Commercial Insight into Northwest Arkansas's 2025 First Half Market

Commercial Skyline Report: Northwest Arkansas — 1H 2025 
*Insights for Investors from Mason Capital Group Real Estate Investment & Trust* 
*Source: The Skyline Report, Center for Business & Economic Research, Sam M. Walton College of Business, University of Arkansas*

---
Executive Summary

The first half of 2025 marked a pivotal moment for Northwest Arkansas’s commercial real estate market. According to the latest Skyline Report, vacancy rates are rising, absorption is trending negative, and building permit activity is surging — all signaling a dynamic shift in investor strategy and tenant behavior.

---
Key Highlights from the Skyline Report

- **Overall commercial vacancy** rose to **7.2%**, up from **5.8%** in 2H 2024 
- **Net negative absorption**: 648,360 sq ft 
- **New commercial space added**: 204,076 sq ft 
- **Building permits issued**: $290.2M (Walmart: $14.2M)

---
Office Market Trends

- Vacancy increased to **6.8%** from 6.3% 
- Class B offices saw moderate leasing activity 
- Over 100,000 sq ft of previously owner-occupied space entered the market

Office Vacancy Rates by City (1H 2025)

  City        Vacancy Rate 
|----------------|--------------|
  Bella Vista    13.5%     
  Bentonville    10.0%     
  Fayetteville    2.3%     
  Johnson      1.3%     
  Lowell       28.4%     
  Rogers       6.5%     
  Siloam Springs   2.6%     
  Springdale     4.7%     

---
Retail Market Trends

- Vacancy rose to **6.6%** from 4.9% 
- Net negative absorption: 149,920 sq ft 
- New space added: 23,932 sq ft

---
Warehouse Market Trends

- Vacancy surged to **10.4%** from 7.6% 
- Net negative absorption: 392,251 sq ft 
- Strong demand for flex warehouse space continues

Warehouse Vacancy Rates by City (1H 2025)

  City        Vacancy Rate 
|----------------|--------------|
  Bentonville    8.8%     
  Fayetteville    0.3%     
  Lowell       7.4%     
  Rogers       9.9%     
  Siloam Springs   32.4%     
  Springdale     10.7%     

---
Building Permit Activity

  Period     Total Permits   Walmart Share 
|------------|---------------|----------------|
  2H 2024    $195.7M      $5.3M     
  1H 2025    $290.2M      $14.2M     

The increase in Walmart’s investment signals confidence in long-term regional growth.

---
Absorption by Submarket (12-Month)

  Submarket      Absorption (sq ft) 
|------------------|-------------------|
  Office        +151,440     
  Office/Retail    –49,424       
  Retail        –15,871       
  Warehouse      –359,755     

---
Strategic Takeaways for Investors

- Rising vacancies suggest a tenant’s market — leverage for lease negotiations 
- Warehouse oversupply in Siloam Springs may present acquisition opportunities 
- Office space in Fayetteville and Johnson remains tight — potential for premium rents 
- Retail rebound is uneven — experiential formats may outperform traditional setups 
- Permit activity indicates bullish development sentiment, especially from institutional players

---
Final Thoughts

As Northwest Arkansas evolves, Mason Capital Group remains committed to identifying high-yield opportunities and guiding investors through shifting market cycles. The Skyline Report — produced by the Center for Business & Economic Research at the University of Arkansas — offers a data-driven lens to navigate 2025 with confidence.