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Thirty people a day are moving to Northwest Arkansas, yet headlines still warn of a frozen housing market and struggling offices. We sat down with Mervin, the economist behind the Skyline Report, to decode what’s actually happening in NWA and why fundamentals here keep bucking national trends. From population inflows and university-driven talent to low office vacancies and steady multifamily absorption, we lay out the signals investors should watch and the moves that make sense right now. We...
Thirty people a day are moving to Northwest Arkansas, yet headlines still warn of a frozen housing market and struggling offices. We sat down with Mervin, the economist behind the Skyline Report, to decode what’s actually happening in NWA and why fundamentals here keep bucking national trends. From population inflows and university-driven talent to low office vacancies and steady multifamily absorption, we lay out the signals investors should watch and the moves that make sense right now.
We start with the macro picture—rate cuts, data uncertainty from the government shutdown, tariff distortions, and the surprising twin engines of growth: the AI/data center boom and high‑income services spending. Then we zoom into the local market. Mortgage rates have reset expectations, but NWA’s price growth has moderated rather than reversed, and vacancies remain historically low. Office? Still tight, thanks to short commutes and a compact urban footprint that makes hybrid work viable without hours on the highway. Industrial and warehouse space stay in demand as e‑commerce logistics cluster close to consumers. Even retail is healthier than expected, especially in walkable downtown districts that keep attracting foot traffic.
The structural story is where the long‑term alpha lives. Smaller bedroom communities hit water and sewer limits, so near‑term growth must concentrate in the big cities with bonding capacity. That constraint is an opportunity: invest in infrastructure, build more mixed‑use nodes, and create multiple “mini‑cores” so people can live near work, food, and culture without starting every trip on I‑49. We compare NWA to fast‑growing peers like Austin and Raleigh, highlighting strengths in employment growth and emerging tech, and gaps in educational attainment and new business formation. The takeaway for investors is simple: prioritize areas with proven demand drivers, short commutes, and plans for new infrastructure; track population growth and vacancy rates; and look hard at infill near emerging cores where walkability and access command durable premiums.
Want more data‑driven insights on Northwest Arkansas real estate? Follow the show, share this episode with a colleague, and leave a quick review so others can find us. Got a question or a deal you want us to dissect? Send it our way—and join the conversation on Instagram, Facebook, and LinkedIn.
Northwest Arkansas's go-to show for real estate agents, brokers, and investors looking to zoom in on the local market. Join us as we sit down with the leading voices in the area to hear how they're investing in NWA.
Hosted by (in order from left to right) Brian Wagers, Zach Stanley, and Brandon Still.
SPEAKER_00: Welcome to Northwest
Arkansas Investing Podcast, your
go-to source for real estate
investing in Northwest Arkansas.
SPEAKER_02: With your seasoned
investor just starting out, we
bring you expert insights,
market trends, and practical
strategies to help you build
wealth through real estate.
SPEAKER_04: From buying and
selling to property management
and long-term investment
planning, we cover it all so you
can make smart, informed
decisions in this fast growing
market.
Let's dive in.
All right.
Welcome back to Northwest
Arkansas Investing Podcast.
I'm here with my co-host, Brian,
and uh we've got we've got an
awesome guest today that we're
excited to have on.
Um, you know, to talk through
one of our favorite episodes
that we've done recently was
kind of talk through last uh
Skyline report that that
dropped, and just talk through a
lot of the data and and what it
looked like for Northwest
Arkansas compared to the rest of
the country and and uh
macroeconomics, and then a
little bit more into the
microeconomic space and just how
resilient Northwest Arkansas is
and uh you know a lot of the
drivers that we have going for
it.
And so the guy that really leads
the charge there, um Mervin,
we're we're super excited to
have you.
So thanks again for coming with
us.
Happy to do it, yeah.
So, but yeah, we we are uh you
know, we've Brian and I both
attended the uh the sky Rvest
Skyline report.
So if you haven't had a chance,
listeners get out to the Skyline
report and listen to to Mervin
chat through that, you know, all
of this data.
But we want to get a little bit
into uh into the weeds here.
But first, Mervin, tell us a
little bit about you and and
kind of how you gotta get got
into the space that you're in.
SPEAKER_01: Uh completely by
accident.
Uh and uh so uh obviously I went
to the University of Arkansas.
I graduated, uh, I was looking
for a job, and I ended up at the
center that I now run.
And uh started out as a lowly
research assistant.
Uh, pretty close to the infancy
of the Scotland report.
So the Scotland Report started
in 2004.
I started the center in 2007.
Um, so I've been around for the
uh sort of joy ride that is
Northwest, Arkansas, in terms of
the growth and changes that
we've seen here in Northwest,
Arkansas, and uh uh sort of the
change in the story in
Northwest, Arkansas as well.
So 2007, this is you know a year
before everybody figured out the
world is ending.
Uh, oversupply of housing to
where we are today is a serious
undersupply of housing in
Northwest, Arkansas.
So um, I can say I've seen both
sides of it.
unknown: Yeah.
SPEAKER_04: Good, bad, and the
other.
Well, it's time to get into it
too, honestly, with uh going
right into that.
I'd I'd be curious to see what
those skyline reports look like
to personal.
Yeah, 100%.
Yeah.
So no, I think when uh when
people think of Northwest
Arkansas, though, obviously they
think about the Giants, the
Walmart, the Tyson, um, the big
movers here, JB Hunt.
Um, but I I think you know, one
thing I I would love to, you
know, get your thoughts on and
and to chat through a little
bit, which is obviously part of
part two of uh the skyline
report in general, but um, you
know, just the University of
Arkansas and and how big of a
driver that has been for the
area.
You know, if you look at the
news, enroll makes at all-time
highs, seems like every year
now.
Um But yeah, how how do you see
that kind of play a part in
what's happening in Northwest
Arkansas when you look at the
rest of the country and the
universities in, you know,
different cities around the
country?
SPEAKER_01: Yeah, I mean, I
think that's you know, part of
the story of Northwest Arkansas
in that sense, that you see the
growth in all the other
industries as well, and you see
the growth at the University of
Arkansas as well.
So uh just like the region as a
whole has grown in population,
the university's enrollment
continues to go up, as you'd
mentioned.
Um, and that's because the
university is a bigger draw to
students, not just from Arkansas
anymore, and is a draw to
students from other places in
neighboring states and sometimes
states very far away.
Uh, they're attracted to what
this region has to offer.
So, you know, they were in this
region 20 years ago, they may
not have chosen to uh go to
school in Fayetteville, but now
the region as a whole has
amenities like many big markets,
and so it is not um, you know, a
college town in the sense that
you have college towns in other
places where you have the
university, it's the college
town, and there's nothing around
it.
Um, so a lot of our competitors'
schools and other places are not
in big metro areas, and so this
offers attraction in that sense
that you have the feel of a
college town.
So that part of it still feels
like a college town.
But if you leave the college
town and you have all kinds of
great amenities, but importantly
also jobs in a very strong
economy in that region.
So um you get best of both
worlds.
You get to live sort of a
college town, but at the same
time in a major metro area as
well.
SPEAKER_04: Yeah, absolutely.
I love that.
And I think, I mean, obviously,
the uh best place to live in the
SEC and all all those kind of
rankings continue to come.
Is that a thing?
I didn't, yeah.
Or it was either SEC or college
in general.
