Austin Market Forecast 2017
The 2017 Urban Land Institutes’ Emerging Trends in Real Estate has been released. Austin sits atop their list of Markets to Watch. This annual report analyzes data gathered by surveys conducted by the Urban Land Institute.
Categories examined by the report include Overall Real Estate Prospects for Investment and Development opportunities (ranked #1), Homebuilding Prospects (ranked #11, Raleigh/Durham #1), Economy, Housing, Investor Demand (ranked #5, Seattle #1), Development / Redevelopment Opportunities (ranked #16, Boise #1) Availability of Debt and Equity Capital (ranked #7, Nashville #1), and Local, Public, and Private Investment (ranked #17, Dallas/Ft Worth #1).
Austin continues the three year run of Texas cities that lead the survey (Houston in 2015, Dallas/Fort Worth in 2016 and Austin in 2017).
Despite Austin’s growing popularity, 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. Despite the amount of competition, local, regional, and national real estate participants operate in relative harmony in the market. This cooperation has helped keep adequate levels of debt and equity capital available for investment opportunities.
The full report can be found here Emerging Trends in Real Estate – United States and Canada.
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Tech Sector focus of current Austin Office Market
According to Jones Lang Lasalle’s High Technology Outlook report the tech sector remains the top industry for real estate expansion in the U.S.
Over the past two years it is estimated that 25% of leasing activity across the country is attributable to the tech market.
Austin is the third most resilient tech market in the U.S. This means that even in the event of an economic slowdown the Austin tech market is projected to remain strong.
The following provides an idea of how big the tech sector is in the Austin market. In 2011 seven of the tech giants occupied just under 900,000 square feet. Today that has grown to nearly 3.2 million square feet or an increase of 268%.
During the third quarter of 2016, 430,000 square feet of office space began construction. One million square feet of new office space is expected to be delivered during the first quarter of 2017.
The three largest submarkets in Austin – Northwest, Southwest and CBD represent 70% of the Austin inventory. From the 3rd quarter of 2014 to the 3rd quarter of 2015 rental rates increased almost 10% year over year. From the 3rd quarter of 2015 to date CBD rates have continued their pace of growth at an increase of 8-10% year over year. However Northwest and Southwest submarkets have slowed to a 2% year over year rate of growth. Read more at JLL Office Insight, Austin | Q3 2016.
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Austin Industrial Vacancy at 6.7% as of the Second Quarter of 2016
Austin Industrial Vacancy near Historic Low.
City wide Industrial vacancy in Austin stands at 6.7% as of the end of the second quarter in 2016, a low that hasn’t been seen since the late 1990’s.
Three Austin sub markets have vacancy less than 3% including the Far Northwest, Northwest, and South.
Warehouse vacancy totals 5.1% city wide.
There was 180,000 square feet of positive net absorption in the second quarter with 167,000 square feet of this total being warehouse space.
Warehouse and flex rates have increased by 24.5% and 31.6% respectively since the first quarter of 2014.
Four new industrial properties are under construction in the Southeast submarket for a total of 623,000 square feet under construction.
Flex rates are becoming competitive with value office rents in parts of Austin.
OBSERVATIONS With vacancy low and demand remaining strong expect rents to continue to rise.
Click here for the detailed CBRE Marketview Report.
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Multifamily Land For Sale at 4500 Nuckols Crossing, Austin, TX 78744
27 acres of Multifamily Land For Sale in southeast Austin! This property is in a great location for apartment development. Currently three multifamily complexes are located in the area. Woodway Village, Rosemont at Williamson Creek and King Fisher Creek apartments.
The site is easily accessed from Highway 71 East, Interstate 35 or South Pleasant Valley Rd. A Dollar General store is located around the corner for very convenient shopping. The property is located near where East St Elmo St transitions to Nuckols Crossing.
The property includes 315 feet of frontage along Nuckols Crossing Rd. There is a water line along the lot frontage. Wastewater is located in a manhole across from the northern most edge of the road frontage. The property slopes to the northwest of the property to a creek.
ZONING: In City of Austin process for a change to Multifamily land use and plan to file for rezoning in the near future.
The Seller is asking $14,500 per multifamily unit. 300 to 500 multifamily units are the estimated density. Click here for a flyer for the sale of this property => 4500 Nuckols Crossing Site For Sale
The Seller would welcome the opportunity to work with a Buyer on the zoning and planning for this property. Interested parties please contact me at 512 970 8359. Click here for the Loopnet listing.
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South Lamar Office Space Available.
Currently there are two suites available for lease at the 3901 South Lamar or One West Hills office building in Austin, Texas. The property is staffed by on site property management and is pristinely maintained and serviced. Convenient and easy access to One West Hills is provided by S. Lamar frontage, and adjacencies to Loop 360, and Highway 290 / 71 (Ben White).
The building is located between the Pluckers and Red Lobster restaurants on the south end of Lamar. Construction from the past few years has resulted in a re-birth with vibrant new restaurants, bars, apartments and condominiums now available. Click here for a guide to South Lamar provided by do512.com.
