Austin apartment market still on fire; could mean rent relief on its way

Oct 29, 2014
Austin Business Journal

The data behind Austin's red hot apartment market could spell relief for some renters. Almost 18,000 units are now under construction in the metro area and some of the new complexes are concentrated in smaller submarkets

Those submarkets could see rent concessions return after years of escalating prices and diminished supply, according to the latest Austin Multi-Family Trend Report published by Austin Investor Interests LLC

"In the short run, the abundance of (Class A) product that will enter the market over the next two seasonally slow quarters are likely to saturate these areas creating a bit of market competition," the report states. "Price points will initially need adjustment while balancing the actual demand. In a proactive move, concessions and locator incentives have already increased to a larger extent."

With 17,639 units in the pipeline — making Austin one of the most aggressive apartment markets in the nation — concern is rising about the viability of an estimated 8,000 units that are scheduled to break ground in the next 180 days

"These new starts are precarious and many are potentially dependent on market conditions," the report states

Though occupancy is tight throughout the Austin market area, the submarket surveyed that has the tightest conditions across product types is Bastrop. Occupancy of Class B and C product — that is, older units — is 100 percent. Newer Class A is 97 percent. Rent prices per square foot in Bastrop, however, are a fairly modest $1.03

As expected, the most expensive submarket is Austin's Central Business District with an average rent of $2.46 per square foot. That number is expected to go even higher when The Bowie and other luxury development deliver soon. The Bowie luxury high rise is advertising staggering rental rates on the web in excess of $9,100 a month for three-bedroom units. Studios as small as 448 square feet start at $1,545 a month

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