Ep. 83 - Why Northwest Arkansas Keeps Beating The Headlines In Housing And Jobs

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.

Episode Transcript

SPEAKER_00 (00:07):
Welcome to Northwest Arkansas Investing Podcast, your
go-to source for real estateinvesting in Northwest Arkansas.

SPEAKER_02 (00:12):
With your seasoned investor just starting out, we
bring you expert insights,market trends, and practical
strategies to help you buildwealth through real estate.

SPEAKER_04 (00:20):
From buying and selling to property management
and long-term investmentplanning, we cover it all so you
can make smart, informeddecisions in this fast growing
market.
Let's dive in.
All right.
Welcome back to NorthwestArkansas Investing Podcast.
I'm here with my co-host, Brian,and uh we've got we've got an
awesome guest today that we'reexcited to have on.
Um, you know, to talk throughone of our favorite episodes

(00:42):
that we've done recently waskind of talk through last uh
Skyline report that thatdropped, and just talk through a
lot of the data and and what itlooked like for Northwest
Arkansas compared to the rest ofthe country and and uh
macroeconomics, and then alittle bit more into the
microeconomic space and just howresilient Northwest Arkansas is
and uh you know a lot of thedrivers that we have going for

(01:03):
it.
And so the guy that really leadsthe charge there, um Mervin,
we're we're super excited tohave you.
So thanks again for coming withus.
Happy to do it, yeah.
So, but yeah, we we are uh youknow, we've Brian and I both
attended the uh the sky RvestSkyline report.
So if you haven't had a chance,listeners get out to the Skyline
report and listen to to Mervinchat through that, you know, all

(01:26):
of this data.
But we want to get a little bitinto uh into the weeds here.
But first, Mervin, tell us alittle bit about you and and
kind of how you gotta get gotinto the space that you're in.

SPEAKER_01 (01:36):
Uh completely by accident.
Uh and uh so uh obviously I wentto the University of Arkansas.
I graduated, uh, I was lookingfor a job, and I ended up at the
center that I now run.
And uh started out as a lowlyresearch assistant.
Uh, pretty close to the infancyof the Scotland report.
So the Scotland Report startedin 2004.

(01:56):
I started the center in 2007.
Um, so I've been around for theuh sort of joy ride that is
Northwest, Arkansas, in terms ofthe growth and changes that
we've seen here in Northwest,Arkansas, and uh uh sort of the
change in the story inNorthwest, Arkansas as well.
So 2007, this is you know a yearbefore everybody figured out the
world is ending.

(02:17):
Uh, oversupply of housing towhere we are today is a serious
undersupply of housing inNorthwest, Arkansas.
So um, I can say I've seen bothsides of it.

unknown (02:26):
Yeah.

SPEAKER_04 (02:26):
Good, bad, and the other.
Well, it's time to get into ittoo, honestly, with uh going
right into that.
I'd I'd be curious to see whatthose skyline reports look like
to personal.
Yeah, 100%.
Yeah.
So no, I think when uh whenpeople think of Northwest
Arkansas, though, obviously theythink about the Giants, the
Walmart, the Tyson, um, the bigmovers here, JB Hunt.

(02:48):
Um, but I I think you know, onething I I would love to, you
know, get your thoughts on andand to chat through a little
bit, which is obviously part ofpart two of uh the skyline
report in general, but um, youknow, just the University of
Arkansas and and how big of adriver that has been for the
area.
You know, if you look at thenews, enroll makes at all-time

(03:09):
highs, seems like every yearnow.
Um But yeah, how how do you seethat kind of play a part in
what's happening in NorthwestArkansas when you look at the
rest of the country and theuniversities in, you know,
different cities around thecountry?

SPEAKER_01 (03:23):
Yeah, I mean, I think that's you know, part of
the story of Northwest Arkansasin that sense, that you see the
growth in all the otherindustries as well, and you see
the growth at the University ofArkansas as well.
So uh just like the region as awhole has grown in population,
the university's enrollmentcontinues to go up, as you'd
mentioned.
Um, and that's because theuniversity is a bigger draw to

(03:43):
students, not just from Arkansasanymore, and is a draw to
students from other places inneighboring states and sometimes
states very far away.
Uh, they're attracted to whatthis region has to offer.
So, you know, they were in thisregion 20 years ago, they may
not have chosen to uh go toschool in Fayetteville, but now
the region as a whole hasamenities like many big markets,

(04:06):
and so it is not um, you know, acollege town in the sense that
you have college towns in otherplaces where you have the
university, it's the collegetown, 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 thisoffers attraction in that sense

(04:27):
that you have the feel of acollege town.
So that part of it still feelslike a college town.
But if you leave the collegetown and you have all kinds of
great amenities, but importantlyalso jobs in a very strong
economy in that region.
So um you get best of bothworlds.
You get to live sort of acollege town, but at the same
time in a major metro area aswell.

SPEAKER_04 (04:47):
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 ofrankings continue to come.
Is that a thing?
I didn't, yeah.
Or it was either SEC or collegein general.
It's there's like a top five,top ten list out there.

SPEAKER_01 (05:02):
Best team in the SEC.

SPEAKER_04 (05:04):
Definitely does not say the best team in the SEC.
We've been struggling on thatfront.
Uh, but yeah, I think I thinkit's an interesting uh factor,
just in general.
And and uh one thing I'm curiousabout, you may not know the
answer to this, but when I wasgoing to school at the U of A,
uh in-state tuition for peoplecoming out of Texas, I heard
that's gone away.

(05:24):
Do you have any idea on that?

SPEAKER_01 (05:25):
This is kind of off topic, but just curious if so
it's not just Texas, but most ofour border states and then some
other states as well.
So, you know, we have reciprocalagreements sometimes, but uh
often it's just a way to attractstudents.
So you know, we don't chargein-state tuition if they have a
certain amount of GPA and ACTscore.
So it's not just anybody, but sowe're attracting the best

(05:47):
students from these places.
So the higher your ACT score is,uh, the more likely you're to
get a discount on theout-of-state tuition uh thing.
So I think you still pay maybe10%, even if you have some of
the highest scores, but you canwork your way up based on your
score.
So it's just a way to attractpeople to Northwest Arkansas

(06:09):
that you know you don't wantthem to not come here because
the cost is really high.

SPEAKER_04 (06:13):
Yeah.
And I was curious too, just withhow enrollments continue to go
up, if that's changed or if orif uh that's kind of continued.

SPEAKER_01 (06:20):
Um, so I mean, so that that's a uh levers at the
university can adjust fairlyeasily to increase or decrease
enrollment.
So obviously, you know, with thegrowth that we've had in the
last several years, there's someinfrastructure issues uh in
Northwest, Arkansas and oncampus as well.
So you can make it harder forout-of-state students to get
here, you can make it easier forout-of-state students to get

(06:41):
here.
Uh, but at the end of the day,you know, you might have heard
this concept called theenrollment cliff, which is to
say that there was thatrecession we referenced in 2007
to 2009.
As a result of the recession,people had fewer kids, uh, which
means fewer 18-year-olds ingeneral, uh, which means the
pipeline to college, uh,pipeline of students coming to

(07:02):
college uh is decreasingnationwide, but that hasn't
affected big state schools likethe University of Arkansas
because we're offering someattractive uh opportunities, and
we're attracting students fromother places as well.
So uh students from Texas,students from Missouri, students
from Oklahoma, Louisiana,wherever else that are coming to

(07:23):
North to Sharpensite now.
That makes sense.