3901 South Lamar boasts on site US Postal service, as well as UPS, Federal Express and Lone Star Overnight drop-off.
Office suites 120 and 225 are available for Lease. Suite 120 on the first floor near the south entrance is available and totals 1,262 square feet. Suite 225 is on the second floor and totals 790 square feet.
South Lamar Suite 120 floor plan
South Lamar Suite 225 floor plan
Three years minimum is required for lease terms. Lease rate rate will be determined by a look at the Tenant’s history and the amount of necessary improvements to the space.
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The Austin office market has absorbed office lease space steadily since 2012 – until now. For the first time since then the market has finished a quarter with negative absorption or in other words the market is returning more lease space to the market than leasing office.
It is too soon to jump to any conclusions after one quarter of negative absorption but in the least it does seem to signal that the office market is settling into a more modest growth rate in absorption and rent.
- Q1 2016 absorption totaled 500,000 SF and Q2 2016 netted a negative 24,000 SF
- Rent is still on the rise increasing on average .9% over the quarter
- Year over year, the average Class A Central Business District Space has seen rent increase from $43.52/SF to $49.52/SF
- Suburban office rates increased slightly from $35.71/SF to $35.74/SF
- Almost 200,000 SF was added to the market during this quarter with the completion of 3 office buildings. These 3 buildings were 92% leased upon their completion. These buildings include 1 at the Domain, and 2 in Round Rock
- During the second quarter Unemployment has decreased from 3.3% to 2.9%
Click here for a link to Colliers International Research & Forecast Report Austin Office Q2 2016
Permanent link to this article: http://atxre.com/austin-office-market-update-second-quarter-2016/
AUSTIN AREA INVESTMENT PROPERTY NEED
Currently I’m working with several Investor Clients looking for income producing properties. Their budget is in the $1,000,000 price range and they will consider Central Texas areas as well as Austin.
Property types that would work include retail such as a small shopping center. Office properties like a small office building or Industrial properties such as a warehouse will also work. Multi tenant properties are preferred.
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South Loop 4, (FM 967 South) Buda, Texas Office, Retail Sites
Commercial Land For Sale
Two, 6 acre tracts For Sale at the Hope Pond Valley entrance to the Meadows at Buda subdivision. Asking price is $4.50/SF of land area. The parcels are zoned C2 / R2 which allows for retail or office uses. Office Condominiums would seem to be an ideal use. All utilities are available to the site(s). The tract to the north of Hope Pond Valley totals 6.55 acres and the asking price is $1,274,130. The tract to the south of Hope Pond Valley totals 6.28 acres and the asking price is $1,231,006.
The property can be found on South Loop 4, in Buda, Texas. Traveling from the north on I-35, exit 217 on I-35 S, Turn right onto South Loop 4 and proceed approximately 1/2 mile and the property is on the right. Traveling from the south on I-35, exit 217 on I-35 N, then proceed to Robert S. Light Blvd and turn left. Continue on Robert S. Light until South Loop 4, turn left on South Loop 4 and property is in 1 mile on the left.
Click here for a link to a Flyer.
Click here for a link to Loopnet.com property listing information.
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Buda Commercial Land For Sale
The last commercial lot in the South Buda Business Park subdivision is available for purchase at $4.00/square foot of land or $435,600.
This land parcel is 2.5 acres in size and is located on Business Park Drive. The subdivision is located on the west side of FM 967 South (Loop 4) approximately 1,200 feet west of the intersection of FM 967 and IH-35. The lot has great access to the Interstate Highway. South Buda Business Park is located in Buda, just south of Austin, Texas, and near the new Seton Medical Center in Kyle, Texas. The property is a few miles South of Cabela’ s and an HEB Center to the north and Lowe’ s, Home Depot, and a Kyle, Texas HEB Center to the south.
A detention pond is in place for the lot and 85% Impervious Cover is allowed (Buda standard for this zoning is 75%). The zoning for this property is I2 and this property is one of the few I2 zoned properties in Buda. The lot has Monarch Utilities water, gravity wastewater, and Time Warner fiber optic service.
Dynamic Systems recently completed construction of a 114,000 sq. ft. manufacturing facility within the park, as well as Capital Excavation which constructed a 10,000 SF building at the rear of the South Buda Business Park property. Fat Quarter Shop purchased 6 acres and has recently completed construction.
Click here for a link to a Flyer.
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Heritage Oaks Lot For Sale – SOLD
Lot 7 at 17 Heritage Oaks Drive,
Dripping Springs, TX 78737
2.808 acres in size
Location: 17 Heritage Oaks Drive
Heritage Oaks Drive where Sentinel Hill “T’s” into it
Lot Frontage: +/- 208’ Heritage Oaks Drive frontage
Lot Size: 2.8 Acres
Jurisdiction: Dripping Springs, TX
Utilities: PEC Electric
Well Water or West Travis County Public Utility Agency – Water Tap and Fees estimated @ $6,500
Septic System for Waste Water will be necessary
Homeowners Association: Link to Heritage Oaks Landowners Association
Asking Price: $190,000
Permanent link to this article: http://atxre.com/heritage-oaks-lot-for-sale/
Biggest Multifamily Developments of 2015 Added 3,400+ New Units to Local Inventory
- Last year proved itself to be a robust year for Austin multifamily development, with a total of 17 projects being completed in the 50+ unit segment – adding a striking total of 5,028 units to the local rental inventory.