It's there's like a top five,
top ten list out there.
SPEAKER_01: Best team in the
SEC.
SPEAKER_04: Definitely does not
say the best team in the SEC.
We've been struggling on that
front.
Uh, but yeah, I think I think
it's an interesting uh factor,
just in general.
And and uh one thing I'm curious
about, you may not know the
answer to this, but when I was
going to school at the U of A,
uh in-state tuition for people
coming out of Texas, I heard
that's gone away.
Do you have any idea on that?
SPEAKER_01: This is kind of off
topic, but just curious if so
it's not just Texas, but most of
our border states and then some
other states as well.
So, you know, we have reciprocal
agreements sometimes, but uh
often it's just a way to attract
students.
So you know, we don't charge
in-state tuition if they have a
certain amount of GPA and ACT
score.
So it's not just anybody, but so
we're attracting the best
students from these places.
So the higher your ACT score is,
uh, the more likely you're to
get a discount on the
out-of-state tuition uh thing.
So I think you still pay maybe
10%, even if you have some of
the highest scores, but you can
work your way up based on your
score.
So it's just a way to attract
people to Northwest Arkansas
that you know you don't want
them to not come here because
the cost is really high.
SPEAKER_04: Yeah.
And I was curious too, just with
how enrollments continue to go
up, if that's changed or if or
if uh that's kind of continued.
SPEAKER_01: Um, so I mean, so
that that's a uh levers at the
university can adjust fairly
easily to increase or decrease
enrollment.
So obviously, you know, with the
growth that we've had in the
last several years, there's some
infrastructure issues uh in
Northwest, Arkansas and on
campus as well.
So you can make it harder for
out-of-state students to get
here, you can make it easier for
out-of-state students to get
here.
Uh, but at the end of the day,
you know, you might have heard
this concept called the
enrollment cliff, which is to
say that there was that
recession we referenced in 2007
to 2009.
As a result of the recession,
people had fewer kids, uh, which
means fewer 18-year-olds in
general, uh, which means the
pipeline to college, uh,
pipeline of students coming to
college uh is decreasing
nationwide, but that hasn't
affected big state schools like
the University of Arkansas
because we're offering some
attractive uh opportunities, and
we're attracting students from
other places as well.
So uh students from Texas,
students from Missouri, students
from Oklahoma, Louisiana,
wherever else that are coming to
North to Sharpensite now.
That makes sense.
SPEAKER_04: No, I think I think
we'll get back back to more of
what's happening with you know
the university, everything like
that.
But I think we want to get a
good look uh about what's
happening macro-wise, uh, the
United States economy and and
even globally, what that's kind
of looking like right now.
Obviously, there's been a ton of
change over the last year and
things like that.
And so would love to get just
kind of some high-level, a
high-level view of kind of how
you're seeing it.
Obviously, a lot of the topic of
conversation for real estate
investors is the Fed and their
decision making and you know how
that changes the outlook for
them as far as uh you know,
rates and and things like that.
And so, you know, give us a a
little bit of a high-level view
on you know GDP, inflation,
obviously, you know, the Fed and
what they've been doing lately.
How are you seeing right now and
and uh what's changed over the
last six months?
SPEAKER_01: Yeah.
So I mean, we're recording this
in the middle of a government
shutdown.
So like the data that we have uh
pretty much just goes to the end
of August and you know, a little
bit of September data.
We don't have a lot of you know
up-to-date data, uh, which is a
challenge for not just anybody
uh measuring what's going on in
the economy, but especially for
the Fed, um, who need uh this
data to be updated on a regular
basis to be able to make a
decision.
So uh you saw a rate cut uh last
week.
Uh, you know, there is one more
meeting for this year, and uh,
you know, there's some prospects
for what the rate cut might be
at that meeting.
That's entirely dependent on
what the economy is doing.
And right now, the Federal
Reserve, if they go into that
meeting without any data, would
be making a decision in the
blind, which you don't want to
do.
And so um, you know, what we
know about the economy so far in
the first half of the year is
that it's slower than it was in
the previous years.
Um, and that has large, uh
largely to do with the change in
policy as it relates to tariffs
uh and things of that nature.
So that's created a lot of
distortion in the economy.
Um, it's increased prices for
some businesses.
Uh, so the sectors of the
economy that are doing well at
this point are you and I going
out and spending money on doing
things.
So that would be going to movie
theaters, going to restaurants
and bars, and uh buying concert
tickets and getting on planes,
going on vacations, going to
hotels, all of these other
things that are service sector
parts.
That part of the economy seems
to be doing fine because people
with means are still spending
lots of money on these things.
And then uh the other part of
the economy that's doing fine is
a technically a very small part
of the economy, but has an
outsized contribution to
economic growth in the first
half of this year, and that's
the AI boom.
Um, so the investment in data
centers and chips and all of
that stuff, uh, you know,
provided as much of an economic
contribution in the first half
of this year as you and I going
on spending money on concerts
and plane tickets and hotels and
restaurants and bars and
everything else.
So that's how much that sector
has done.
So that sector is not um that
does not have any tariffs right
now.
Uh so obviously there's a lot of
imports of chips and those types
of things, and a lot of new data
centers being built uh across
the country here in Arkansas as
well, fueling that boom.
Uh but it is certainly a boom.
Uh, you know, people have made a
lot of uh comparisons to the
dot-com bust and all of these
things.
And there's certainly on the
equity side, anyway, some
concern about whether these few
companies that are investing all
of this money are going to make
all their money back or not.
It's I think it's fair to say
that data centers, the
investment in data centers are
going to be worthwhile
investments.
Whether this rush of equities
coming into a and the equity
valuations based on that, I
don't know.
Uh that has some frothiness to
it.
Uh, but the investment in AI is
a long-term we expect long-term
growth from that.
So that's not the issue.
So those are the two sectors
doing really well right now.
AI boom.
People with high incomes
spending money.
SPEAKER_04: That makes sense.
It seems like just looking in
the news and and uh if you're
you know, if you're paying
attention to what's happening in
the housing sector for for
instance, I know there's there's
other sectors obviously that are
probably not doing well either,
but you know, you see headlines
like you know, slowest housing
market since the 19 whatever,
you know, 1960s or whatever.
Uh I don't quote me on that,
obviously.
But uh what are you what have
you seen um, you know,
nationally when it comes to the
housing sector as of the last
six, twelve months?
SPEAKER_01: Yeah, you sort of
have this weird squeeze in the
housing market where sellers are
not willing to sell and buyers
not willing to buy uh for
related reasons.
The mortgage rate is uh higher
than it has been a decade and a
half at this point.
So I know a six percent mortgage
rate for most people um, you
know, that are not millennials
uh or younger seems quite,
right?
A six percent mortgage rate was
normal, great.
Uh, but for almost the entire
adult life of millennials and
then uh you know the older Gen
Zers, the mortgage rate has
always been, you know, under 5%.
Four and a half was a bad
mortgage rate in the 2010s.
Right.
So uh that's when most
millennials came of age when
thinking about buying houses.
So the entire time they were
buying houses, mortgage rates
are like at worst four and a
half uh percent or something,
and now it's six, six and a half
percent.
So that feels weird to people,
and then a lot of people bought
homes during the pandemic, and
then mortgage rates were like
three, three and a half percent.
Those rates are probably never
coming back unless there's a
huge crisis housing sector,
which we don't foresee at this
point.
