Downtown Austin: flood of multifamily units in forecast

AUSTIN – The latest apartment survey published by Austin Investors Interests LLC indicates vacancies are growing substantially in that particular market segment.

New deliveries have pushed occupancy to 82 percent in the urban core, compared to 90 percent last quarter.

Consider this — in the past 12 months about 2,341 luxury units have delivered in a four-mile radius of downtown and more than double that are under construction in the same area.

Rents in the new luxury properties downtown — mostly high-rise and mid-rise buildings — range dramatically in price, too, but all well above the market average.

Average price per sf of new build in the urban core is anywhere from $1.73 per sf to $3.16 per sf.

The next several months will be very telling about developers’ decisions to flood the market with expensive units.

Here are a few other highlights of the report:

• Average rent across Austin market is $1.31 per sf, about 6 percent more than a year ago.
• The highest rents are in the Central Business District where the average across all product types is $2.52 per sf, an increase of 2.2 percent from a year ago.
• Rents have increased the most during the past year in Bastrop (9 percent) and the northeast submarket (8.2 percent).
• Average rent is the lowest in Bastrop, averaging $1 per sf.
• The overall occupancy rate for apartment communities that are stabilized is 93.6 percent.
• Two submarkets in specific categories are posting 100 percent occupancy: Class B product in Bastrop and Class C product in Cedar Park and Leander.
• Concessions, such as free rent for several weeks, are returning to the market, mostly among new apartment communities downtown.
• About 2,615 new apartment units delivered across the market in 2Q 2015. About 12,080 units are scheduled to deliver in the next year.
• Investment sales are strongest in the Class C product, where assets are trading at an average of $81,000 per unit. Compare that with newer Class A communities that are selling for an average of $218,766 per unit.

Read more at the Austin Business Journal.

Click Austin NewsTalk and Austin Market Research.