 jobs in 2024, positions Northwest Arkansas for significant economic growth.
FORECASTED ABSORPTION
FORECASTED NEW SUPPLY
Over the past three years, Northwest Arkansas has experienced stable demand, with developers building steadily in response to strong demographic growth in key submarkets. Although supply side pressures have slightly reduced occupancies, the level of new apartment construction is still manageable. The local economy has thrived, buoyed by the expanding labor force and the regional growth of major companies like Walmart, Tyson Foods, and J.B. Hunt. Additionally, suppliers and service providers selling to Walmart continue to gravitate towards the metro, reinforcing economic stability.
Looking ahead to 2024, net absorption in the region’s apartment market is expected to surpass 1,000 units, bouncing back from a slightly lower figure in 2023. Most submarkets are projected to experience stable or minimal changes in occupancy rates. However, Central Benton County might face supply side pressures leading to a 40-basis point drop in average occupancy. Nonetheless, given its status as the core submarket and the location of Walmart’s world headquarters, any downturn in occupancy here is anticipated to be temporary.
Northwest Arkansas enjoys a dynamic economy and a rapidly expanding population, prompting developers to add nearly 10,000 housing units in the past five years. This inventory growth closely aligns with the area’s population increase, particularly evident in Central Benton County, the location of Walmart’s global headquarters. This submarket has become a focal point for new apartment deliveries, with 2,171 units currently under development, poised to expand its inventory base by an impressive 13%.
Across Northwest Arkansas, there are approximately 3,050 units under development. The remaining 880 units are spread across other core submarkets, with Northeast Washington County and Fayetteville slated to receive 260 and 317 units, respectively. For detailed information on development activities in each submarket, please consult the accompanying development table.
Average Monthly Mortgage Payment
Average Monthly Rent
After reaching a high of 10% in 2022, rent growth in Northwest Arkansas is now stabilizing. The region saw a 1.4% annual rent increase in the final quarter of 2023, which, though notably lower than the peak, still exceeded the national average of 0.8%. Moving into 2024, rent growth is expected to pick up, particularly with a promising leasing season in the spring and summer, providing stronger pricing power for apartment operators and leading to a projected 4.2% year-over-year increase by the year’s end. The Class B segment is anticipated to show the strongest rent performance, less affected by the supply pressures impacting new, highly amenitized developments. Across the board, all nine submarkets in Northwest Arkansas are forecasted to see consistent and considerable rent growth, each surpassing 4.0% over the next 12 months.
| Submarket | Q4 2023 Stabilized Occupancy | Q4 2024 Stabilized Occupancy (f) | Annual Occupancy Change (2024/2023) | Q4 2023 Average Monthly Rent | Q4 2024 Average Monthly Rent (f) | Annual Rent Change (2024/2023) |
|---|---|---|---|---|---|---|
| Central Benton County | 92.8% | 92.4% | -0.4% | $1,164 | $1,210 | 4.0% |
| East Benton County | 97.7% | 97.6% | -0.2% | $1,616 | $1,701 | 5.2% |
| Fayetteville | 97.0% | 96.9% | -0.1% | $912 | $949 | 4.0% |
| McDonald County | 94.4% | 94.0% | -0.4% | $646 | $672 | 4.1% |
| Northeast Washington County | 95.8% | 95.6% | -0.2% | $1,004 | $1,044 | 4.0% |
| Southwest Benton County | 98.4% | 98.4% | -0.1% | $736 | $767 | 4.2% |
| Southwest Washington County | 95.8% | 95.6% | -0.3% | $1,358 | $1,415 | 4.2% |
| West Benton County | 97.2% | 97.0% | -0.1% | $672 | $700 | 4.2% |
| Market | 95.1% | 94.9% | -0.2% | $1,040 | $1,084 | 4.2% |
4Q 2023 Unit Inventory
Number of Units Under Construction
Number of Units UC Delivering
In the Next 4 Quarters
| Submarket | Unit Inventory: 4Q 2023 | Units Under Construction | % of Existing Inventory UC | % of Total UC | Units UC Delivering In the Next 4 Quarters |
|---|---|---|---|---|---|
| Central Benton County | 16,904 | 2,171 | 13% | 71.1% | 742 |
| East Benton County | 96 | 193 | 201% | 6.3% | 168 |
| Fayetteville | 14,587 | 317 | 2% | 10.4% | 210 |
| McDonald County | 98 | 0 | 0% | 0.0% | 0 |
| Northeast Washington County | 7,329 | 260 | 4% | 8.5% | 138 |
| Southwest Benton County | 966 | 112 | 12% | 3.7% | 111 |
| Southwest Washington County | 268 | 0 | 0% | 0.0% | 0 |
| West Benton County | 286 | 0 | 0% | 0.0% | 0 |
| Market | 40,534 | 3,053 | 7.5% | 100.0% | 1,369 |
Investment activity in Northwest Arkansas is experiencing a slowdown, primarily due to increased interest rates which have raised the cost of debt for acquisitions. Additionally, a significant bid-ask spread persists between buyers and sellers. The past year’s confirmed sales volume stood at $304.3 million, a decrease from the $397 million recorded in 2022. However, prospects for more stable interest rates in 2024 could help narrow this bid-ask gap. When combined with several other factors, such as the region’s booming economy and robust population growth, these conditions are expected to rekindle investor interest in Northwest Arkansas throughout the year.
*Most Active Buyers and Sellers are based on the sale volume of apartment units.
* Trailing 4Q average PPU
* Preliminary Data from Costar
P=Preliminary
| Sector | Employment Change 2023 to 2024 | Percent Change |
|---|---|---|
| Overall Employment | 4,600 | 1.5% |
| Manufacturing | 200 | 0.9% |
| Construction | 500 | 3.3% |
| Trade, Transport., & Utilities | 800 | 1.2% |
| Information | 0 | 0.0% |
| Financial Activities | 100 | 1.0% |
| Professional & Business Services | 1,000 | 1.7% |
| Education & Health Services | 1,000 | 2.6% |
| Government | 900 | 1.9% |
| Leisure & Hospitality | 800 | 2.9% |
| Other Services | 200 | 1.3% |
The economic outlook for Northwest Arkansas in 2024 is highly optimistic, buoyed by an anticipated 4,600 new job positions. The region’s growth trajectory is further reinforced by significant development projects. A key contributor is Mercy Northwest Arkansas, a leading healthcare institution, committing $500 million to expand its primary care and specialty services, a venture poised to generate hundreds of job opportunities. In addition, Tyson Foods’ $250 million relocation is set to deliver a substantial economic infusion to the area.
The most impactful project, however, is Walmart’s construction of its new world headquarters. This ambitious initiative involves developing a 350-acre, state-of-the-art campus for approximately 15,000 employees, a move designed to attract and retain top talent. Walmart employees are expected to transition to the new headquarters in 2025. These major investments, indicative of the region’s dynamic economic landscape, are poised to significantly boost demand and contribute to the continued vibrancy and expansion of Northwest Arkansas’s economy.