So, you know, the the those
people are not willing to sell
their houses because they don't
want to pay so much more for a
mortgage, and then home prices
traditionally go down when
mortgage prices go up.
But that hasn't happened because
we're working on a decade and a
half worth of a shortage in
housing in this country at this
point.
So home prices haven't come down
either.
So uh so you have this weird
squeeze where sellers are not
selling their homes, buyers are
not willing to buy at these high
prices and high mortgage rates
uh is lower inventory uh on
average.
But that's a national picture,
not necessarily because you're
here in Northwest Arkansas.
SPEAKER_04: Right.
And and yeah, I think that's
been really the story is just
how resilient Northwest Arkansas
has been when it comes to the
housing market.
And so I know, you know, you'll
see also headlines out there,
Austin, Texas, Dallas, Texas,
Florida, especially, um, and
some other spots are seeing 20%
cuts, 30% cuts.
Although inventory in Northwest
Arkansas, residential-wise,
we're talking is up, you know.
I think active inventory is up
around 30% or maybe more to
where we were last year.
Uh, I don't think we're still
caught up to what would be
considered a healthy supply of
of inventory.
So it's certainly not.
Yeah.
And so I guess I guess that
would be what you're saying for
the audience.
Um, what is, you know, our the
fact that we don't still don't
have enough inventory is and but
we have the migration of people
is what's kind of causing that
that yeah.
SPEAKER_01: I mean, so our home
prices are not going up in
double digits anymore.
Um, and so the increase in home
prices is still increasing, it's
still going down.
Um, so the increase in home
prices slowed to you know mid
single digits, high single
digits.
Uh, and then rent rent increases
were going up in double digits
as well.
That has slowed a little bit.
So the vacancy rate has gone up
from you know nothing to three
percent for this market.
So again, nothing crazy, but
like, okay, well, it was close
to zero and now it's three.
Is that too high?
And that's still an extremely
low vacancy rate for this
market.
But you know, you know, most
people listening to this
probably on the investing side.
Most people that are outside of
this are on the buying side, and
you know, lower rents and lower
prices are great for the market
because there are more buyers
than sellers in general.
Absolutely.
Um, and so there'll be a lot
more customers at a lower price
than there are today.
SPEAKER_04: Yeah, that makes
sense.
So just wrapping up too on on a
little bit of the national
economic outlook.
Uh, what are you seeing as the
biggest drivers the other way
negatively on the economy right
now?
Obviously, we talked a little
bit about the housing sector,
but tariffs, obviously, which
we'll get into.
SPEAKER_03: But I had a question
too.
On on re we talked about some of
the different sectors, but re
regions and the some regions in
the country, you know, people
are feeling like they're in a
recession.
You know, here we don't we feel
like we're still thriving, maybe
a little bit of kickback.
But, you know, I'm interested in
your take on, you know,
regionally, like why some
regions might be feeling like
they're in recessions.
SPEAKER_01: Yeah.
I mean, so basically at this
point, the economy in terms of
economic growth is consumer
services.
Um, so if you have a good mix of
consumer services, you're doing
okay.
Uh, but anybody that's relying
on other sectors of the economy,
especially manufacturing, which
counterintuitively we have all
these high tariffs in the
manufacturing sector has seen
job losses, closures, and so on
and so forth, because the import
prices have gone up
significantly uh in those
sectors.
So outside of AI and consumer
services, the other sector that
has done well has been
healthcare.
Um, so we've added a lot of
healthcare jobs just because we
have an aging population.
Uh, some places like here, we
have a growing population, so
you need a lot more healthcare
services.
Uh, but that is a sector we
don't expect to continue to grow
uh into the future because who
pays the healthcare sector is
starting to pull back.
So the federal government, uh,
as far as their uh HR one that
they passed recently uh reduced
the amount of payments going
into healthcare so the hospitals
won't get paid as much as they
did in previous years.
Uh insurance companies, we've
all seen in the news, have been
struggling in the last few
years, not making, you know,
that sounds crazy uh for how
much we pay in health insurance
premiums, but the health
insurance companies are not
making a lot of money.
So then they've been cut back
payments to hospitals too.
So the one sector that has been
uh a lot in terms of employment
uh nationally, we expect
slowdown in that sector uh in
the upcoming years.
So the drawbacks are, you know,
many fold in that sense that we
have tariffs, and it's not just
the tariffs, but it's the
uncertainty around them.
That's uh, you know, it's stuck
forever at a certain percent.
That's almost easier to deal
with, even if it's a high
number, because you know what
it's gonna be and you can make
some decisions.
But everybody at this point is
basically waiting to see what
happens.
And I think that is the larger
problem with the economy, is too
many people just sitting on the
sidelines thinking, well, I
don't know if it's gonna be
higher or lower.
I don't know if I should go or
if I should hold.
And I think that is the uh and
the too many people waiting on
the sidelines is how you get
into problems quickly.
SPEAKER_04: So it seems like uh
another stat that I saw recently
was that maybe we're at the the
highest amount in saving uh
savings, I guess, or in high
yield savings or something like
that ever.
I don't know if you see have you
seen a stat like that before?
Um I mean I think the personal
savings rate is maybe not that
high anymore.
Right, yeah, yeah.
But uh money markets maybe and
stuff like that.
SPEAKER_03: And I think that
just tells you people don't know
what to do with their money.
It's right.
Wait so much uncertainty.
I think it's interesting that
how NWA is so different from the
rest of the country.
Like you mentioned the
healthcare industry pulling
back, but here we are in you
know, huge facilities and like
expanding our medical residence
in NWA.
You know, why do you think NWA
stands out from the rest of the
region on that?
SPEAKER_01: So these are
investments based on like past
growth, right?
So and so we still have
population growth.
And so we don't have as much of
an aging population.
We do have something of an aging
population, but a lot of people
here are younger, and the
meeting age here in Northwest
Arkansas is younger, so you
don't have a lot of healthcare
services from that perspective.
But more people is just more
healthcare.
I mean, people have children,
children need healthcare
regularly.
Um, and also just, you know,
most of us need four eyes to
look at things these days.
So you need to go to the doctor
once a year to get your eyes
checked, go to the dentist twice
a year to get your teeth
cleaned.
That's just more services um
because of a growing population.
Um but that's not they're not
immune necessarily from the
bigger changes.
In the health insurance up here.
So fewer people carry health
insurance into the future.
And that's going to affect our
hospitals too.
And then the state payment
changes that are going through,
and then federal payment changes
are going through, that will
affect the hospitals here as
well.
But to make any of these
investments takes forever.
You make a decision you want to
get an investment that actually
build the thing takes forever.
It's not.
We don't build things fast in
this country, which is a
different picture that we should
talk about at some point.
That's, you know, the investment
we're seeing were to were meant
to deal with growth that had
already happened.
SPEAKER_04: Yeah.
It seems it seems like what
you're saying is, I mean,
population growth is really the
driver of a lot of what's
happening in Northwest Arkansas.
How do you uh this may not be
something that you've studied or
is part of the study that you
do, but how do we stack up when
you look at other areas that are
having really solid migration as
well?
And you know, what what are
some, I guess, indicators or
things that we do better or
maybe even do worse than, you
know, I think about like a
Charlotte, maybe, or a
Huntsville, Alabama, places that
you think about or have heard
that are having similar growth
or might be comparable to
Northwest Arkansas.
