$1,096 2Q 2024
1.5%
94.6% 2Q 2024
-70 BASIS POINTS
359 [YTD: 559]
132 [YTD: 635]
QUARTERLY DEMAND
QUARTERLY COMPLETIONS
The Northwest Arkansas multifamily market is witnessing a resurgence in rental demand. In 2Q 2024, renters absorbed 359 units, surpassing the 132 units delivered during the same period—marking the first time in eight quarters that absorption has outstripped new deliveries. Looking at the past 12 months, Central Benton County has been a hub of rental activity, with renters absorbing 552 units, accounting for 51% of the region’s total annual demand. Other submarkets that also demonstrated strong rental demand over the past year include Northeast Washington County with 217 units absorbed, Fayetteville with 177 units absorbed, and Southeast Benton County with 112 units absorbed.
As of 2Q 2024, there are approximately 3,100 units under construction in Northwest Arkansas, with the majority concentrated in Central Benton County, Fayetteville, and Northeast Washington County. Supply dynamics are expected to continue influencing local owners’ operations as developers maintain an elevated yet steady construction pace. Notably, construction starts in the first half of 2024 saw a modest increase from the same period the previous year, rising from 618 units to 723 units.
The gap between supply and demand in the Northwest Arkansas multifamily market is gradually closing, leading to occupancy rate stabilization. Although the average occupancy rate experienced a year-over-year dip of 70 basis points in the second quarter of 2024, there was a 20-basis point increase on a quarter-over-quarter basis as rental demand outpaced new deliveries during the period. Across Northwest Arkansas’s nine submarkets, all but West Benton County observed slight annual declines in their average occupancy rates. Central Benton County faced the most significant drop, with a 100-basis point annual decrease, largely due to a substantial influx of new units. Looking ahead, while new deliveries are projected to exceed rental demand for the entirety of 2024, the narrowing gap is expected to support the average occupancy rate in the vicinity of 94.5%.
Annual effective rent growth in Northwest Arkansas has picked up momentum, accelerating from a low of 0.8% in 1Q 2024 to 1.5% in 2Q 2024, while also outstripped the national average increase of 1.0%. Across the quality spectrum, mid-range properties are performing the best, with a notable annual rent growth rate of 2.1% in the most recent quarter. However, supply-side pressures are impacting the luxury segment, where growth was recorded at 1.1% over the past year. Across the nine submarkets of Northwest Arkansas, only East Benton County experienced a contraction in rents on an annual basis at 0.3%. In contrast, Southwest Benton County and Fayetteville stood out with impressive annual rental growth rates of 3.5% and 2.8%, respectively. Central Benton County, despite receiving the majority of new unit deliveries, saw a more modest annual increase of 0.8%.
Average Monthly Mortgage Payment
Average Monthly Rent
In the year ending June 2024, the total value of conventional multifamily transactions in Northwest Arkansas was approximately $198.1 million across 14 transactions. This marks a 54% decrease in dollar volume and a reduction of 15 transactions compared to the previous year. During this period, investors were most active in the Central Benton County submarket. This area encompasses the cities of Bentonville and Rogers and is home to Walmart’s world headquarters.
* Trailing 4Q average PPU
* Preliminary Data from Costar – Individual transaction $2.5M +
|
Under 35 Years
|
35 to 44 Years
|
45 to 54 Years
|
55 to 64 Years
|
65 to 74 Years
|
75 to 84 Years
|
85 Years & over
|
|---|---|---|---|---|---|---|
|
-0.8%
|
0.7%
|
0.3%
|
0.5%
|
0.2%
|
-0.1%
|
-0.1%
|
In the Northwest Arkansas metro area, the 35-44 age group is the fastest-growing renter demographic, exhibiting a 0.8% growth rate from 2019 to 2022. This trend indicates a rising demand for rental housing located near quality school districts and employment hubs, appealing particularly to young families and professionals.
The rental housing market in Northwest Arkansas continues to show resilience, driven by significant demographic growth in key submarkets and a steady development pace. Although occupancy rates have slightly declined due to increased housing supply, the construction of new apartments is being kept within manageable levels. The local economy is experiencing robust growth, fueled by the expansion of major corporations like Walmart, Tyson Foods, and J.B. Hunt, along with a growing ecosystem of suppliers and service providers related to Walmart. This expansion is reinforcing the region’s economic base. Looking ahead, the apartment market in Northwest Arkansas is well-positioned for a rebound, as the gap between rental demand and new supply narrows.