SPEAKER_04 (07:26):
No, I think I think we'll get back back to more of
what's happening with you knowthe university, everything like
that.
But I think we want to get agood look uh about what's
happening macro-wise, uh, theUnited States economy and and
even globally, what that's kindof looking like right now.
Obviously, there's been a ton ofchange over the last year and
things like that.

(07:47):
And so would love to get justkind of some high-level, a
high-level view of kind of howyou're seeing it.
Obviously, a lot of the topic ofconversation for real estate
investors is the Fed and theirdecision making and you know how
that changes the outlook forthem as far as uh you know,
rates and and things like that.
And so, you know, give us a alittle bit of a high-level view

(08:09):
on you know GDP, inflation,obviously, you know, the Fed and
what they've been doing lately.
How are you seeing right now andand uh what's changed over the
last six months?

SPEAKER_01 (08:20):
Yeah.
So I mean, we're recording thisin the middle of a government
shutdown.
So like the data that we have uhpretty much just goes to the end
of August and you know, a littlebit of September data.
We don't have a lot of you knowup-to-date data, uh, which is a
challenge for not just anybodyuh measuring what's going on in
the economy, but especially forthe Fed, um, who need uh this

(08:44):
data to be updated on a regularbasis to be able to make a
decision.
So uh you saw a rate cut uh lastweek.
Uh, you know, there is one moremeeting for this year, and uh,
you know, there's some prospectsfor what the rate cut might be
at that meeting.
That's entirely dependent onwhat the economy is doing.
And right now, the FederalReserve, if they go into that

(09:04):
meeting without any data, wouldbe making a decision in the
blind, which you don't want todo.
And so um, you know, what weknow about the economy so far in
the first half of the year isthat it's slower than it was in
the previous years.
Um, and that has large, uhlargely to do with the change in
policy as it relates to tariffsuh and things of that nature.

(09:27):
So that's created a lot ofdistortion in the economy.
Um, it's increased prices forsome businesses.
Uh, so the sectors of theeconomy that are doing well at
this point are you and I goingout and spending money on doing
things.
So that would be going to movietheaters, going to restaurants
and bars, and uh buying concerttickets and getting on planes,
going on vacations, going tohotels, all of these other

(09:49):
things that are service sectorparts.
That part of the economy seemsto be doing fine because people
with means are still spendinglots of money on these things.
And then uh the other part ofthe economy that's doing fine is
a technically a very small partof the economy, but has an
outsized contribution toeconomic growth in the first
half of this year, and that'sthe AI boom.

(10:11):
Um, so the investment in datacenters and chips and all of
that stuff, uh, you know,provided as much of an economic
contribution in the first halfof this year as you and I going
on spending money on concertsand plane tickets and hotels and
restaurants and bars andeverything else.
So that's how much that sectorhas done.
So that sector is not um thatdoes not have any tariffs right

(10:35):
now.
Uh so obviously there's a lot ofimports of chips and those types
of things, and a lot of new datacenters being built uh across
the country here in Arkansas aswell, fueling that boom.
Uh but it is certainly a boom.
Uh, you know, people have made alot of uh comparisons to the
dot-com bust and all of thesethings.
And there's certainly on theequity side, anyway, some

(10:57):
concern about whether these fewcompanies that are investing all
of this money are going to makeall their money back or not.
It's I think it's fair to saythat data centers, the
investment in data centers aregoing to be worthwhile
investments.
Whether this rush of equitiescoming into a and the equity
valuations based on that, Idon't know.

(11:20):
Uh that has some frothiness toit.
Uh, but the investment in AI isa long-term we expect long-term
growth from that.
So that's not the issue.
So those are the two sectorsdoing really well right now.
AI boom.
People with high incomesspending money.

SPEAKER_04 (11:39):
That makes sense.
It seems like just looking inthe news and and uh if you're
you know, if you're payingattention to what's happening in
the housing sector for forinstance, I know there's there's
other sectors obviously that areprobably not doing well either,
but you know, you see headlineslike you know, slowest housing
market since the 19 whatever,you know, 1960s or whatever.

(11:59):
Uh I don't quote me on that,obviously.
But uh what are you what haveyou seen um, you know,
nationally when it comes to thehousing sector as of the last
six, twelve months?

SPEAKER_01 (12:11):
Yeah, you sort of have this weird squeeze in the
housing market where sellers arenot willing to sell and buyers
not willing to buy uh forrelated reasons.
The mortgage rate is uh higherthan it has been a decade and a
half at this point.
So I know a six percent mortgagerate for most people um, you
know, that are not millennialsuh or younger seems quite,

(12:36):
right?
A six percent mortgage rate wasnormal, great.
Uh, but for almost the entireadult life of millennials and
then uh you know the older GenZers, the mortgage rate has
always been, you know, under 5%.
Four and a half was a badmortgage rate in the 2010s.
Right.
So uh that's when mostmillennials came of age when

(12:57):
thinking about buying houses.
So the entire time they werebuying houses, mortgage rates
are like at worst four and ahalf uh percent or something,
and now it's six, six and a halfpercent.
So that feels weird to people,and then a lot of people bought
homes during the pandemic, andthen mortgage rates were like
three, three and a half percent.
Those rates are probably nevercoming back unless there's a
huge crisis housing sector,which we don't foresee at this

(13:21):
point.
So, you know, the the thosepeople are not willing to sell
their houses because they don'twant to pay so much more for a
mortgage, and then home pricestraditionally go down when
mortgage prices go up.
But that hasn't happened becausewe're working on a decade and a
half worth of a shortage inhousing in this country at this
point.
So home prices haven't come downeither.
So uh so you have this weirdsqueeze where sellers are not

(13:44):
selling their homes, buyers arenot willing to buy at these high
prices and high mortgage ratesuh is lower inventory uh on
average.
But that's a national picture,not necessarily because you're
here in Northwest Arkansas.

SPEAKER_04 (13:54):
Right.
And and yeah, I think that'sbeen really the story is just
how resilient Northwest Arkansashas been when it comes to the
housing market.
And so I know, you know, you'llsee also headlines out there,
Austin, Texas, Dallas, Texas,Florida, especially, um, and
some other spots are seeing 20%cuts, 30% cuts.

(14:15):
Although inventory in NorthwestArkansas, residential-wise,
we're talking is up, you know.
I think active inventory is uparound 30% or maybe more to
where we were last year.
Uh, I don't think we're stillcaught up to what would be
considered a healthy supply ofof inventory.
So it's certainly not.
Yeah.
And so I guess I guess thatwould be what you're saying for

(14:36):
the audience.
Um, what is, you know, our thefact that we don't still don't
have enough inventory is and butwe have the migration of people
is what's kind of causing thatthat yeah.