SPEAKER_01: Yeah, so we do this
report once a year with the
Northwest Arkansas Council.
Um, and it's called the State of
the Region report.
And so it basically compares
Northwest Arkansas to other
regions, and we were comparing
ourselves to places like
Huntsville, Alabama.
Uh places that are more like us
in that sense.
Uh, and we realized we were
always doing better than them by
most metrics.
So then we decided we don't want
to just, you know, pat ourselves
on the back.
Say, oh, look how great we are.
So now we compare ourselves to
really fast-growing regions, uh,
and regions that are often, you
know, double our size or much
bigger than us, uh, more than
double our size.
So we're comparing ourselves now
to Austin, Texas, and Madison,
Wisconsin, and Genoine, Iowa,
and uh Raleigh and Durham, and
and uh Prolow uh in Utah.
And so these places are all
larger than us, they're all
growing faster than us.
And, you know, so we don't
compare as well those regions.
Uh so we do have some areas
where we do well.
Our unemployment rate is lower
than most of those regions.
Our employment growth rate is
faster than most of those
regions, uh, but we don't grow
as many new businesses as those
regions.
And that is probably because we
have a lot of people working at
corporations.
And the nice thing about working
at corporations is that uh we've
talked so much about healthcare,
is that they provide decent
health insurance, uh, other
benefits as well.
So it's harder for people to
leave corporate jobs and go to
entrepreneurship because you'd
be giving up quite a bit of
safety net uh doing that.
So we don't do well in that
regard.
Uh, but in other places like
high-tech jobs, we don't have as
many high-tech jobs as these
places, uh, but we're growing
them faster than these places.
So we're adding quite a few of
those.
And so those are sectors we're
doing well in.
And our overall educational
attainment, since we've talked
about the university, is lower
than these places.
So our peer regions, those ones
that I mentioned, uh, on
average, they have half their
population, has a bachelor's
degree or higher.
Uh, ours is at 38% right now.
So we're doing well, a lot
better than the state, a lot
better than the nation as a
whole, but not as good as those
peer regions.
So then that means our incomes
are lower than those peer
regions as well.
The one metric we're doing
better than them, which we
shouldn't be, is our home prices
are growing faster than those
places.
Yeah.
So Austin and you know, probe
are technically more expensive
than us.
Uh but in terms of growth rates,
we're doing so much that we're
starting to catch up with their
high uh home prices as well.
So we have a pretty good way of
looking at these metrics against
these places.
Uh and those places are doing
things right, which is why we
want to uh measure ourselves
against them.
Places like Austin have built so
much housing in the last few
years that their rents have come
down significantly.
Um that they had people leaving
Austin to move to Northwest
Arkansas because things were
getting so expensive in Austin,
and now their rents are going
down significantly, that they're
getting people going back to
Austin because um, you know,
Austin's becoming more
affordable.
SPEAKER_03: Yeah, the Austin
story is that you know, it's
similar, like I mean, there are
some similarities of how fast
they grew and then how you know
they had this kind of drawback
like the past couple of years of
this rent rent and sale prices.
Do you see that happening in NWA
or are we more in front of it
than Austin was?
SPEAKER_01: Or so in terms of
like building scale, like how
much Austin built in the last
few years, we we could not even
close to building that, like
percentage-wise.
Yeah.
Um so you know, it looks like if
you drive around a region,
there's a lot of construction of
apartments, uh, but it pales in
comparison to what Austin did in
the last few years.
So we're not putting that much
inventory in the market all at
once.
And they did.
Um, so you know, from an
investor perspective, not great.
But like for Austin, the city,
and so the economy of that
region, that's great.
Because I don't know, it's like,
hey, our cost of living is lower
now.
There were years when North
Arkansas was doing better than
Austin in some of those metrics,
like best places to live and
something.
A lot of that is entirely driven
by cost of living, right?
So you get a lower cost of
living, you get a much higher
ranking on those metrics.
And so we'll be like, oh, we're
better than Austin, largely
because our cost of living was
lower.
That's the one thing they fixed,
whether they intended to or not,
that they finished at least in
the short run.
SPEAKER_04: So yeah.
How do we stack up?
I'm I'm just curious on this
too, um, comparatively when it
comes to, you know, I it feels
like maybe there's a pretty big
gap between where the median
price for us is or maybe where
it's headed compared to even
like where our median or our
average rent is compared to
these these other big cities.
It seems like just thinking
about in Austin, for instance,
their median price is probably
well well above ours.
Their average rent is probably
also well above ours.
Their gaps to me would seem like
it might be closer than uh, you
know, than what ours seems to be
like.
It seems like our average rent
is still pretty low uh
comparatively.
SPEAKER_01: Would you say that's
correct, or would you say our
average rent is uh, you know,
has come up to a point where for
our multifamily market, uh, you
know, I know we slap the name
luxury on a lot of developments,
but it's not like compared to
what's in Austin.
There's some big cities, it's
not really luxury developments
in that sense.
So it's just an apartment
complex.
Right.
So what we're building for this
market is different than what
you get in other markets.
So like in Austin, your rents
are higher in downtown cores in
Austin because you can do a lot
of things in the downtown cores
of Austin without ever touching
your car.
Uh so that justifies a higher
rent.
And North South Arkansas is not
like that.
So we do have some downtowns,
you can do some things without
using your car, but by and
large, almost everybody has to
get in a car to get to work.
And that's not true in some of
those places.
Those places can charge higher
rents because you don't have
transportation costs.
And we have this is another
metric that we look in this
report.
Um we measure not just housing
costs, but housing and
transportation costs.
And North of Charlotte actually
has one of the highest housing
and transportation costs
compared to our peer regions,
which sounds crazy because
you're comparing to Austin and
Provo and these places.
But because so many people there
don't have to use transportation
for as many things, uh, or cars
for as many things, they have
lower transportation costs.
So uh what you're building here,
you know, often see it might
have nice amenities in the
place, but um it's not you know
downtown living.
We do have some.
Downtown Benville, downtown
Fayville, uh a little bit of
stuff going down into Rogers and
Springdale as well.
But most, the bulk of the
apartments that we've built are
basically, you know, almost
suburban developments, core city
developments, which is why you
don't get those prices.
So stuff in downtown Benville,
high price rents.
You might maybe not quite
downtown Austin, but high enough
to compare.
But the rest of the apartments
are basically suburban
apartments, there's no amenities
around them.
Somebody might have built a
sidewalk, but the sidewalk heads
to a main road that nothing's
on.
You can walk to a gas station,
maybe, right?
Um, or the apartments right
right on the highway.
Right.
It's not a great amenity to be
down the highway.
It's like you open your balcony,
you're breathing fumes and
getting car noise.
Um, or you're overlooking, you
know, commercial development
parking lots or large retailers.
Yeah, right.
I mean, so that's not the
apartment that you're living in
downtown Austin, uh, where
you're looking at a downtown
core, a lot of activity and
things of that nature.
Got it.
SPEAKER_03: That that makes a
ton of sense.
The walkability is so is like
such a buzzword, walkability,
but it's really hard to have
walkability like in some of the,
you know, there Bentonville, I
can think of, you know, the
Howard, which is, you know,
walkable, but I don't know any
other apartment that's truly,
you know, walkable to the
square, walkable to your job, or
where you can have a, you know,
we're not building very high in
northwest Arkansas compared to
And so, yeah, like I mean, uh
it's hard to call.
