Fayetteville Maintains Solid Occupancy Despite Aggressive Inventory Growth
Fayetteville, Arkansas has been a great example of a market where demand has been more than able to maintain pace with new construction. This has been a hot market for developers in recent years. Since the end of 2016, Fayetteville has added some 8,300 new apartment units. That accounts for more than one-quarter of all existing inventory, meaning that for every 100 units that existed at the end of 2016, there have been an additional 27 units added since. Helping demand keep up with elevated supply, Fayetteville was one of the nation’s strongest job growth markets heading into the pandemic. In fact, the local employment base expanded by more than 35% during the 2010s decade. Only two other secondary markets (Florida’s Naples and Cape Coral/Ft. Myers) saw more growth than Fayetteville during that period. Although occupancy rates did contract during the 2020 downturn, the Fayetteville market has since rebounded in an impressive manner. Preliminary 1st quarter 2022 occupancy stats suggest local occupancy rates remain above 98%, one of the tightest rates in the nation and nearly 100 basis points above the U.S. overall. Moving forward, the stability provided by the University of Arkansas paired with an overall fast-growing economy means that Fayetteville occupancy rates will likely remain solid by U.S. standards. While new construction will remain a near-term headwind, this remains a great example of a market where substantial demand appears strong enough to maintain pace with new deliveries.