Austin tops investment opportunity list

The list is included in ULI’s 2016 edition of Emerging Trends in Real Estate. The report was unveiled this week during the organization’s fall meeting here. The list ranks cities by their opportunities for investors.

Austin is the third consecutive Texas market to lead the survey. Houston was at the top in 2014.

Austin received high marks as a city where local, regional, and national real estate participants operate in relative harmony. Such cooperation helps keep adequate levels of debt and equity capital available for investment opportunities.

“Despite Austin’s growing popularity,” said the report, “it remains a comparatively small market in terms of investment opportunities. While Austin is unlikely to attract a meaningful amount of off-shore capital, it tops many domestic investors’ wish lists. This makes the market very competitive.”

Here’s what ULI focus groups had to say about other Texas markets.

Dallas-Fort Worth (No. 2). This region of Texas is perceived as a business-friendly environment that offers an attractive cost of doing business, an adequate and well-educated workforce, and world-class transportation by air, rail, and road.

Once known exclusively as a suburban market, Dallas’ growth now includes in-fill and inner-ring communities and the use of smaller lots and higher density to keep housing affordable.

San Antonio (No. 32). Institutional investors are now looking for opportunities in “this very affordable market.” San Antonio is “gaining experience in multiple product types that have generated a considerable amount of buzz.”

San Antonio’s opportunities can be found in shared office work locations in the CBD, urban residential, historic developments, and top-tier distribution. Some suburban employers are moving at least some of their employees downtown.

Houston (No. 40). Bayou City investors are in a waiting game to see how the energy sector will recover and how the market will deal with new space begun when energy prices were higher. Employment growth has contracted but not as much as was expected.

The 2017 outlook for Houston is “muted” with a lot riding on energy prices. Slower economic growth hinders the housing market with building permits and starts flat. The multifamily market will be dealing with significant new supply projected to deliver over the next 24 months.

Read the entire report here.