Sobering up 

Suddenly, the NW Ark. real estate market isn't so hot.

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Northwest Arkansas has grown faster than anyone could have anticipated. Sleepy pastureland overnight became subdivisions, office parks and strip malls. Traffic backs up amid road construction and snarls at rush hour on a freeway not yet 10 years old. Internet map sites like Mapquest can’t update Benton County quick enough to keep up with all of the new local streets.

The lure of easy money proved irresistible to would-be developers.

“There were a lot of people who jumped on the bandwagon,” said Tom Terminella, a familiar name in Northwest Arkansas real estate for almost two decades. “Every hairdresser and fireman and a lot of people who were in banking got in.”

The dizzying pace of expansion was as evident in the pages of new society magazines as in the economic statistics. Ambitious developers joined with start-up bank executives to unveil high-profile projects at glitzy functions.

Now, the hangover from the big party has set in. Despite a steady population increase of about 1,100 people a month, there’s a serious oversupply of residential and commercial property. One economist estimates 112.9 months of housing inventory — more than nine years’ worth — at the current rates of absorption.

“Houses were being built at such a pace that even the fantastic growth of Northwest Arkansas couldn’t keep up with it,” said Kathy Deck, the associate director of the Center for Business and Economic Research at the Sam M. Walton College for Business at the University of Arkansas in Fayetteville.

That reality has sobered everyone. Formerly eager developers are scaling back their plans, and their once-trigger-happy bankers are re-evaluating lending practices.

It adds up to a mood best described as chastened, though most believe the situation temporary. The unanswered question is, how temporary?

The chastened mood is reflected in Brandon Barber’s voice as he talks about the adjustments he has made in his business over the last few months.

Now the chairman and CEO of the Barber Group, a residential and commercial real estate development company he founded almost three years ago, Barber embodies the fast-paced roller-coaster ride of Northwest Arkansas’s boom cycle. Eight years ago, he was a recent graduate of the University of Arkansas and working for a bank in Fayetteville owned by his father-in-law, John Ed Chambers of Danville.

“I got the opportunity to see people jumping in the speculative market, more on the residential side,” Barber says. “I jumped out there and built spec homes which sold at the time, just like everything else was.”

Eventually he left the bank to focus full-time on residential construction and land development, incorporating the Barber Group in February 2004. His timing coincided perfectly with what would become the most profitable two years in the regional real estate market. First he focused on building large residential communities, mainly in Fayetteville, where stricter zoning regulations meant he had fewer competitors than if he built in other nearby cities.

With the money from those projects, Barber upped the ante by introducing high-profile mixed-use developments, starting with the Legacy Building, which, at seven stories, already towers over Dickson Street in Fayetteville. The building includes 37 expensive condominiums scheduled for completion by early 2007, an upscale restaurant expected to open this month, and high-end retail shops.



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