Austin Texas Apartment Market Report
Continued>>>
Area's apartment market still sizzling hot
Jan. 14, 2012
Sanders said about 60 percent of her business is from people relocating to Austin "from all over the world" because of the job market. Nationally, the U.S. apartment market also is robust.
"While apartment demand has cooled off a bit from 2010's incredibly large volume, it remains very strong," Greg Willett, vice president of research and analysis for MPF, said this month. "Most of the jobs being formed are going to young adults, who tend to be renters. At the same time, loss of renters to (home) purchase continues to run far below the historical norm.
"Those factors are combining to produce demand far in excess of the limited deliveries coming on stream right now, especially when today's completions are heavy on niche product such as affordable housing, seniors housing or student properties, rather than conventional, market-rate apartments."
Those same demand generators are true for Austin as well as the nation, Willett said.
"Mortgage lending requirements are a big factor in the limited volume of home sales," Willett said. "Also, would-be buyers just aren't yet sure that we're at the bottom on (home) pricing."
The relatively few newly built projects in the Austin area are leasing fast.
At the Retreat at North Bluff, which began leasing units in December 2010, all 240 apartments were rented by midsummer of 2011, said Christa Wilson, the property manager. As of late last week, about 20 people were on a waiting list.
Since opening, "we've never gone below 99 percent occupied, which would be three vacancies," Wilson said.
Monthly rents range from $765 for a one-bedroom unit to $1,115 for a two-bedroom. The project includes some units at below-market rents, which range from about $400 to $600 a month.
Xuan Le Redding, leasing and sales manager with JB Goodwin Realtors, said it's not uncommon for a prospective renter to face multiple offers for a unit. She encourages her clients to fill out their applications in advance so they don't lose out. One client found an apartment he wanted, but by the time he went back the next day to fill out an application, two other applications had come in.
Karla Cavazos also wasn't prepared for what she encountered in her apartment search. Cavazos recently moved here from Dallas to start a job as an oncology sales representative with a diagnostic company. Cavazos hit a few snags in her search, finding that either the move-in date didn't work or there was a waiting list.
"I was really surprised with the market," she said. "The city seems to be booming."
How long will the apartment boom last? Heimsath predicts another two to three years, though Austin's apartment market is known for turning quickly in its boom-and-bust cycles .
Brett Denton, a principal with Ardent, said that although there has been a lot of discussion about overbuilding, the "projected deliveries will be spread over a number of years."
Financing also will serve as a check-and-balance on the amount of new apartment construction, developers say.
"Obtaining debt and equity financing for projects is still quite challenging as lenders and bankers watch the European capital markets," Denton said. "This situation will not be resolved soon and will serve to limit capital that will fund new supply in the near-term."
Proposed Construction / Greater Austin - 2011
Name * = Affordable Housing Units Area
** = Senior Housing
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Central:
- District SoCo/Kaplan 215 South Congress (SoCo)
- Riverside Square Redev/CWS 300 Downtown/UT/Riverside
- The Milan 100 Downtown/UT/Riverside
- Robertson Hill II/Lane-SW 282 Downtown
- Gables Republic Park 221 Downtown/University of Texas
- Post 1500 S Lamar/Post 298 Downtown/UT/
- 5400 N Lamar/Camden 290 Central Austin
- Greystar Magnolia 245 Downtown/UT/Riverside
- 21st at Pearl/Lee Prop 121 Downtown / West Campus /UT
Northeast & Southeast:
- Mueller Airport Site II/Simmons Vedder 300 Northeast
- South Shore District I & II/Grayco 1175 Southeast / Riverside Dr
North & Northwest:
- Crestview Station II/High St Res 600 North
- Criterion at Harris Ridge 400 Pflugerville / Round Rock / Georgetown
- Greystar Stone Hill 300 Pflugerville/RR/Gtown
- Two Rivers/Larry Peel 163 Pflugerville / Round Rock / Georgetown
- Archstone Hogfarm 500 Cdr Pk/Leandr/Jollyvl
- Riverhorse Ranch II/Belco 278 Pflugerville / Round Rock / Georgetown
- Mansions at Round Rock II/Chaucer 237 Pflugerville/Round Rock / Georgetown
- RIATA IX/Legacy 306 Cedar Park / Leander
- Crossings La Frontera/Simmons Vedder 357 Cdr Pk/Leander/Jollyvllle
- Crossings Lakeline/Simmons Vedder 400 Cdr Pk / Leander
- Camden Amber Oaks II / Camden 250 Cdr Pk/Leandr/Jollyvl
- Park North/GenCap 600 Cedar Pk/Leandr/Jollyvl
- Little Elm/GenCap 372 Cedar Park / Leander Cedar Park / Leander
- Fairfield @ Ribelin Ranch 298 Cdr Pk/Leandr/Jollyvl
- Crystal Falls/GenCap 488 Cedar Park / Leander
South & West:
- Stonecreek Canyon / Moody National 184 So. Hwy 71 / Interstate 35
- Alexan Legacy Oaks / Trammell Crow 372 South/Hwy 71/I-35
- Verde LaDera 300 South / Hwy 71/ Interstate-35
- Vantage at Plum Creek* (Kyle) 264 South / Hwy 71/I-35
- Colonial Village @ Cityway 376 South/Hwy 71/ Interstate-35
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Total (31 properties) 10,588
Austin apartment rents will rise, report says
Austin Business Journal
Date: Thursday, January, 2011
Apartment occupancy rates jumped notably in 2010, prompting decreased supply and higher prices, according to a recent report.MPF Research, a division of RealPage Inc., said the market is expected to further contract this year, and Austin will become the country’s second best apartment industry performer.
