The three largest metro cities in Fort Smith reported above-average building permit values in February. Fort Smith, Greenwood and Van Buren had a combined total of $90.808 million in building permits in February, up 298% from $22.802 million in February 2021.
February permit values also represented a 187% increase from the $30.554 million value of building permits reported in January. Year-to-date construction activity is valued at $121.362 million, a 173% increase from $44.422 million for the first two months of 2021.
Fort Smith issued 134 permits in February worth $36.873 million, a 91.2% increase from the $28.509 million value of the 155 permits issued in January and a 213% increase over to the value of $17.42 million from the 108 permits issued in February 2021. There were 22 permits issued for new residential construction during the month with a combined value of $3.785 million, down 22% from the $4.86 million value of the 25 permits issued in January, but up 110% from the combined $1.8 million value of the seven new residential building permits issued in February 2021.
Part of the February gain was a $13.25 million permit for an addition to Mercy Fort Smith at 7301 Rogers Ave. February 22, Mercy marked the beginning construction of a $162.5 million expansion of Mercy Hospital that will focus on new emergency room and intensive care unit (ICU) areas, as well as parking.
VAN BUREN, GREENWOOD PROJECTS
Van Buren, the region’s second largest city, issued 43 permits in February worth $35.014 million, a significant increase from the $1.86 million value of the 64 permits issued in January and to the value of $5.26 million from the 52 permits issued in February of last year.
Monthly activity included four residential projects worth $636,000, down 61% from the $1.65 million value of the nine residential projects authorized in January and down 78% from to the combined value of $2.89 million of residential construction projects authorized in February 2021.
On the business side, there were three authorized projects with a combined value of $34.337 million per report. There were no commercial projects in January and $2.34 million of commercial projects recorded in February 2021. The big push towards high authorized activity for Van Buren in the month came from the first phase of a $100 million addition to Simmons Foods at its factory at 2101 Twin Circle in Van Buren, which has an authorized value of $34 million. Company officials said the upgrade will create 100 jobs, bringing the total number of jobs at the plant to 700.
Greenwood also had a good month, issuing 11 permits in February with a combined value of $1.286 million. The total was 585% higher than the $185,043 value of 12 permits issued in January and 950% higher than the $122,520 value of nine permits issued in February 2021.
INFLATION, INTEREST RATES
Jimmie Deer, director of construction services for the city of Fort Smith, said the increase in the value of construction activity in recent months was due to a combination of increased activity and a cost of higher construction due to inflation.
ERC President Rod Coleman agreed with this assessment.
“Twenty-four months ago it was just more construction. Over the past six to twelve months, there has still been a lot of construction, but inflation has a lot to do with it. People always want to buy. They’re not that concerned about how much that 10-20% higher price will have on their monthly payments,” Coleman said.
Year-to-date construction in the region is up 105% from the $59.22 million in permitted activity reported in Fort Smith, Van Buren and Greenwood in the first two months of 2020. This pace is likely to change if interest rates rise, Coleman said. , noting that a rise in interest rates of 3% to 5% will greatly affect residential construction.
“A rise in interest rates affects the construction of houses. There is no doubt about it,” he said.
The region ended 2021 with $343.289 million in authorized construction activity, a 29% increase from $265.975 million in 2020. Fort Smith Metro has seen continued growth in recent years, but no recent year has performed as well in terms of construction activity as 2021, with the three largest cities in the region seeing an increase in the number of buildings from 2020.
SUMMARY OF REGIONAL CONSTRUCTION ACTIVITIES
Combined total for the three cities
2021: $343.289 million
2020: $265.975 million
2019: $241.741 million
2018: $231.78 million
2017: $210.844 million
2016: $211.345 million
2015: $218.899 million
2014: $198.983 million
2013: $202.389 million
2012: $154.64 million
2011: $201.079 million