2010 AUSTIN APARTMENT REVIEW
JANUARY 2010
Austin Market
General Overview 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%
Not surprisingly, August is a big month for the
multifamily industry in the Austin area. With all
the new leases for incoming students, we usually
see impressive numbers for that month.
And 2009 followed that pattern as well. After
all the new leases in late summer we normally
see a slow but steady fall off in occupancy
through the fourth quarter. 2009 broke from
that pattern, however. In a recession as deep
and widespread as this one has been any
good news is as refreshing as it is surprising!
The Overall Occupancy Rate finished 2009 at
89.1%, up 0.1% for the year. As late as May
of last year, that figure had fallen to 86.9%, but
rose as much as 2.5 percentage points by November,
before it fell slightly at the end of the
year. Rents, however, did not follow this trend.
The Overall Effective Rental Rate dropped $39
over the year to finish 2009 at $788 per month.
Although steadily decreasing throughout the
year, the decline gained momentum during the
4th Quarter, where $31 of this drop occurred.
4th Quarter is historically a slow time for leasing
in the Austin area but whereas Occupancy
managed a slight improvement, it was accomplished
at the cost of rental rates.
As recently as the beginning of last year, Austin
was not known as a concession-prone market.
At that time, only about one in four properties
offered an advertised concession, and
that averaged only about 2.5 weeks free on a
12-month lease. Today, 54.6% offer concessions
and they now average over 4 weeks free.
In fact, the majority of the reduction in Effective
Rents came by simply lowering Asking
Rents, rather than by offering additional rental
concessions.
Nearly 5000 new units were added in the area
over the last year. Lease up rates have been
fairly strong. For Same-Store Occupancy
Rates, they have only lost 0.9% over the year,
even with all the new product hitting the market.
This signifies a pretty healthy ability to absorb
this new product.
Unlike most places around the country, Austin
has been experiencing job growth throughout
this past year. At the beginning of the year,
there were 827,573 people employed in the
area; by November, that figure had climbed to
843,093. The Unemployment Rate rose from
5.2% to 6.9% because of more people looking
for jobs, but job growth still occurred in 8 out of
the 11 months (through November, the latest
figures available from the U.S. Bureau of Labor
Statistics).
There are more new units still in the pipeline as
well as new projects being announced with expectations
to begin construction early this year.
Austin, however, is not experiencing the overbuilt
conditions seen in many other Texas markets,
so we should be able to handle these as
they come on board. With the job market looking
better, the fact that Austin never got hit too
hard with this recession and that the fundamentals
are in better shape here than in most
places, the multifamily industry in Austin should
look forward to a good year ahead.
ALN Apartment Data
AUSTIN REVIEW
Austin Market
General Overview
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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JOB GROWTH TO FUEL AUSTIN APARTMENT DEMAND
February, 2010
AUSTIN – 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 Austin 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.
- A sharp reduction in multifamily development activity is expected in 2010 as 2,500 units come online. Last year, 7,900 apartments were delivered.
- Population gains and job growth will fuel a 2.1 percent increase in apartment demand this year, resulting in a 40 basis point improvement in vacancy to 10.6 percent.
- 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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Historical Data on Renting in Central Texas
Rents are for 2-bedroom, 2-bath units. Occupancy rates
are for all apartments.
Date Average rent Occupancy rate
June 2000 $913 98%
June 2001 $951 93%
June 2002 $868 90%
June 2003 $812 88%
June 2004 $784 89%
June 2005 $811 93%
June 2006 $861 95%
June 2007 $900 93%
June 2008 $905 92%
Feb 2009 $870 88%
March 2009 $824 87%
Sept 2009 $820 87%
March 2010 $850 91%
August 2010 $874 94%
Where the jobs are
Central Texas added more jobs last year than expected, and Austin led Texas cities in employment growth rate, according to Dallas Federal Reserve estimates.
Job growth
Austin 4.5%
Dallas 2.3%
San Antonio 2.4%
Houston 2.0%
Statewide 2.1%
Source: Dallas Federal Reserve
Industries that added the most jobs
Category Jobs added Precent change Pay
1. Retail 3,420 11% $474
2. Employment services 3,048 19% $483
3. Restaurants 3,045 6% $284
4. Local government 2,356 4% $737
5. State government 2,129 3% $801
6. Health care 2,124 6% $793
7. Construction 1,831 5% $823
8. Professional equipment 1,569 7% $1,634
(computer/peripherals
9. Architecture/engineering 793 8% $1,137
10. Building supplies 738 15% $674
Industries that lost the most jobs
Category Jobs lost Percent change Pay
1. Insurance carriers 701 10% $1,095
2. Building equip. contractors 568 5% $807
3. Nonresidential construction 355 9% $900
4. Misc. manufacturing 318 12% $696
5. Pharmaceutical/medical 242 12% $1,052
manufacturing
6. Special food services 210 9% $343
7. Medical equip./supply manuf. 207 13% $1,379
8. Federal government 192 2% $975
9. Computer/peripheral manuf. 189 2% $2,271
10. Business support services 188 3% $645
Largest industries in Central Texas
Category Employment Pay
1. Local government 67,659 $737
2. State government 63,332 $801
3. Technology 63,034 $1,734
4. Restaurants 50,269 $284
5. Construction 38,852 $823
6. Health care 37,578 $793
7. Retail 35,734 $474
8. Employment services 19,380 $483
9. Grocery stores 13,560 $429
10. Architectural, engineering 10,918 $1,137
and related services
Total region 704,300 $839
Top-paying jobs
Jobs added/ jobs lost Percent change Pay Percent change
1. Oil and gas extraction +523 +158% $4,211 +275%
2. Computer/peripheral mfg. -189 -2% $2,271 +7%
3. Internet publishing/broadcasting -49 -25% $2,058 +43%
Lowest-paying jobs
1. RV parks +47 +54% $249 +1%
2. Fast-food restaurants +1,159 +5% $255 +8%
3. Bars +107 +4% $261 +13%
Source: Texas Workforce Commission
Notes pay figures are weekly averages.
CREEKSTONE PARTNERS INVESTS IN AUSTIN
Creekstone Partners has purchased The Reserve at Walnut Creek, a Class-A multifamily property. The 14-acre property is located in the middle of Austin’s Walnut Creek Business Park, and has 284 one- and two-bedroom garden-style apartments ranging from 730 to 1,250 square feet. The property was purchased from a group of investors that included Creekstone Builders. Allianz Life Insurance Company of North America provided the financing.
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