SPEAKER_01 (14:46):
I mean, so our home prices are not going up in
double digits anymore.
Um, and so the increase in homeprices is still increasing, it's
still going down.
Um, so the increase in homeprices slowed to you know mid
single digits, high singledigits.
Uh, and then rent rent increaseswere going up in double digits
as well.
That has slowed a little bit.

(15:07):
So the vacancy rate has gone upfrom you know nothing to three
percent for this market.
So again, nothing crazy, butlike, okay, well, it was close
to zero and now it's three.
Is that too high?
And that's still an extremelylow vacancy rate for this
market.
But you know, you know, mostpeople listening to this
probably on the investing side.

(15:27):
Most people that are outside ofthis are on the buying side, and
you know, lower rents and lowerprices are great for the market
because there are more buyersthan sellers in general.
Absolutely.
Um, and so there'll be a lotmore customers at a lower price
than there are today.

SPEAKER_04 (15:42):
Yeah, that makes sense.
So just wrapping up too on on alittle bit of the national
economic outlook.
Uh, what are you seeing as thebiggest drivers the other way
negatively on the economy rightnow?
Obviously, we talked a littlebit about the housing sector,
but tariffs, obviously, whichwe'll get into.

SPEAKER_03 (16:01):
But I had a question too.
On on re we talked about some ofthe different sectors, but re
regions and the some regions inthe country, you know, people
are feeling like they're in arecession.
You know, here we don't we feellike we're still thriving, maybe
a little bit of kickback.
But, you know, I'm interested inyour take on, you know,
regionally, like why someregions might be feeling like

(16:22):
they're in recessions.

SPEAKER_01 (16:24):
Yeah.
I mean, so basically at thispoint, the economy in terms of
economic growth is consumerservices.
Um, so if you have a good mix ofconsumer services, you're doing
okay.
Uh, but anybody that's relyingon other sectors of the economy,
especially manufacturing, whichcounterintuitively we have all
these high tariffs in themanufacturing sector has seen
job losses, closures, and so onand so forth, because the import

(16:47):
prices have gone upsignificantly uh in those
sectors.
So outside of AI and consumerservices, the other sector that
has done well has beenhealthcare.
Um, so we've added a lot ofhealthcare jobs just because we
have an aging population.
Uh, some places like here, wehave a growing population, so
you need a lot more healthcareservices.

(17:07):
Uh, but that is a sector wedon't expect to continue to grow
uh into the future because whopays 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 reducedthe amount of payments going
into healthcare so the hospitalswon't get paid as much as they
did in previous years.

(17:28):
Uh insurance companies, we'veall seen in the news, have been
struggling in the last fewyears, not making, you know,
that sounds crazy uh for howmuch we pay in health insurance
premiums, but the healthinsurance companies are not
making a lot of money.
So then they've been cut backpayments to hospitals too.
So the one sector that has beenuh a lot in terms of employment
uh nationally, we expectslowdown in that sector uh in

(17:51):
the upcoming years.
So the drawbacks are, you know,many fold in that sense that we
have tariffs, and it's not justthe tariffs, but it's the
uncertainty around them.
That's uh, you know, it's stuckforever at a certain percent.
That's almost easier to dealwith, even if it's a high
number, because you know whatit's gonna be and you can make
some decisions.
But everybody at this point isbasically waiting to see what

(18:13):
happens.
And I think that is the largerproblem with the economy, is too
many people just sitting on thesidelines thinking, well, I
don't know if it's gonna behigher or lower.
I don't know if I should go orif I should hold.
And I think that is the uh andthe too many people waiting on
the sidelines is how you getinto problems quickly.

SPEAKER_04 (18:30):
So it seems like uh another stat that I saw recently
was that maybe we're at the thehighest amount in saving uh
savings, I guess, or in highyield savings or something like
that ever.
I don't know if you see have youseen a stat like that before?
Um I mean I think the personalsavings rate is maybe not that
high anymore.
Right, yeah, yeah.
But uh money markets maybe andstuff like that.

SPEAKER_03 (18:52):
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 thathow NWA is so different from the
rest of the country.
Like you mentioned thehealthcare industry pulling
back, but here we are in youknow, huge facilities and like
expanding our medical residencein NWA.
You know, why do you think NWAstands out from the rest of the

(19:13):
region on that?

SPEAKER_01 (19:14):
So these are investments based on like past
growth, right?
So and so we still havepopulation growth.
And so we don't have as much ofan aging population.
We do have something of an agingpopulation, but a lot of people
here are younger, and themeeting age here in Northwest
Arkansas is younger, so youdon't have a lot of healthcare
services from that perspective.
But more people is just morehealthcare.

(19:35):
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 doctoronce a year to get your eyes
checked, go to the dentist twicea year to get your teeth
cleaned.
That's just more services umbecause of a growing population.
Um but that's not they're notimmune necessarily from the

(19:59):
bigger changes.
In the health insurance up here.
So fewer people carry healthinsurance into the future.
And that's going to affect ourhospitals too.
And then the state paymentchanges that are going through,
and then federal payment changesare going through, that will
affect the hospitals here aswell.
But to make any of theseinvestments takes forever.
You make a decision you want toget an investment that actually

(20:21):
build the thing takes forever.
It's not.
We don't build things fast inthis country, which is a
different picture that we shouldtalk about at some point.
That's, you know, the investmentwe're seeing were to were meant
to deal with growth that hadalready happened.

SPEAKER_04 (20:35):
Yeah.
It seems it seems like whatyou're saying is, I mean,
population growth is really thedriver of a lot of what's
happening in Northwest Arkansas.
How do you uh this may not besomething that you've studied or
is part of the study that youdo, but how do we stack up when
you look at other areas that arehaving really solid migration as

(20:55):
well?
And you know, what what aresome, I guess, indicators or
things that we do better ormaybe even do worse than, you
know, I think about like aCharlotte, maybe, or a
Huntsville, Alabama, places thatyou think about or have heard
that are having similar growthor might be comparable to
Northwest Arkansas.

SPEAKER_01 (21:12):
Yeah, so we do this report once a year with the
Northwest Arkansas Council.
Um, and it's called the State ofthe Region report.
And so it basically comparesNorthwest Arkansas to other
regions, and we were comparingourselves to places like
Huntsville, Alabama.
Uh places that are more like usin that sense.
Uh, and we realized we werealways doing better than them by
most metrics.

(21:33):
So then we decided we don't wantto just, you know, pat ourselves
on the back.
Say, oh, look how great we are.
So now we compare ourselves toreally fast-growing regions, uh,
and regions that are often, youknow, double our size or much
bigger than us, uh, more thandouble our size.
So we're comparing ourselves nowto Austin, Texas, and Madison,
Wisconsin, and Genoine, Iowa,and uh Raleigh and Durham, and

(21:56):
and uh Prolow uh in Utah.
And so these places are alllarger than us, they're all
growing faster than us.
And, you know, so we don'tcompare as well those regions.
Uh so we do have some areaswhere we do well.
Our unemployment rate is lowerthan most of those regions.
Our employment growth rate isfaster than most of those

(22:18):
regions, uh, but we don't growas many new businesses as those
regions.
And that is probably because wehave a lot of people working at
corporations.
And the nice thing about workingat corporations is that uh we've
talked so much about healthcare,is that they provide decent
health insurance, uh, otherbenefits as well.
So it's harder for people toleave corporate jobs and go to

(22:40):
entrepreneurship because you'dbe giving up quite a bit of
safety net uh doing that.
So we don't do well in thatregard.
Uh, but in other places likehigh-tech jobs, we don't have as
many high-tech jobs as theseplaces, uh, but we're growing
them faster than these places.
So we're adding quite a few ofthose.
And so those are sectors we'redoing well in.