Occupancy is expected to rise another 2.2 percentage points this year with a concurrent 6.8 percent increase in rental rates. Only San Jose, with 10.2 percent revenue growth, is expected to outperform Austin's net 9 percent revenue increase this year.
“Significant further improvement in Austin’s apartment occupancy rate looks like a sure thing,” said Greg Willett, MPF’s vice president of research. “As for rent growth, it’s always a feast-or-famine situation in Austin. Conditions now are coming together to produce one of the area’s cyclical pricing spikes.”
Apartment occupancy increased 3.6 percentage points to 93.5 percent last year, one of the strongest increases nationally. The city's monthly rent averaged $854 at the end of 2010, up 2.4 percent year-over-year last month.
“Austin’s apartment market cycle is fast and pronounced,” Willett said
Report: Austin apartment vacancies to fall, rates to rise
Austin area apartment vacancies are expected to fall this year with relatively few new projects coming online, a Marcus & Millichap reported Wednesday.
The real estate investment services firm forecasts the rate falling 250 basis points this year versus 2009, hitting about 7.6 percent. The current rate is about 8.2 percent. The company attributes the change to local employment growth drawing people to the area, about 23,000 new jobs this year, and fewer multifamily projects in the pipeline.
Developers are expected to add about 2,900 units in Austin this year, down from the average 4,700 new apartments annually during the last five years. Builders completed about 10,300 units just last year.
The rising demand and decreased supply will push rental rates up this year, Marcus & Millichap reported. Asking rents will grow to $865 per month and effective rents to $780 per month, an annual increase of about 2.5 percent and 3.1 percent, respectively. Asking and effective rents decreased 3 percent the 3.4 percent in 2009.
Apartment market rebound good news for landlords, but tenants face higher rents
Last year marked a turnaround for the apartment market in the Austin area; rents and leasing activity rose to their highest levels on record. Real estate experts say 2011 will be another strong year, as job growth, newcomers moving to the area and scant new apartment construction push rents higher this year and next.
That's great news for landlords, but not for tenants, who are facing hefty rent increases. AMLI Residential, a major apartment owner in Austin, expects market-rate rents to increase from 4 percent to 12 percent this year in most of its 11 markets and 65 communities in the U.S. Austin is AMLI's strongest market now.
CEO Gregory Mutz anticipates that AMLI's eight Austin properties will have market-rate rent hikes of 7.5 percent to 8.5 percent. "Austin is doing very well, and our downtown properties are doing extremely well," Mutz said. "There are a number of positive forces at work — job growth, household formations, positive demographic trends, a greater propensity to rent versus buy, and the fact that there are currently very few new apartment units being delivered as new supply this year," he said.
Regionwide, rents began rising in the second half of 2010 and will continue climbing for the next two years, said Greg Willett, vice president of research for MPF Research, which tracks the apartment market. "Obviously we think this year is going to be phenomenal for the market," Willett said. "Renters need to be pushing for longer leases" to protect themselves against increases, he said.
The apartment market for the U.S. as a whole "is back in a big way," Willett said. "If you had to pick a half-dozen markets that are on everyone's radar list, Austin is one of them. Everybody wants to buy or build something in Austin because the outlook is strong," he said.
This spring, San Antonio National Bank will open an Austin office, looking to lend money to investors acquiring or refinancing apartment complexes with stable occupancies and positive cash flow. Several apartment developers, including Colonial Grand Partners and Simmons Vedder Partners, say they expect to start new projects in Austin later this year.
Charles Heimsath, a real estate consultant, said an apartment recovery that began in 2009 and accelerated into 2010 is expected to continue into next year. Heimsath, president of Capitol Market Research, said rents citywide rose by late 2010 to an average of 98 cents a square foot, the highest ever. That amounts to $731 a month for the average one-bedroom apartment and $989 for the average two-bedroom unit.
Heimsath's survey, conducted twice a year, covers a total of 147,000 units, including 1,867 in the downtown area. While the newer luxury downtown units have high rents, they are not the only reason for the overall market increase, Heimsath notes.
Austin ended 2011 with a record 8,773 more apartments leased than at the end of 2009, Heimsath said.