SPEAKER_01: I mean, like the
apartments are going in
Mentville and Springdale and
Rogers and Fayetteville, and
they're not suburbs, they're
cities, but they're suburban
type development.
They're not what you would
consider downtown apartment
building, right?
Most of these places.
Fayetteville has a lot more
because it's right by campus and
the student housing.
Uh but not seeing a significant.
SPEAKER_03: It's cool to see
what downtown Springdale, like
uh it's kind of become, you
know, the big Emma via Emma,
some of those projects on Emma
are truly becoming walkable,
which is surprising, you know,
Springdale, you wouldn't have
thought that five years ago that
you would have a walkable cool
area.
SPEAKER_04: Yeah, I think I
think the interesting question
too is you know, what absorption
rate will look like for uh a lot
of those downtown areas in
Northwest Arkansas, just with,
you know, it it seems like now
ease of access to 49 is gonna
continue to be a premium and
what people really want.
Uh, but I'll be curious to see
how that continues to, you know,
potentially shift to be able to
walk to dinner, walk to, you
know, things to do, downtown
Springdale, downtown Bidonville,
things like that, and just how
the cities too are adopting
those projects, I think is
really interesting.
SPEAKER_01: So and then getting
enough people to where, you
know, importantly, most of the
commute is to work back.
Um, you know, there's a recent
report that uh the Regional
Planning Commission did looking
at bus rapid transit, right?
And so you could end up with a
situation where it's a lot
easier to get to work if you're
not driving yourself on I-49.
You could do any number of
things, listen to a podcast, pay
attention to a podcast at the
road.
These days people seem to be
paying attention to the podcast
more than the road, but yeah,
it's a different problem.
But um there are ways around
that where you could get more
downtown living and a commute to
work that is less painful than
what we have right now.
Because uh, people do value the
ability to get on the highway
really quickly, but then they're
not willing to pay for the
apartment because that is not
considered like being next to
I-49 is never going to be cool.
SPEAKER_04: Yeah.
Absolutely.
So just thinking about the state
of the region report that you
mentioned, I know Northwest
Arkansas Council, and then is it
the U University of Arkansas as
well that partners together for
the Yeah, so the Northwest
Arkansas Council, which
obviously is the regional
chamber made of the largest
companies here in Northwest
Arkansas, and then the
University of Arkansas has
partnered on this report since
2011.
SPEAKER_01: Basically, when the
council came up with long-term
development plans uh or economic
growth plans for the region as a
whole, um, we decided that it's
probably good to measure how
we're doing.
SPEAKER_04: So just I I think
thinking about that with each of
those metrics that you all track
on there, what do you feel like
is the area's biggest priority
on that list?
I mean, what are some of the
biggest priorities?
I know you mentioned median
income is part of that.
Um, you know, you you mentioned
a few others, but what what do
you feel like is leadership in
Northwest Arkansas their biggest
priority when it comes to I know
they would say all of them are
their biggest priority, but to
you, what are what are their
biggest priority and what what
are going to be real good
drivers for Northwest Arkansas
long term?
SPEAKER_01: I mean, I think so
everything sort of falls in this
large bucket of supporting
growth.
Um, so whatever we're doing, we
want to continue to support the
growth that we've had in
Northwest Arkansas.
And that means that, you know,
for the companies that are
already here providing a
pipeline of talent, so bringing
in people, uh, like I said, just
people moving into North
Arkansas have had higher
educational attainment, and
that's raised incomes here in
North of Arkansas as well.
So bringing in those people to
Northwest Arkansas, continuing
to make this a place that those
people want to come to.
Uh, and that is, you know,
because it's an investment in
all kinds of amenities for what
people want to do with their
free time, uh, but also, you
know, making sure that housing
does not run ahead of what
people's incomes are, which for
a while there in the 2020, 2021,
home prices skyrocketed when
incomes are not going up nearly
uh as much as they are.
So uh making sure that that
remains affordable is a huge
component.
Um then also growing new
businesses.
So we have a lot of businesses.
Uh we have three Fortune 500
companies with the University of
Arkansas, we have all the
companies, major companies that
work with these three big
companies, then all the
companies that work with all the
companies that work with the
three big companies, uh, and so
on.
Uh, but we also want to grow new
businesses here in North of
Sharkensau.
So we've had Walmart, we've had
Tyson, we've had JB Hunt, uh,
you know, we've had some other
successes uh from startups, but
we want new startups, we want
the new big Fortune 500 company
to be built uh here in North of
Sharkensau.
And that is an area, as I
mentioned, that we struggle with
because we can't get people to
leave.
Uh there are safe corporate jobs
uh with nice benefits and things
like that to take a chance, you
know, go with that health
insurance and uh vacations and
all of that for a year or two
years and build a new company,
right?
So it's a little easier in some
of these other places where you
don't have as many uh good
corporate jobs for the size of
the area, um, and we do.
So uh that's a little harder.
Uh, but we are working on that.
We have a lot of different
entrepreneurship programs at uh
all of our schools here in North
Rush, Arkansas.
A couple of good VC programs
combining the talent in Tulsa
and Northwest, Arkansas, so you
have a larger region and larger
pool uh projects that VCs might
want to look at.
So uh there's a lot of effort
gone into it.
You know, the results will come.
We have yet to see the
significant results from that,
but they'll come.
SPEAKER_03: Yeah.
By VC, Melissa, he's talking
about venture capital.
And I definitely have seen that
a growing area in NWA.
I think that's super important.
As we mentioned, the golden
handcuffs is what I call it, you
know, the the corporate mail of
all the benefits, and you're
making above median income.
So it's hard to take that jump.
But uh, it's interesting to see
the amount of money pour into
the venture capital space and
get incubate, you know, the
startup junkie.
There's what the University of
Arkansas does, and then uh a
couple other groups.
SPEAKER_01: So I mean people
want to do these things, but you
know, gold panicas are uh but so
during the pandemic when the
federal government was just
handing out money just freely,
uh the average Arkansas family
could have gotten something like
$14,000 from all these different
programs, right?
So we saw a huge increase in
business growth, people starting
new businesses at that time.
Because there was this large sum
of money just given to them.
In time, I assume, right?
Yeah.
And then you're like, oh, maybe
I can take a risk of anyway
because I have this pool of
money sitting around.
Uh but you know, so that helps
people get out of the old golden
handcuffs.
But outside of that, it's kind
of really hard to convince
people to give up something safe
and start something risky.
That makes sense.
SPEAKER_04: I think I think uh
one one thing you mentioned in
there was just talking about uh
the University of Arkansas and
how kind of how that has an
effect on our population growth
and things like that, um, median
income as well, and how that
continues to rise.
Well, how do you see us stack up
with other uh big college areas?
You know, again, we keep
mentioning Austin, but Austin
obviously has the University of
Texas at Austin.
How do we uh retain, how well do
we retain students that graduate
from the University of Arkansas
compared to, I guess, other
cities like that?
SPEAKER_01: Yeah, I mean, we do
retain, you know, a good chunk
of students.
So obviously, if they're coming
from all of these different
places, factor of the matter
remains that most people are
reverse to moving, which sounds
weird to people who are
Australia because there are a
lot of people here that move
from other places.
But these places are rather
anomalous in that sense, because
like 90% of people, uh, the most
they ever move was for college.