(23:02):
And our overall educationalattainment, since we've talked
about the university, is lowerthan these places.
So our peer regions, those onesthat I mentioned, uh, on
average, they have half theirpopulation, has a bachelor's
degree or higher.
Uh, ours is at 38% right now.
So we're doing well, a lotbetter than the state, a lot
better than the nation as awhole, but not as good as those

(23:22):
peer regions.
So then that means our incomesare lower than those peer
regions as well.
The one metric we're doingbetter than them, which we
shouldn't be, is our home pricesare growing faster than those
places.
Yeah.
So Austin and you know, probeare technically more expensive
than us.
Uh but in terms of growth rates,we're doing so much that we're

(23:44):
starting to catch up with theirhigh uh home prices as well.
So we have a pretty good way oflooking at these metrics against
these places.
Uh and those places are doingthings right, which is why we
want to uh measure ourselvesagainst them.
Places like Austin have built somuch housing in the last few
years that their rents have comedown significantly.

(24:06):
Um that they had people leavingAustin to move to Northwest
Arkansas because things weregetting so expensive in Austin,
and now their rents are goingdown significantly, that they're
getting people going back toAustin because um, you know,
Austin's becoming moreaffordable.

SPEAKER_03 (24:21):
Yeah, the Austin story is that you know, it's
similar, like I mean, there aresome similarities of how fast
they grew and then how you knowthey had this kind of drawback
like the past couple of years ofthis rent rent and sale prices.
Do you see that happening in NWAor are we more in front of it
than Austin was?

SPEAKER_01 (24:38):
Or so in terms of like building scale, like how
much Austin built in the lastfew years, we we could not even
close to building that, likepercentage-wise.
Yeah.
Um so you know, it looks like ifyou drive around a region,
there's a lot of construction ofapartments, uh, but it pales in
comparison to what Austin did inthe last few years.

(24:58):
So we're not putting that muchinventory in the market all at
once.
And they did.
Um, so you know, from aninvestor 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 NorthArkansas was doing better than
Austin in some of those metrics,like best places to live and

(25:20):
something.
A lot of that is entirely drivenby cost of living, right?
So you get a lower cost ofliving, you get a much higher
ranking on those metrics.
And so we'll be like, oh, we'rebetter than Austin, largely
because our cost of living waslower.
That's the one thing they fixed,whether they intended to or not,
that they finished at least inthe short run.

SPEAKER_04 (25:41):
So yeah.
How do we stack up?
I'm I'm just curious on thistoo, um, comparatively when it
comes to, you know, I it feelslike maybe there's a pretty big
gap between where the medianprice for us is or maybe where
it's headed compared to evenlike where our median or our
average rent is compared tothese these other big cities.

(26:03):
It seems like just thinkingabout in Austin, for instance,
their median price is probablywell well above ours.
Their average rent is probablyalso well above ours.
Their gaps to me would seem likeit might be closer than uh, you
know, than what ours seems to belike.
It seems like our average rentis still pretty low uh

(26:24):
comparatively.

SPEAKER_01 (26:25):
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, youknow, 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'snot really luxury developments
in that sense.
So it's just an apartmentcomplex.

(26:46):
Right.
So what we're building for thismarket is different than what
you get in other markets.
So like in Austin, your rentsare higher in downtown cores in
Austin because you can do a lotof things in the downtown cores
of Austin without ever touchingyour car.
Uh so that justifies a higherrent.
And North South Arkansas is notlike that.
So we do have some downtowns,you can do some things without

(27:08):
using your car, but by andlarge, almost everybody has to
get in a car to get to work.
And that's not true in some ofthose places.
Those places can charge higherrents because you don't have
transportation costs.
And we have this is anothermetric that we look in this
report.
Um we measure not just housingcosts, but housing and
transportation costs.
And North of Charlotte actuallyhas one of the highest housing

(27:30):
and transportation costscompared to our peer regions,
which sounds crazy becauseyou're comparing to Austin and
Provo and these places.
But because so many people theredon't have to use transportation
for as many things, uh, or carsfor as many things, they have
lower transportation costs.
So uh what you're building here,you know, often see it might

(27:52):
have nice amenities in theplace, but um it's not you know
downtown living.
We do have some.
Downtown Benville, downtownFayville, uh a little bit of
stuff going down into Rogers andSpringdale as well.
But most, the bulk of theapartments that we've built are
basically, you know, almostsuburban developments, core city

(28:13):
developments, which is why youdon't get those prices.
So stuff in downtown Benville,high price rents.
You might maybe not quitedowntown Austin, but high enough
to compare.
But the rest of the apartmentsare basically suburban
apartments, there's no amenitiesaround them.
Somebody might have built asidewalk, but the sidewalk heads
to a main road that nothing'son.
You can walk to a gas station,maybe, right?

(28:36):
Um, or the apartments rightright on the highway.
Right.
It's not a great amenity to bedown the highway.
It's like you open your balcony,you're breathing fumes and
getting car noise.
Um, or you're overlooking, youknow, commercial development
parking lots or large retailers.
Yeah, right.
I mean, so that's not theapartment that you're living in

(28:57):
downtown Austin, uh, whereyou're looking at a downtown
core, a lot of activity andthings of that nature.
Got it.

SPEAKER_03 (29:04):
That that makes a ton of sense.
The walkability is so is likesuch a buzzword, walkability,
but it's really hard to havewalkability like in some of the,
you know, there Bentonville, Ican 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, orwhere you can have a, you know,

(29:24):
we're not building very high innorthwest Arkansas compared to
And so, yeah, like I mean, uhit's hard to call.

SPEAKER_01 (29:32):
I mean, like the apartments are going in
Mentville and Springdale andRogers and Fayetteville, and
they're not suburbs, they'recities, but they're suburban
type development.
They're not what you wouldconsider downtown apartment
building, right?
Most of these places.
Fayetteville has a lot morebecause it's right by campus and
the student housing.
Uh but not seeing a significant.

SPEAKER_03 (29:53):
It's cool to see what downtown Springdale, like
uh it's kind of become, youknow, the big Emma via Emma,
some of those projects on Emmaare truly becoming walkable,
which is surprising, you know,Springdale, you wouldn't have
thought that five years ago thatyou would have a walkable cool
area.

SPEAKER_04 (30:09):
Yeah, I think I think the interesting question
too is you know, what absorptionrate will look like for uh a lot
of those downtown areas inNorthwest Arkansas, just with,
you know, it it seems like nowease of access to 49 is gonna
continue to be a premium andwhat people really want.
Uh, but I'll be curious to seehow that continues to, you know,

(30:30):
potentially shift to be able towalk to dinner, walk to, you
know, things to do, downtownSpringdale, downtown Bidonville,
things like that, and just howthe cities too are adopting
those projects, I think isreally interesting.