Citywide, occupancy hit 94.8 percent by late 2010, a level not seen since late 2007 and up from 90.4 percent at the end of 2009, he said. "This is just phenomenal. It's amazing how rapidly the market recovered," he said."A lot of it is the demographics, and the movement of the younger age population of Austin to take a job, or to find a job, or in some cases to just hang out," Heimsath said.
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JOB GROWTH TO FUEL DEMAND FOR AUSTIN APARTMENT RENTALS
The Capital City's robust employment growth is expected to resume in the coming months, attracting job seekers from areas hit hard by the recession, according to the 2010 National Apartment Report by Marcus & Millichap.
A recovery in the global economy will be particularly beneficial for firms, as technology sales in emerging markets will revive the local manufacturing sector, which has declined by 15 percent since peaking in 2007.
Following are some of the most significant aspects of the Austin Apartment Research Report:
- Job growth is expected to gain steam this year. Companies are forecast to expand local payrolls at a 2.5 percent clip with the addition of 19,000 positions.
- Population gains and job growth will fuel a 2.1 percent increase in multifamily demand this year, resulting in a 40 basis point improvement in vacancy to 10.6 percent.
- A sharp reduction in multifamily development activity is expected in 2010 as 2,500 units come online. Last year, 7,900 apartments were delivered.
- Asking rents are forecast to rise 0.6 percent in 2010 to $849 per month while effective rents retreat 0.7 percent to $752 per month.
(Marcus & Millichap)
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Austin Market
OCCUPANCY CHANGE EFFECTIVE RENT
Jul-09 Jul-10 % Jul-09 Jul-10 %
Austin 87.5% 90.9% 3.8% $813 $811 -0.3%
General Overview (as of December 2009) Dec 2009 Annual Change
Occupancy: 89.1 0%
Units Added: 4,520 - 48.5%
Units Absorbed (Annual): 4,039 +110.6%
Average Size (SF): 849 +0.5%
Asking Rent: $826 -4.3%
Asking Rent per SF: $0.97 -4.8%
Effective Rent: $788 -4.7%
Effective Rent per SF: $0.93 -5.2%
% Offering Concessions: 55% +12.4%
Ave. Concession Package: 7.7% +10.6%
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Austin Apartment Finder
Apartments - The New American Dream?
Apartment living is becoming more popular among households who could otherwise afford to buy a home according to this NMHC presentation.
Early in the 1900s, apartment living was considered very chic. American cities were high density, pedestrian friendly areas. But the arrival of new transportation systems & evolutions in the mortgage system made it possible for families to leave the cities. After World War II the American Dream came to be defined as owning a home of your own, usually a single family detached home.
Now it appears the pendulum is swinging back to favor apartment living. Today, fully 15 percent of households rent an apartment in a building with five or more units. Plus the number of apartment renters is growing. In 1999, the number of people who rented apartments in buildings with 5 or more units was up 2.2 percent, while the total number of households grew just 1.4 percent.
. Renters are becoming older, more affluent and more educated. For the last 2 years, the fastest growing segment of apt renters was households earning over $50,000.
These households are part of a growing number who now choose to rent an apartment for lifestyle - not economic reasons. Nearly 40 percent of renters surveyed by Fannie Mae in 1999 said that buying a home was not an important priority or not a priority at all.
Why the sudden interest in apartment living? Changing demographics, new public policy initiatives, evolving lifestyles and changes in the apartment industry are working together to increase apartment demand,
Demographic Changes
The profile of the American population is changing, and some of these changes are helping to boost apartment demand.
2 of the fastest growing age groups over the next 10 years (people in their mid-twenties and empty nesters in their fifties) are two of the groups most likely to prefer apartment living. After more than 2 decades of declining in number, the population in the traditional primary renting years (age 20-29) is expected to increase 11 % between now and 2010.
The 2 demographic factor at work is the shakeup in the makeup of what constitutes the "typical household." In the past it was traditionally a married couple with children. But these households have been declining in number since the early 1970s, and now account for just 1/4 of all households.Taking their place are a growing number of non-traditional households who are more likely to choose apartment living - childless couples (DINKS), people who live alone and non family/ nonrelated households. (roommates) In fact, in the 90s, 2/3 of all new households were headed by single adults or single-parent families.
Financial Incentives
Many households opt to rent so they can invest their money in the stock market instead of in a home. Others want to be able to move from one job to another without incurring the cost of selling a house so they are choosing apartments
Evolving Lifestyles
In today's hectic times, there are 3 key reasons why households that would not have previously rented are now considering apartments:
- (1) desire for hassle free living;
- (2) the superior amenity packages available in apartments.&
- (3) financial reasons.
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Austin Texas Apartment Market Report
Rentals in Austin Texas - Austin Apartment Rents and rental Demographics
Austin Texas Apartments: Amenities like Broadband Internet access, attached garages, built-ins, entertainment centers, alarm systems, granite countertops, Jacuzzi type bathtubs, crown molding, fireplace, fitness centers, cyber-cafes, business centers, movie theaters, Demographics, single family detached homes, roommates, households headed by single adults or single-parent families, capital gains on homes sold
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