And then that's it.
So they go to college and then
go back home.
Um, so you know, it is
unreasonable to expect us to
keep a large chunk of people
that came here from other places
because they came here from
home.
They went to college, that was
the time they left home, and
they're gonna go back home.
Um, there's a grade stat, I
think it's like 90% of the
country lives within three hours
of their mother or something
like that, you know.
So it's people don't like to
move.
Yeah.
It makes sense.
Uh so you know, we do keep uh
some people here.
Uh, but even if they leave, uh,
you know, come to college, they
go back home, they do whatever.
This at least is now a place
that's on their radar because
they enjoy their time here.
And unlike other college towns,
there are other things here.
So, you know, pick on college
station, uh, Texas AM.
Good school.
Not a great place in general,
for what I've been told, I've
never been.
Um, or you know, love of Texas,
so places like Miami of Ohio,
Miami of Ohio.
SPEAKER_03: Yeah, like the
Oxford, Ohio, uh, Athens, Ohio.
SPEAKER_01: There's a bunch of
that's all it is.
Yeah.
I mean, so it's a great place
when you're in college, but not
a whole lot of things outside.
So, like UT Austin, you know,
you're in college, but you're
also in this great town.
I think that is something that
people enjoy about here.
So even if they leave and go
back, uh, they might come back
for a job opportunity uh a few
years down the line.
Um, you know, wherever the
whatever they call home is they
might move here uh afterwards.
But again, you have to remember
that the people that move are
different lion artist than
people that don't move, and
people that don't move are the
norm.
So how do you couldn't keep
everybody that went to college
here?
SPEAKER_03: How do you see the
with all this population?
How do you see our region
expanding outside, you know, on
our on the Skyline report, we
have Fayeville, Bentonville,
Rogers, Springdale, and Silem
Springs.
Do you see you ever see another,
you know, Sylem Springs kind of
on the outskirts?
Yeah.
I I asked Jeff when he said you
guys used to do uh Fort Smith,
but that's obvious it's not NWA,
but that's a separate topic.
Do you ever see like a a
Farmington or a Pea Ridge or a
Prairie Grove?
SPEAKER_01: I think so you were
seeing so much growth in some of
these small communities that you
might have thought that we would
have gotten to you know much
larger populations.
Center, but they've all hit the
same problem through water and
sewer infrastructures.
As it turns out, you can only
build as many homes as you can
flush toilets.
And once you hit the limit of
how many toilets can be flushed
at once, that's it.
You can't build any more homes.
So, you know, that is a growth
challenge for the region because
like in the last decade and a
half, most of our population
growth has happened in the
smaller communities.
So it hasn't happened.
So yes, the big five cities have
grown, the big four cities in
particular have grown a lot, but
a lot of the growth has been
taken up by the smaller
communities that are not in this
I-49 corridor.
Um, and they've all at the same
time hit infrastructure issues.
And the issue they have is that
they do not have the taxing
capacity to build new
infrastructure.
Um, so these are all largely
bedroom communities.
They might have small grocery
store or gas station, fast food
restaurant or something, but not
enough of a sales tax base to
build new water in through
infrastructure.
So the only places that have
that infrastructure or that
bonding capacity of the big four
cities, larger, you know, we
include Silent Springs as well.
But they don't have the same uh
infrastructure crunch as the big
four cities and the smaller
cities.
So necessarily over the next
decade and a half, our
population has to grow in the
bigger cities because that's who
has bonding infrastructure or
bonding capacity to build new
water and sewer uh
infrastructure.
So the city of Apple has a new
bond uh offer coming up in
March.
Uh citizens have to vote for it
first.
But the biggest chunk of the
money is going to building new
water and sewer capacity uh in
the city so that you can build
more development.
Uh Bentonville is going to be
borrowing money here soon to
build new water and sewer
capacity that will open up new
parts of Bentonville for
development and invest in
capacity in existing parts as
well.
Springdale has to do that as
well uh going forward.
And that will get you a lot more
building in the cities.
Uh there are some regional
efforts to help the smaller
cities get new water and sewer
capacity.
Uh but corning, that is
obviously a little harder
because there are a lot of lot
of small cities with varying
interests and all of these
things.
But you know, Centerton, Caves
Rings, all of these places would
like to grow, but they can't as
much because they don't have
water sewer capacity to go along
with that.
SPEAKER_03: That makes sense.
What's your take on uh Fort
Smith as far as uh economic
region grows?
SPEAKER_01: I think we could say
that they probably reached the
bottom some point uh in the last
several years.
They're slightly on the uptick,
but they're not anywhere like
they were before the 2007
recession.
Um and so they've had some
growth there from the uh air
base that's uh the new airbase
operations that are coming to
Fort Smith.
Uh there's some manufacturing
capacity there that continues to
be invested in, uh, but it just
doesn't have that sort of
driving growth uh that you have
sort of automatic growth that
just generates its own growth.
Uh the airbase operations are
important, it'll bring people
in, but again, it's not a very
large number of people.
So you get that with a lot more
businesses that go there.
That's something that we haven't
had uh a lot of success yet.
And so there is some amount of
commuting happening from
Crawford County, so not
Sebastian County, uh just north
of Fort Smith, Crawford County,
because that's immediately south
of Washington County.
Um is that Alma area and stuff
like that?
Van Bier and Alma.
Yep.
Uh so people again can get right
on 49, come up to North of Shark
and say, ah, it's all on commute
today.
So if you have some of those
hybrid jobs, it might be more
bearable, but yeah.
SPEAKER_04: Do you do you ever
see, um, in your opinion, do you
think Northwest Arkansas as it
continues to grow?
Obviously, it seems like a lot
of these cities that are
continuing to have growth, like
a Farmington, like a Pea Ridge,
stuff like that.
Uh, my my guess with my hunch
would also be the fact that
obviously they don't have the
capacity to build as much in the
major four cities, but if you
know, people are chasing
affordability.
And I think, you know, we live
in an area too that, and I
obviously I don't have a data
point.
I know you're a data guy, but uh
I think our area is uh, you
know, and maybe this is a thing
in the South in general, but
most people still want the
American dream of owning a home
and things like that.
And so I think therefore a lot
of these areas are going to
continue all these cities that
are surrounding are going to
continue to grow because they're
more affordable, but they can
still be in Northwest Arkansas,
stuff like that.
Is it do you do you think that's
the case?
Do you think that'll continue to
go out because of factors like
that, even?
SPEAKER_01: I mean, I think to a
certain degree it will have to,
because the big four cities just
can't build enough, you know, as
much as we'd like them to absorb
all the housing growth in
Northwest Arkansas, they're not
going to.
So you gotta be realistic.
So the smaller cities are going
to continue to grow, uh, but
they probably will not grow at
the rate that they grew in the
last decade and a half, just
because they don't have the
infrastructure to grow that way.
And I think also, you know,
people might want to own a home,
but they don't necessarily
always want all that space uh
and the maintenance that goes
with it particularly.
Um, so I think you see people,
especially in the last several
years, have bought houses larger
than they wanted to.
Uh, because household sizes have
gone down.
But then the only houses on the
market were like three
four-bedroom houses.
So you have two people buying a
four-bedroom house.
Like, what are you doing?
I'll expect this was what was on
the market.
And the mortgage rate was too
low to just not buy.
So we bought.