SPEAKER_01 (30:42):
So and then getting enough people to where, you
know, importantly, most of thecommute is to work back.
Um, you know, there's a recentreport that uh the Regional
Planning Commission did lookingat bus rapid transit, right?
And so you could end up with asituation where it's a lot
easier to get to work if you'renot driving yourself on I-49.
You could do any number ofthings, listen to a podcast, pay

(31:04):
attention to a podcast at theroad.
These days people seem to bepaying attention to the podcast
more than the road, but yeah,it's a different problem.
But um there are ways aroundthat where you could get more
downtown living and a commute towork that is less painful than
what we have right now.
Because uh, people do value theability to get on the highway

(31:27):
really quickly, but then they'renot willing to pay for the
apartment because that is notconsidered like being next to
I-49 is never going to be cool.

SPEAKER_04 (31:35):
Yeah.
Absolutely.
So just thinking about the stateof the region report that you
mentioned, I know NorthwestArkansas Council, and then is it
the U University of Arkansas aswell that partners together for
the Yeah, so the NorthwestArkansas Council, which
obviously is the regionalchamber made of the largest
companies here in NorthwestArkansas, and then the
University of Arkansas haspartnered on this report since

(31:56):
2011.

SPEAKER_01 (31:57):
Basically, when the council came up with long-term
development plans uh or economicgrowth plans for the region as a
whole, um, we decided that it'sprobably good to measure how
we're doing.

SPEAKER_04 (32:09):
So just I I think thinking about that with each of
those metrics that you all trackon there, what do you feel like
is the area's biggest priorityon that list?
I mean, what are some of thebiggest priorities?
I know you mentioned medianincome is part of that.
Um, you know, you you mentioneda few others, but what what do

(32:29):
you feel like is leadership inNorthwest Arkansas their biggest
priority when it comes to I knowthey would say all of them are
their biggest priority, but toyou, what are what are their
biggest priority and what whatare going to be real good
drivers for Northwest Arkansaslong term?

SPEAKER_01 (32:44):
I mean, I think so everything sort of falls in this
large bucket of supportinggrowth.
Um, so whatever we're doing, wewant to continue to support the
growth that we've had inNorthwest Arkansas.
And that means that, you know,for the companies that are
already here providing apipeline of talent, so bringing
in people, uh, like I said, justpeople moving into North

(33:05):
Arkansas have had highereducational attainment, and
that's raised incomes here inNorth of Arkansas as well.
So bringing in those people toNorthwest Arkansas, continuing
to make this a place that thosepeople want to come to.
Uh, and that is, you know,because it's an investment in
all kinds of amenities for whatpeople want to do with their
free time, uh, but also, youknow, making sure that housing

(33:26):
does not run ahead of whatpeople's incomes are, which for
a while there in the 2020, 2021,home prices skyrocketed when
incomes are not going up nearlyuh as much as they are.
So uh making sure that thatremains affordable is a huge
component.
Um then also growing newbusinesses.
So we have a lot of businesses.

(33:47):
Uh we have three Fortune 500companies with the University of
Arkansas, we have all thecompanies, major companies that
work with these three bigcompanies, then all the
companies that work with all thecompanies that work with the
three big companies, uh, and soon.
Uh, but we also want to grow newbusinesses here in North of
Sharkensau.
So we've had Walmart, we've hadTyson, we've had JB Hunt, uh,

(34:08):
you know, we've had some othersuccesses uh from startups, but
we want new startups, we wantthe new big Fortune 500 company
to be built uh here in North ofSharkensau.
And that is an area, as Imentioned, that we struggle with
because we can't get people toleave.
Uh there are safe corporate jobsuh with nice benefits and things

(34:29):
like that to take a chance, youknow, go with that health
insurance and uh vacations andall of that for a year or two
years and build a new company,right?
So it's a little easier in someof these other places where you
don't have as many uh goodcorporate jobs for the size of
the area, um, and we do.
So uh that's a little harder.

(34:49):
Uh, but we are working on that.
We have a lot of differententrepreneurship programs at uh
all of our schools here in NorthRush, Arkansas.
A couple of good VC programscombining the talent in Tulsa
and Northwest, Arkansas, so youhave a larger region and larger
pool uh projects that VCs mightwant to look at.

(35:10):
So uh there's a lot of effortgone into it.
You know, the results will come.
We have yet to see thesignificant results from that,
but they'll come.

SPEAKER_03 (35:19):
Yeah.
By VC, Melissa, he's talkingabout venture capital.
And I definitely have seen thata growing area in NWA.
I think that's super important.
As we mentioned, the goldenhandcuffs is what I call it, you
know, the the corporate mail ofall the benefits, and you're
making above median income.
So it's hard to take that jump.
But uh, it's interesting to seethe amount of money pour into

(35:41):
the venture capital space andget incubate, you know, the
startup junkie.
There's what the University ofArkansas does, and then uh a
couple other groups.

SPEAKER_01 (35:50):
So I mean people want to do these things, but you
know, gold panicas are uh but soduring the pandemic when the
federal government was justhanding out money just freely,
uh the average Arkansas familycould have gotten something like
$14,000 from all these differentprograms, right?
So we saw a huge increase inbusiness growth, people starting

(36:11):
new businesses at that time.
Because there was this large sumof money just given to them.
In time, I assume, right?
Yeah.
And then you're like, oh, maybeI can take a risk of anyway
because I have this pool ofmoney sitting around.
Uh but you know, so that helpspeople get out of the old golden
handcuffs.
But outside of that, it's kindof really hard to convince

(36:32):
people to give up something safeand start something risky.
That makes sense.

SPEAKER_04 (36:37):
I think I think uh one one thing you mentioned in
there was just talking about uhthe University of Arkansas and
how kind of how that has aneffect on our population growth
and things like that, um, medianincome as well, and how that
continues to rise.
Well, how do you see us stack upwith other uh big college areas?

(36:57):
You know, again, we keepmentioning Austin, but Austin
obviously has the University ofTexas at Austin.
How do we uh retain, how well dowe retain students that graduate
from the University of Arkansascompared to, I guess, other
cities like that?

SPEAKER_01 (37:15):
Yeah, I mean, we do retain, you know, a good chunk
of students.
So obviously, if they're comingfrom all of these different
places, factor of the matterremains that most people are
reverse to moving, which soundsweird to people who are
Australia because there are alot of people here that move
from other places.
But these places are ratheranomalous in that sense, because

(37:36):
like 90% of people, uh, the mostthey ever move was for college.
And then that's it.
So they go to college and thengo back home.
Um, so you know, it isunreasonable to expect us to
keep a large chunk of peoplethat came here from other places
because they came here fromhome.
They went to college, that wasthe time they left home, and
they're gonna go back home.

(37:58):
Um, there's a grade stat, Ithink it's like 90% of the
country lives within three hoursof their mother or something
like that, you know.
So it's people don't like tomove.
Yeah.
It makes sense.
Uh so you know, we do keep uhsome people here.
Uh, but even if they leave, uh,you know, come to college, they
go back home, they do whatever.

(38:19):
This at least is now a placethat'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 collegestation, 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,

(38:40):
Miami of Ohio.

