Austin's Got The Multifamily Mojo. Here's Why.
Strong job growth and a still increasing population has kept Austin among the top five multifamily investment markets and there’s no slowdown on the horizon. That’s why we are excited to host Bisnow’s Austin Multifamily Surge event on Aug. 27 at the JW Marriott Austin (110 E Second St).
Event speaker Argyle Residential managing director John Burnham (here with his wife, Morgan, in Rhode Island for a recent family visit) tells us both the Austin and San Antonio markets are continuing to see strong demand for apartment homes. The region is benefiting from significant population growth and strong job markets. Austin, in particular, has seen lease-ups go well despite the glut of supply that moved through in the past 18 months. John says that space has been absorbed with relative ease and many institutional investors have kept Austin on their short list of places to look for opportunities. San Antonio is a similar story, especially in the infill markets. Overall, both cities are just trying to keep up with housing demand and more will be needed in coming years, assuming there's not an unexpected economic shock, he says.
Argyle has more than 1,200 units under construction with many of those ready for move-in this fall. The 298-unit Sabina at 3400 Harmon Ave in Austin (pictured) opened in 2014 and is 93% leased. The 256-unit Corazon (which opened in late December) at 1000 E Fifth St in Austin is 61% leased. Under construction are the 302-unit Rivera at 1130 Broadway in San Antonio, the 343-unit Burnet Marketplace at 6701 Burnet Rd in Austin, the 295-unit Azul Lakeshore at 1201 Lady Bird Lane in Austin and the 269-unit UP Town at 915 Duncan in Austin.
Event speaker Greystone managing director Jef Elm (here, speaking at a Dallas Bisnow event last year) says the multifamily market is extremely robust with Austin among the top five investment markets nationally. The market is attracting both domestic and international buyers and every deal is extremely competitive down to the last ink on the contract, Jef says.
Multifamily thrives in markets with job growth, Jef says, but Austin’s status as a major tech hub is beneficial because it’s an indicator of continued high job growth as the tech industry thrives. Jef says the volume of deal transactions is steady and may exceed previous years’ performances. Most of the new development in Austin is Class-A luxury projects getting rents of $2.50 to $3/SF. Because of that, affordability around the CBD is one of the few challenges that Austin faces. Rents aren’t nearly as high in the suburbs. But, of the roughly 15,000 to 20,000 new units coming on line in the Austin area for 2015 and 2016, about 20% of that is in the CBD. Pending another dot-com or 2008 capital markets style crash, Jef says, Austin will continue to see steady growth for the next 10 years. (Argyle Residential's Corazon project pictured.)