The Next Austin? How About Arkansas. Seriously.
(Bloomberg Opinion) -- Ambitious young college graduates are looking for an affordable home base where they can build their families and careers. Here’s a place that may not (yet) be on their list: Arkansas.
For the past decade, coastal metros like New York and San Francisco dominated the landscape for the upwardly mobile, but the main story became how to cope with the high cost of living in those cities. One solution was to move into lower-cost neighborhoods, further pushing up rents and home prices. Others moved to lower-cost metros that shared some of the characteristics of those high-cost places; Austin, Texas, was one of the biggest beneficiaries of that trend.
Thanks to the accumulated impact of all that migration — accelerated by lifestyle changes during the pandemic — Austin is no longer affordable, and arguably overpriced for what it offers. That begs the question: Where should someone who’s been priced out of Austin look? I would argue the best candidate to be the next Austin is the up-and-coming region known as Northwest Arkansas.
This isn't just throwing a dart at the map and arbitrarily calling something the next Austin. Northwest Arkansas has both idiosyncratic and macro factors that make it a logical heir to the role played by Austin for so long.
First, we should define what we're talking about. Northwest Arkansas includes 4 of the 10 largest cities in the state: Fayetteville, home to the University of Arkansas; Bentonville, home to Walmart Inc.; and Springdale and Rogers. The two key counties in the region are Benton and Washington, which comprise just 17.6% of the state's population but accounted for more than 100% of the state's net population growth in the 2010's. That's not a misprint — Arkansas expanded by 95,600 people during the decade thanks to 105,800 residents added by Benton and Washington County. Of the 110 U.S. metro areas that have more than 500,000 people, the Fayetteville-Springdale-Rogers metro area was the fifth-fastest growing during that period.
The metro area, anchored by the state’s flagship public university and the largest corporation in the U.S. by revenues, is growing as fast as recent urban juggernauts such as Boise, Idaho, Raleigh, North Carolina and Orlando, Florida.
Northwestern Arkansas also benefits from the continued growth of Texas in the same way that Austin benefited from the growth of the economy in California. There's intense competition from universities in neighboring states to raise their profile and fill seats by recruiting students from Texas, and more than 25% of the student body of the University of Arkansas hails from Texas. Fayetteville is an 8-hour drive from Austin and a 5.5-hour drive from Dallas, so to the extent the Texas metros get too crowded or expensive for locals, northwest Arkansas already has a diaspora of Lone Star expats that should make it a sensible place to consider while remaining less than a day's drive away from "home."
If you're asking, "What's there to do in Northwest Arkansas?" you should know the region is being transformed by the wealth of the Waltons, Walmart’s founding family. The Crystal Bridges Museum of American Art opened a decade ago, funded by over $1 billion from Walmart heiress Alice Walton, and has become one of the country’s top museums. It's where the copy of the U.S. Constitution won at auction by Citadel founder Kenneth Griffin will be lent for public viewing.
Walmart, cognizant of the need to recruit more young talent to Arkansas, is transforming downtown Bentonville into a walkable, amenity-filled campus. The Razorback Regional Greenway — also funded in part with Walton family money — is a 37-mile hiking and biking trail dedicated in 2015 that connects to many community attractions.
The underlying driver in all this is that a lot of second-tier metro areas got a lot more expensive over the past two years and aren't the bargains they used to be. New places will gain traction as metros like Austin and Boise struggle with their own affordability problems. At the same time, the continued growth in Texas will slowly but surely create its own spillover dynamics to other metro areas, just as growth on the West Coast spilled over to Austin.
Northwest Arkansas might not be on the radar of many coastal people. but it's the most likely candidate to be the prime beneficiary of these trends.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Conor Sen is a Bloomberg Opinion columnist and the founder of Peachtree Creek Investments. He's been a contributor to the Atlantic and Business Insider and resides in Atlanta.
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