SPEAKER_03 (38:41):
Yeah, like the Oxford, Ohio, uh, Athens, Ohio.

SPEAKER_01 (38:44):
There's a bunch of that's all it is.
Yeah.
I mean, so it's a great placewhen 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 thatpeople enjoy about here.
So even if they leave and goback, uh, they might come back
for a job opportunity uh a fewyears down the line.

(39:05):
Um, you know, wherever thewhatever they call home is they
might move here uh afterwards.
But again, you have to rememberthat the people that move are
different lion artist thanpeople that don't move, and
people that don't move are thenorm.
So how do you couldn't keepeverybody that went to college
here?

SPEAKER_03 (39:24):
How do you see the with all this population?
How do you see our regionexpanding outside, you know, on
our on the Skyline report, wehave Fayeville, Bentonville,
Rogers, Springdale, and SilemSprings.
Do you see you ever see another,you know, Sylem Springs kind of
on the outskirts?
Yeah.
I I asked Jeff when he said youguys used to do uh Fort Smith,

(39:44):
but that's obvious it's not NWA,but that's a separate topic.
Do you ever see like a aFarmington or a Pea Ridge or a
Prairie Grove?

SPEAKER_01 (39:52):
I think so you were seeing so much growth in some of
these small communities that youmight have thought that we would
have gotten to you know muchlarger populations.
Center, but they've all hit thesame problem through water and
sewer infrastructures.
As it turns out, you can onlybuild as many homes as you can
flush toilets.
And once you hit the limit ofhow many toilets can be flushed

(40:13):
at once, that's it.
You can't build any more homes.
So, you know, that is a growthchallenge for the region because
like in the last decade and ahalf, most of our population
growth has happened in thesmaller communities.
So it hasn't happened.
So yes, the big five cities havegrown, the big four cities in
particular have grown a lot, buta lot of the growth has been

(40:33):
taken up by the smallercommunities that are not in this
I-49 corridor.
Um, and they've all at the sametime hit infrastructure issues.
And the issue they have is thatthey do not have the taxing
capacity to build newinfrastructure.
Um, so these are all largelybedroom communities.

(40:56):
They might have small grocerystore or gas station, fast food
restaurant or something, but notenough of a sales tax base to
build new water in throughinfrastructure.
So the only places that havethat infrastructure or that
bonding capacity of the big fourcities, larger, you know, we
include Silent Springs as well.
But they don't have the same uhinfrastructure crunch as the big

(41:19):
four cities and the smallercities.
So necessarily over the nextdecade and a half, our
population has to grow in thebigger cities because that's who
has bonding infrastructure orbonding capacity to build new
water and sewer uhinfrastructure.
So the city of Apple has a newbond uh offer coming up in

(41:41):
March.
Uh citizens have to vote for itfirst.
But the biggest chunk of themoney is going to building new
water and sewer capacity uh inthe city so that you can build
more development.
Uh Bentonville is going to beborrowing money here soon to
build new water and sewercapacity that will open up new

(42:02):
parts of Bentonville fordevelopment and invest in
capacity in existing parts aswell.
Springdale has to do that aswell uh going forward.
And that will get you a lot morebuilding in the cities.
Uh there are some regionalefforts to help the smaller
cities get new water and sewercapacity.
Uh but corning, that isobviously a little harder

(42:24):
because there are a lot of lotof small cities with varying
interests and all of thesethings.
But you know, Centerton, CavesRings, all of these places would
like to grow, but they can't asmuch because they don't have
water sewer capacity to go alongwith that.

SPEAKER_03 (42:41):
That makes sense.
What's your take on uh FortSmith as far as uh economic
region grows?

SPEAKER_01 (42:48):
I think we could say that they probably reached the
bottom some point uh in the lastseveral years.
They're slightly on the uptick,but they're not anywhere like
they were before the 2007recession.
Um and so they've had somegrowth there from the uh air
base that's uh the new airbaseoperations that are coming to
Fort Smith.

(43:08):
Uh there's some manufacturingcapacity there that continues to
be invested in, uh, but it justdoesn't have that sort of
driving growth uh that you havesort of automatic growth that
just generates its own growth.
Uh the airbase operations areimportant, it'll bring people
in, but again, it's not a verylarge number of people.
So you get that with a lot morebusinesses that go there.

(43:31):
That's something that we haven'thad uh a lot of success yet.
And so there is some amount ofcommuting happening from
Crawford County, so notSebastian County, uh just north
of Fort Smith, Crawford County,because that's immediately south
of Washington County.
Um is that Alma area and stufflike that?

(43:52):
Van Bier and Alma.
Yep.
Uh so people again can get righton 49, come up to North of Shark
and say, ah, it's all on commutetoday.
So if you have some of thosehybrid jobs, it might be more
bearable, but yeah.

SPEAKER_04 (44:06):
Do you do you ever see, um, in your opinion, do you
think Northwest Arkansas as itcontinues to grow?
Obviously, it seems like a lotof these cities that are
continuing to have growth, likea Farmington, like a Pea Ridge,
stuff like that.
Uh, my my guess with my hunchwould also be the fact that
obviously they don't have thecapacity to build as much in the

(44:27):
major four cities, but if youknow, people are chasing
affordability.
And I think, you know, we livein an area too that, and I
obviously I don't have a datapoint.
I know you're a data guy, but uhI think our area is uh, you
know, and maybe this is a thingin the South in general, but
most people still want theAmerican dream of owning a home

(44:47):
and things like that.
And so I think therefore a lotof these areas are going to
continue all these cities thatare surrounding are going to
continue to grow because they'remore affordable, but they can
still be in Northwest Arkansas,stuff like that.
Is it do you do you think that'sthe case?
Do you think that'll continue togo out because of factors like

(45:08):
that, even?

SPEAKER_01 (45:09):
I mean, I think to a certain degree it will have to,
because the big four cities justcan't build enough, you know, as
much as we'd like them to absorball the housing growth in
Northwest Arkansas, they're notgoing to.
So you gotta be realistic.
So the smaller cities are goingto continue to grow, uh, but
they probably will not grow atthe rate that they grew in the
last decade and a half, justbecause they don't have the

(45:29):
infrastructure to grow that way.
And I think also, you know,people might want to own a home,
but they don't necessarilyalways want all that space uh
and the maintenance that goeswith it particularly.
Um, so I think you see people,especially in the last several
years, have bought houses largerthan they wanted to.

(45:51):
Uh, because household sizes havegone down.
But then the only houses on themarket were like three
four-bedroom houses.
So you have two people buying afour-bedroom house.
Like, what are you doing?
I'll expect this was what was onthe market.
And the mortgage rate was toolow to just not buy.
So we bought.
Um, which is sort of the othercrunch, right?
So you buy a starter home andthen move to another larger

(46:13):
home.
And nowadays people are justbuying 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 thatwe can interrogate whether
that's something we should allaspire to or not in the future.
But I don't know that theynecessarily want like an acre,

(46:36):
yeah, a long commute becausepart of the appeal of living in
Northwest Arkansas is theability to do all of the things.
And so if you have to go to workso far away from New York and
then drive back, you're notgonna get back in the car and go
back out again to anotherdowntown to have a drink and a
meal because you just did thatcommute.