Um, which is sort of the other
crunch, right?
So you buy a starter home and
then move to another larger
home.
And nowadays people are just
buying the last home they might
ever need uh from the beginning.
So there's that whole, you know,
I think people want largely, I
think, still to own a home that
we can interrogate whether
that's something we should all
aspire to or not in the future.
But I don't know that they
necessarily want like an acre,
yeah, a long commute because
part of the appeal of living in
Northwest Arkansas is the
ability to do all of the things.
And so if you have to go to work
so far away from New York and
then drive back, you're not
gonna get back in the car and go
back out again to another
downtown to have a drink and a
meal because you just did that
commute.
SPEAKER_03: That made me think
of uh Bella Vista.
I feel like Bella Vista could
be, you know, with how much the
Waltons are putting back into
Bella Vista.
Like I could see that, you know,
and what you're talking about
home, like smaller, nicer homes
are being built in Bella Vista.
SPEAKER_01: Yeah, people Well,
it always had this sort of very
compact field to it because it
was built as a retirement
community.
So they wanted the retirees to
get to all the amenities very
easily on a golf cart,
preferably.
So it kind of is built in a way,
or the town was structured in a
way to impede the scattered
development.
Smaller homes, a lot easier to
get to your amenities, which may
not be the golf course, but you
know, at this point, so I'll get
mountain bike part 27 mountain
biking work there building.
So, yeah, that that is a lot
more.
And so, you know, Bella Vista uh
has this weird dynamic where you
have a bunch of retirees and
then young people that are
wanting schools and school
districts, and uh older people
like I thought this was a
retirement community.
What are you asking me to pay
for schools?
Um, so that is a lot more
appealing, I think, to people
than living you know, 45 minutes
from the corridor, uh, which is
basically then 45 minutes from
anything you might want to do or
need to do.
SPEAKER_04: Yeah, that makes
sense.
So just, I mean, we're we're
kind of getting near the end
real uh here at the end, and
obviously our listeners are a
lot of investors in in real
estate in Northwest Arkansas or
want to invest in real estate
northwest Arkansas.
Um, they're hearing a lot of
this uh the talk about you know
how resilient we are and you
know what what kind of bubble
per se that that you know we we
have around our our area
compared to other areas in in
the country.
And so just as I I'd love to
kind of wrap it up in in more of
a real estate sense here, just
looking at you know some of the
things that we you have in your
in your skyline report with the
multifamily pipeline and how
absorption rates have looked,
vacancy rates and things like
that.
Um I mean, how how do you see,
you know, kind of when you look
at Northwest Arkansas compared
to others, what what are some of
those key indicators, I guess,
in the real estate space that
you think we have an advantage
of over other cities out there,
I guess?
SPEAKER_01: I mean the one big
thing that you know we haven't
talked about is the office space
vacancy rate, which is insane
how low our office space vacancy
rate is in Northwest Arkansas
compared to everybody else we
compare ourselves to, or just
nationally.
Um, so we continue to build more
office space here, and our
office space vacancy rates
continue to be really low.
And nationally, office space
vacancy rates are the high,
double, you know, 20% nearly or
thereabouts, depending on what
market you're looking at.
And so much of that is tied to
the fact that our region is
still a lot more compact.
And so, you know, 73-ish percent
of people uh drive fewer than 30
minutes to get to work one way.
Um some of our peer regions,
Austin, you know, it's like 60%
or something.
Yeah, most of our peer regions
might be a little bit lower than
that as well.
So uh, you know, nearly
three-fourths of our population
is driving fewer than 30 minutes
to get to work.
Um so in those cases, you know,
people I think like to see other
people, uh, remote work being
what it is, hybrid work and also
people would like to at least
work hybrid, but they're not
going to want to continue to do
it if they had to commute an
hour each way to be able to go,
right?
Uh so you can very clearly see
there's a very good relationship
between how tight some of these
communities are, how dense some
of these communities are, and
their vacancy rates for office
space.
So the places that still have
really high vacancy rates, and
they're places with long commute
times.
So people would like to go to
work with other people.
They just don't want to going to
work with other people does not
mean sitting in a car for an
hour.
Yeah, that, you know, driving on
an open road and you're out in a
national park, great.
Driving on an I-49 in traffic,
not great.
It's work on top of doing work,
right?
Yeah.
Um, so people don't want to do
that.
And I think, you know, making
sure that our future growth is
aligned to the way people live
right now.
So why people come here that are
not in big metro, they're like,
I don't want to live in Dallas.
I moved from Sherkans.
Well, because in Dallas you have
to drive an hour to get to NP.
They don't want to do that.
So if we end up developing the
way Dallas did with this suburbs
and suburbs and suburbs of
suburbs, then you end up with
the same commuting patterns that
you had in Dallas, which is what
people left to be here.
They want to be closer to the
work, closer to the amenities.
They don't want to just drive to
work and drive home and then be
stuck at home because they're
done their trackings to their
day.
Absolutely.
SPEAKER_03: That's exactly what
we had Mayor Orman on and Tyler
Overstreet with Bentonville.
And they were talking, you know,
this initiative to have, you
know, they have the Bentonville
Square, but they have they're
trying to have more Bentonville
Squares in Bentonville.
So it's exactly to your point of
uh being you know, commutable.
You know, that's one thing to be
walkable, but another to be
drivable.
Makes a lot of sense.
SPEAKER_04: Absolutely.
And you and you mentioned, so I
I personally think vacancy rates
uh for my investing is like the
number one factor that I think
is important to me because
historical vacancy rates that
is.
And just looking at Northwest
Arkansas as a whole, for the
last 10 years, let's say, even,
our vacancy rates have been in
multifamily specifically, is
what what I've focused on, but
have been low compared to
national averages, it seems like
um you mentioned office rates
being significantly lower than
others.
What what are some other sectors
uh in Northwest Arkansas,
multifamily, industrial
warehouse, stuff like that?
Um, are they all seeing low
super low vacancy rates?
SPEAKER_01: Or what's the point
of it?
You wouldn't have thought this,
but like the retail vacancy rate
is fairly low in Northwest
Arkansas, which is insane
because we have a lot of old
retail space still.
Um, you know, and so
occasionally one of these whole
big box stores will go out of
business because it's well past
their time.
Um, but you know, and then you
know the vacancy rate might pop
up a little bit because it's a
large big box store that went
out.
Uh, but broadly we've added new
retail space again in a lot of
our downtowns.
And I am not much of a shopper
in that sense, but like they
seem to be.
I mean, yeah, people keep
putting these little boutiques
all over the place.
Um, and they seem to, you know,
people are in downtowns and
they're happy to go in these
shops and purchase things from
them.
The other sector is warehouses,
you know, people have built a
lot of new warehouse space, and
warehouse vacancy rate remains
extremely low uh in North Rosh
Arkansas, because again, the
whole thing of people shopping
online, you still need a lot of
warehouses close to people to be
able to deliver goods to them in
a speedy manner.
So you still have a lot more
warehouse uh development as
well.
So the multifamily vacancy rate
has been under 5% for a very
long time in North Rosh,
Arkansas, and you know, has gone
up like 1% to 3% in the last few
years.
Sounds terrible, but like, come
on.
But you know, I think the rent
increases have slowed so that in
case there's it's not it's not
growing 10%, 11%, 12% uh as it
did in previous years.