SPEAKER_03 (46:58):
That made me think of uh Bella Vista.
I feel like Bella Vista couldbe, you know, with how much the
Waltons are putting back intoBella Vista.
Like I could see that, you know,and what you're talking about
home, like smaller, nicer homesare being built in Bella Vista.

SPEAKER_01 (47:12):
Yeah, people Well, it always had this sort of very
compact field to it because itwas built as a retirement
community.
So they wanted the retirees toget 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 scattereddevelopment.
Smaller homes, a lot easier toget to your amenities, which may
not be the golf course, but youknow, at this point, so I'll get

(47:35):
mountain bike part 27 mountainbiking work there building.
So, yeah, that that is a lotmore.
And so, you know, Bella Vista uhhas this weird dynamic where you
have a bunch of retirees andthen young people that are
wanting schools and schooldistricts, and uh older people
like I thought this was aretirement community.
What are you asking me to payfor schools?
Um, so that is a lot moreappealing, I think, to people

(47:58):
than living you know, 45 minutesfrom the corridor, uh, which is
basically then 45 minutes fromanything you might want to do or
need to do.

SPEAKER_04 (48:06):
Yeah, that makes sense.
So just, I mean, we're we'rekind of getting near the end
real uh here at the end, andobviously our listeners are a
lot of investors in in realestate in Northwest Arkansas or
want to invest in real estatenorthwest Arkansas.
Um, they're hearing a lot ofthis uh the talk about you know
how resilient we are and youknow what what kind of bubble

(48:28):
per se that that you know we wehave around our our area
compared to other areas in inthe country.
And so just as I I'd love tokind of wrap it up in in more of
a real estate sense here, justlooking at you know some of the
things that we you have in yourin your skyline report with the
multifamily pipeline and howabsorption rates have looked,

(48:50):
vacancy rates and things likethat.
Um I mean, how how do you see,you know, kind of when you look
at Northwest Arkansas comparedto others, what what are some of
those key indicators, I guess,in the real estate space that
you think we have an advantageof over other cities out there,
I guess?

SPEAKER_01 (49:09):
I mean the one big thing that you know we haven't
talked about is the office spacevacancy rate, which is insane
how low our office space vacancyrate is in Northwest Arkansas
compared to everybody else wecompare ourselves to, or just
nationally.
Um, so we continue to build moreoffice space here, and our
office space vacancy ratescontinue to be really low.

(49:32):
And nationally, office spacevacancy rates are the high,
double, you know, 20% nearly orthereabouts, depending on what
market you're looking at.
And so much of that is tied tothe fact that our region is
still a lot more compact.
And so, you know, 73-ish percentof people uh drive fewer than 30
minutes to get to work one way.

(49:54):
Um some of our peer regions,Austin, you know, it's like 60%
or something.
Yeah, most of our peer regionsmight be a little bit lower than
that as well.
So uh, you know, nearlythree-fourths of our population
is driving fewer than 30 minutesto get to work.
Um so in those cases, you know,people I think like to see other

(50:16):
people, uh, remote work beingwhat it is, hybrid work and also
people would like to at leastwork hybrid, but they're not
going to want to continue to doit if they had to commute an
hour each way to be able to go,right?
Uh so you can very clearly seethere's a very good relationship
between how tight some of thesecommunities are, how dense some
of these communities are, andtheir vacancy rates for office

(50:39):
space.
So the places that still havereally high vacancy rates, and
they're places with long commutetimes.
So people would like to go towork with other people.
They just don't want to going towork with other people does not
mean sitting in a car for anhour.
Yeah, that, you know, driving onan open road and you're out in a
national park, great.

(51:00):
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 dothat.
And I think, you know, makingsure that our future growth is
aligned to the way people liveright now.
So why people come here that arenot in big metro, they're like,
I don't want to live in Dallas.
I moved from Sherkans.

(51:22):
Well, because in Dallas you haveto drive an hour to get to NP.
They don't want to do that.
So if we end up developing theway Dallas did with this suburbs
and suburbs and suburbs ofsuburbs, then you end up with
the same commuting patterns thatyou had in Dallas, which is what
people left to be here.
They want to be closer to thework, closer to the amenities.

(51:45):
They don't want to just drive towork and drive home and then be
stuck at home because they'redone their trackings to their
day.
Absolutely.

SPEAKER_03 (51:52):
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 BentonvilleSquare, but they have they're
trying to have more BentonvilleSquares in Bentonville.
So it's exactly to your point ofuh being you know, commutable.
You know, that's one thing to bewalkable, but another to be
drivable.

(52:13):
Makes a lot of sense.

SPEAKER_04 (52:14):
Absolutely.
And you and you mentioned, so II personally think vacancy rates
uh for my investing is like thenumber one factor that I think
is important to me becausehistorical vacancy rates that
is.
And just looking at NorthwestArkansas as a whole, for the
last 10 years, let's say, even,our vacancy rates have been in

(52:34):
multifamily specifically, iswhat what I've focused on, but
have been low compared tonational averages, it seems like
um you mentioned office ratesbeing significantly lower than
others.
What what are some other sectorsuh in Northwest Arkansas,
multifamily, industrialwarehouse, stuff like that?
Um, are they all seeing lowsuper low vacancy rates?

SPEAKER_01 (52:55):
Or what's the point of it?
You wouldn't have thought this,but like the retail vacancy rate
is fairly low in NorthwestArkansas, which is insane
because we have a lot of oldretail space still.
Um, you know, and sooccasionally one of these whole
big box stores will go out ofbusiness because it's well past
their time.
Um, but you know, and then youknow the vacancy rate might pop
up a little bit because it's alarge big box store that went

(53:17):
out.
Uh, but broadly we've added newretail space again in a lot of
our downtowns.
And I am not much of a shopperin that sense, but like they
seem to be.
I mean, yeah, people keepputting 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 theseshops and purchase things from

(53:38):
them.
The other sector is warehouses,you know, people have built a
lot of new warehouse space, andwarehouse vacancy rate remains
extremely low uh in North RoshArkansas, because again, the
whole thing of people shoppingonline, you still need a lot of
warehouses close to people to beable to deliver goods to them in
a speedy manner.
So you still have a lot morewarehouse uh development as

(54:01):
well.
So the multifamily vacancy ratehas 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 fewyears.
Sounds terrible, but like, comeon.
But you know, I think the rentincreases have slowed so that in
case there's it's not it's notgrowing 10%, 11%, 12% uh as it

(54:25):
did in previous years.
So there's a little bit ofsoftness there, and then you'd
have people offer discounts likefree rent, one-month free rent
or something like that, which isdoesn't show up in our metrics
as a reduction in rent, but itis a reduction in rent in that
sense.
But okay, that's good.

SPEAKER_04 (54:42):
And I I I just like that that um you know sector
because I feel like, you know,especially if you look
historically, Northwest Arkansasbeing 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 realestate in Northwest Arkansas,
knowing that, you know, the thevacancy rates are very, I mean,

(55:05):
they've had a history of beingvery low.

SPEAKER_01 (55:07):
Well, I think people have more choices in uh renting
now.
Didn't used to be the case whenwe had 1% vacancy rate, right?
People are just like happy toget something.
And now they're happy to shoparound a little bit, you know,
be for a lower price, but alsoin nicer locations.
And I was talking about some ofthose developments looking like
suburban developments.
So you have two differentoptions.

(55:29):
I might actually live closerinto town.
Instead of since I'm living inan apartment anyway, I don't own
the space.
Why should I live out wherethere's nothing around me?
Um, but I can pay eitherslightly more or the same amount
if rents are not growing asfast.
Um if the unit is older, atleast I'm buy stuff, right?

(55:51):
If I'm gonna have to live in anapartment, might as well live
near things.
Yes.
So absolutely.

SPEAKER_04 (55:56):
So j just as you look at those factors, vacancy
rates, average rents, thingslike that.
I know you're an economist.
I don't know if you're a realestate investor or not.

SPEAKER_01 (56:06):
I try stay clear.
Yeah.

SPEAKER_04 (56:09):
But I I would love your take on what cities that
you would be, if you were a realestate investor, what cities
would you be most excited aboutthinking about those kind of
metrics going forward?

SPEAKER_01 (56:19):
Here in North of Sharkens.
I mean, I think our downtownsare sort of so I mean downtown
Pentville seems like hard andreally expensive to develop in,
but they're thinking aboutdeveloping new downtowns.
So I think our cities areseriously underdeveloped.
Like they all have one smalldowntown geographically.
So we compare ourselves to theseother very large cities.

(56:40):
No place in North Wash has alarge city.
Um, so our largest city is100,000 people.
Um, which is one of the smallestcities in the surroundings, you
know, tri-state area, if youwill.
So Mississippi has smallercities than we do, and that's
it, right?

(57:00):
Oklahoma has a larger cities,Missouri has a larger city.
So our cities are seriouslyunderdeveloped.
Uh in that sense, or that, youknow, whatever development is
like in one spot, and that weneed more of these downtown
cores throughout the cities.
Um, so that's that's the areasthat, you know, if you're
thinking about Fayetteville orSpindale, Rogers, uh, the only

(57:22):
developed-looking part of thecities like downtown
Fayetteville, Emma Avenue, youknow, downtown Rogers, downtown
Bentonville.
But there are so many otherintersections where a lot of
other people, a lot of goodpopulation density, traffic
density, and all of thesethings.
That at this point just don'thave housing amenities, anything
else.
It's just like a big, you know,traffic light, eight lanes and

(57:46):
nothingness there.
Those that's the realdevelopment opportunity um in a
large cities is to build morecores uh closer to where there
are already people.
Um and getting more of yeah, weneed to get people to you know
not drive to work and drive homeand then call it even.
Yeah, we need to get them out.

(58:06):
Um and building stuff closer tothem.
One way to do it.
Everybody can live in downtownBimple.

SPEAKER_04 (58:13):
Right.
But it sounds like for you, thatdefinitely was an economist
answer there for sure.
But no, but for you, you wouldbe you are most excited about
what's happening around thedowntown areas in each of the
big four cities, it sounds like.

SPEAKER_01 (58:26):
Well, I'm more excited about the potential in
the non-downtown area.
So, like you have these majorintersections in all our big
cities that are currently stripmalls, massive traffic lights,
and cars passing through, butnot people.
Yeah, that makes sense.

SPEAKER_04 (58:45):
So just as we wrap up here, um, you know, you hear
a lot of met you've heard a lotof metrics out there if you've
paid attention to NorthwestArkansas at all, but we've heard
there's 32 people moving hereper day, should be at a million
population in 20 years.
Are we are there changes tothat?
Has there been changes to that?
And uh, where do you see?

SPEAKER_01 (59:06):
No, our population growth has been consistently uh
pretty strong, two, two and ahalf percent, two and a half
percent growth closer to uh inthe last several years.
So you're you know, sort of that30 people a day uh moving into
this region, that's significant.
Um you know, but that's again,our population growth uh stats

(59:27):
go to 2024.
I have no reason to believethat's not true in 2025 either.
Uh and yes, if the populationgrowth continued the way it is
at this point in 20 years we'llbe a million people, but I
that's not a guarantee.
I I mean just because ourpopulation grew two and a half
percent every year for the lastfew years doesn't mean it's
gonna grow two and a halfpercent every year or twenty

(59:48):
years.
Um so we need to continue toinvest in this place to make it
a place that grows two and ahalf percent.
And that two and a half percentis harder to achieve the larger
you get.
Absolutely.
Um So two and a half percent tosix hundred thousand people.
Two and a half percent of sevenhundred thousand people is a
whole lot more people.
So that growth rate to sustainthat growth rate, we need to

(01:00:10):
continue investing ininfrastructure amenities, new
housing, all these things.
Absolutely.

SPEAKER_04 (01:00:15):
I love that.
Another quick rapid firequestion.
What what do you see thelikelihood of another rate cut
uh towards the end of this year?

SPEAKER_01 (01:00:24):
Um so I would say that this rate cut that they
made uh last week was done blindand it was sort of risk
management.
Uh their language indicateslargely that was risk
management.
They were uncertain about thestate of the economy and they
thought it was safer to cut thanto not cut.
I don't see how they make twoblind decisions.

(01:00:46):
So um if the government remainsshut down well into November,
like closer to Thanksgiving, Ithink the chances for another
rate cut in December diminish atthat point.
Because I think if thegovernment reopens anytime the
next week or so, you're morelikely to get a little more
data, at least looking atSeptember or something.

(01:01:06):
And I don't think the data looksgreat.
So I think it would justify sothe employment growth and so on
and so forth.
I don't think the privatesources that we had can cobble
together don't look particularlygreat at this point.
So it's likely that if we getnew data, it would justify
another quarter point data uhrate cut.
But it's hard for them to maketwo rate cuts in the blind

(01:01:27):
because they're literally makingit on no data.
Um, so the longer the shutdownlasts, I think reduces your
likelihood um uh of a rate cut.
So if we do end up getting moredata, we'll probably see another
quarter point.
So I'd say about 60% at thispoint chance that we get a

(01:01:48):
quarter point in December.

SPEAKER_04 (01:01:50):
Love it.
Last one here for investorslistening to this.
Um, what what do you think yourone metric that every investor
should track those artists offshould be?

SPEAKER_01 (01:02:02):
Uh for real estate?
Yeah.
I would I mean I'd look at uhyou know two metrics, I cheap
population growth and then thevacancy rates.

SPEAKER_04 (01:02:14):
Well, Marvin, we appreciate your time.
We're we're super grateful.
We know you're a busy man andand your time is valuable.
So we're we're thankful that uhyou spent some time with us.
We're super grateful for theSkyline report that you work on
and and um and your team putstogether.
And uh if you haven't had achance to take a look at that,
we'd recommend taking a look atthe Skyline report uh two times

(01:02:34):
a year.
Um but yeah, we're we'regrateful and and uh we
appreciate all the nuggets youhad on here.

SPEAKER_03 (01:02:39):
So happy to do it.
Thanks for reminding me.
Thanks, Marvin.
Yeah, thanks for again.

SPEAKER_00 (01:02:44):
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