So there's a little bit of
softness there, and then you'd
have people offer discounts like
free rent, one-month free rent
or something like that, which is
doesn't show up in our metrics
as a reduction in rent, but it
is a reduction in rent in that
sense.
But okay, that's good.
SPEAKER_04: And I I I just like
that that um you know sector
because I feel like, you know,
especially if you look
historically, Northwest Arkansas
being as low vacancy rate as
they have been.
Um, you know, you can uh to me,
you can feel strong about an
investment in a piece of real
estate in Northwest Arkansas,
knowing that, you know, the the
vacancy rates are very, I mean,
they've had a history of being
very low.
SPEAKER_01: Well, I think people
have more choices in uh renting
now.
Didn't used to be the case when
we had 1% vacancy rate, right?
People are just like happy to
get something.
And now they're happy to shop
around a little bit, you know,
be for a lower price, but also
in nicer locations.
And I was talking about some of
those developments looking like
suburban developments.
So you have two different
options.
I might actually live closer
into town.
Instead of since I'm living in
an apartment anyway, I don't own
the space.
Why should I live out where
there's nothing around me?
Um, but I can pay either
slightly more or the same amount
if rents are not growing as
fast.
Um if the unit is older, at
least I'm buy stuff, right?
If I'm gonna have to live in an
apartment, might as well live
near things.
Yes.
So absolutely.
SPEAKER_04: So j just as you
look at those factors, vacancy
rates, average rents, things
like that.
I know you're an economist.
I don't know if you're a real
estate investor or not.
SPEAKER_01: I try stay clear.
Yeah.
SPEAKER_04: But I I would love
your take on what cities that
you would be, if you were a real
estate investor, what cities
would you be most excited about
thinking about those kind of
metrics going forward?
SPEAKER_01: Here in North of
Sharkens.
I mean, I think our downtowns
are sort of so I mean downtown
Pentville seems like hard and
really expensive to develop in,
but they're thinking about
developing new downtowns.
So I think our cities are
seriously underdeveloped.
Like they all have one small
downtown geographically.
So we compare ourselves to these
other very large cities.
No place in North Wash has a
large city.
Um, so our largest city is
100,000 people.
Um, which is one of the smallest
cities in the surroundings, you
know, tri-state area, if you
will.
So Mississippi has smaller
cities than we do, and that's
it, right?
Oklahoma has a larger cities,
Missouri has a larger city.
So our cities are seriously
underdeveloped.
Uh in that sense, or that, you
know, whatever development is
like in one spot, and that we
need more of these downtown
cores throughout the cities.
Um, so that's that's the areas
that, you know, if you're
thinking about Fayetteville or
Spindale, Rogers, uh, the only
developed-looking part of the
cities like downtown
Fayetteville, Emma Avenue, you
know, downtown Rogers, downtown
Bentonville.
But there are so many other
intersections where a lot of
other people, a lot of good
population density, traffic
density, and all of these
things.
That at this point just don't
have housing amenities, anything
else.
It's just like a big, you know,
traffic light, eight lanes and
nothingness there.
Those that's the real
development opportunity um in a
large cities is to build more
cores uh closer to where there
are already people.
Um and getting more of yeah, we
need to get people to you know
not drive to work and drive home
and then call it even.
Yeah, we need to get them out.
Um and building stuff closer to
them.
One way to do it.
Everybody can live in downtown
Bimple.
SPEAKER_04: Right.
But it sounds like for you, that
definitely was an economist
answer there for sure.
But no, but for you, you would
be you are most excited about
what's happening around the
downtown areas in each of the
big four cities, it sounds like.
SPEAKER_01: Well, I'm more
excited about the potential in
the non-downtown area.
So, like you have these major
intersections in all our big
cities that are currently strip
malls, massive traffic lights,
and cars passing through, but
not people.
Yeah, that makes sense.
SPEAKER_04: So just as we wrap
up here, um, you know, you hear
a lot of met you've heard a lot
of metrics out there if you've
paid attention to Northwest
Arkansas at all, but we've heard
there's 32 people moving here
per day, should be at a million
population in 20 years.
Are we are there changes to
that?
Has there been changes to that?
And uh, where do you see?
SPEAKER_01: No, our population
growth has been consistently uh
pretty strong, two, two and a
half percent, two and a half
percent growth closer to uh in
the last several years.
So you're you know, sort of that
30 people a day uh moving into
this region, that's significant.
Um you know, but that's again,
our population growth uh stats
go to 2024.
I have no reason to believe
that's not true in 2025 either.
Uh and yes, if the population
growth continued the way it is
at this point in 20 years we'll
be a million people, but I
that's not a guarantee.
I I mean just because our
population grew two and a half
percent every year for the last
few years doesn't mean it's
gonna grow two and a half
percent every year or twenty
years.
Um so we need to continue to
invest in this place to make it
a place that grows two and a
half percent.
And that two and a half percent
is harder to achieve the larger
you get.
Absolutely.
Um So two and a half percent to
six hundred thousand people.
Two and a half percent of seven
hundred thousand people is a
whole lot more people.
So that growth rate to sustain
that growth rate, we need to
continue investing in
infrastructure amenities, new
housing, all these things.
Absolutely.
SPEAKER_04: I love that.
Another quick rapid fire
question.
What what do you see the
likelihood of another rate cut
uh towards the end of this year?
SPEAKER_01: Um so I would say
that this rate cut that they
made uh last week was done blind
and it was sort of risk
management.
Uh their language indicates
largely that was risk
management.
They were uncertain about the
state of the economy and they
thought it was safer to cut than
to not cut.
I don't see how they make two
blind decisions.
So um if the government remains
shut down well into November,
like closer to Thanksgiving, I
think the chances for another
rate cut in December diminish at
that point.
Because I think if the
government reopens anytime the
next week or so, you're more
likely to get a little more
data, at least looking at
September or something.
And I don't think the data looks
great.
So I think it would justify so
the employment growth and so on
and so forth.
I don't think the private
sources that we had can cobble
together don't look particularly
great at this point.
So it's likely that if we get
new data, it would justify
another quarter point data uh
rate cut.
But it's hard for them to make
two rate cuts in the blind
because they're literally making
it on no data.
Um, so the longer the shutdown
lasts, I think reduces your
likelihood um uh of a rate cut.
So if we do end up getting more
data, we'll probably see another
quarter point.
So I'd say about 60% at this
point chance that we get a
quarter point in December.
SPEAKER_04: Love it.
Last one here for investors
listening to this.
Um, what what do you think your
one metric that every investor
should track those artists off
should be?
SPEAKER_01: Uh for real estate?
Yeah.
I would I mean I'd look at uh
you know two metrics, I cheap
population growth and then the
vacancy rates.
SPEAKER_04: Well, Marvin, we
appreciate your time.
We're we're super grateful.
We know you're a busy man and
and your time is valuable.
So we're we're thankful that uh
you spent some time with us.
We're super grateful for the
Skyline report that you work on
and and um and your team puts
together.
And uh if you haven't had a
chance to take a look at that,
we'd recommend taking a look at
the Skyline report uh two times
a year.
Um but yeah, we're we're
grateful and and uh we
appreciate all the nuggets you
had on here.
SPEAKER_03: So happy to do it.
Thanks for reminding me.
Thanks, Marvin.
Yeah, thanks for again.
SPEAKER_00: Thank you guys for
tuning in.
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