- Out of the 17 major developments, the top 10 biggest projects (by number of units) alone delivered 3,404 apartments to market. With no project of under 300 units, the top producers – ten biggest multifamily developments of 2015 – delivered nearly 70% of all apartments released in the 50+ segment in 2015: 3,404 apartments.
- The Addison at Kramer Station alone added 388 new units, with runner up The Mansions at Lakeline delivering 374 units to market. The Bowie was the sole other project of over 350 units (358 to be more precise), with buildings like Escape at Four Points, Bexley at Whitestone, and Hanover South Lamar also making their way to the top 10.
To see the full list, click here: Austin’s 10 Largest Rental Developments Completed in 2015
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QUARTER 4, 2015 – AUSTIN REAL ESTATE MARKET UPDATE
|Quarter 4, 2015 AUSTIN OFFICE
The highest positive net absorption of office space ever recorded – 900,000 SF was achieved during the 4th quarter of 2015. Five new buildings that total over 675,000 SF were completed during the fourth quarter with an additional 1,500,000 SF of office space still under construction. The city wide average rental rate increased during the quarter from $30.52/SF/year to $30.71/SF/year. Class A, Central Business District rental rates increased during the quarter from $42.96/SF/year to $44.36/SF/year and Class A suburban office space increased from $32.73/SF/year to $33.16/SF/year. City wide vacancy fell from 11.7% in the third quarter to 11.3% in the 4th quarter continuing a downward trend that started in the second quarter of 2009. Central Business District vacancy continues to be lower than the average vacancy rate of 6.8%.
Colliers International Q4 2015 Austin Office Market Report
Quarter 4, 2015 AUSTIN INDUSTRIAL
The city wide average vacancy rate dropped from 8.6% to 7.8% over the quarter. The lowest vacancy in the quarter was 2.7% in the northwest submarket. Over 400,000 SF of positive net absorption was achieved in the fourth quarter bringing year end absorption to over 2,000,000 SF. The city wide average rental rate decreased slightly from $9.37/SF/year to $9.32/SF/year. The highest average rental rate was found in the southwest submarket at $14.03/SF/year. One building in Round Rock was completed in the fourth quarter that totaled 50,000 SF with 1.2 million SF still under construction.
Colliers International Q4 2015 Austin Industrial Market Report
February 2016, AUSTIN RETAIL
In the fourth quarter of 2015 nine retail properties valued at $62 million were sold in the Austin market – for an average sales price of $204 per building square foot with an average Capitalization Rate of 6.8%. In February of 2016 the average net rental rate for retail in the greater Austin area is $18.70/SF/year. By submarket the top rental market is the Central Business District which averages $28.86/SF/year and the lowest is the Northeast and East submarket at $14.33/SF/year.
February 2016 Transwestern Austin Retail Market Watch
2015 Year End AUSTIN RESIDENTIAL
The median price for single family homes in Austin increased by almost $30,0000 in 2015, a 9% increase over 2014. 29,068 single family homes were sold in 2015 up 5% year over year and an all time high. At year end the median price for a home in Austin was $270,000 an increase of 10% year over year. $9.6 billion in sales were completed in 2015 an increase of more than a billion dollars over 2014. Housing inventory ended the year with a 2.2 month supply, less than half of what the Real Estate Center at Texas A&M considers a balanced inventory of homes. Homes in 2015 averaged two additional days on the market over 2014.
Austin Board of Realtors End Year 2015 Report
February 2016 AUSTIN MULTIFAMILY
The fourth quarter of 2015 apartment occupancy rate averaged 89.9% with the North submarket leading the way at 94.9% and the Southeast submarket at the low end totalling 85.4%. Class A rental space averaged $1.51/SF with the Central Business District the highest submarket rate at $2.55/SF followed by the Central submarket at $2.02/SF. The average rent per square foot in Austin totals $1.34/SF. 25 properties were sold in the fourth quarter of 2015 for an average price per unit of $87,874 and an average Capitalization Rate of 5.2%.
February 2016 Transwestern Austin Multifamily Market Watch
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Great Hills Land For Sale
GREAT HILLS / LOOP 360 AREA OFFICE SITE
“LR” Neighborhood Commercial Zoning
Corner of Bluegrass Drive and Bluffstone Drive
2 Acres, 2 Blocks West of Loop 360, Near Arboretum, NW Austin
Lot Size: 2 Acres
Zoning: Neighborhood Commercial allows for Office and retail uses.
Frontage: +/- 220 feet along Bluegrass Dr. and 440 feet along Bluffstone Dr.
Jurisdiction: City of Austin, TX
Zoning: LR (Neighborhood Commercial) Rezoning to Residential or adding Residential overlay is a possibility
Price: Asking Price – $350,000
2.05 Acres of Great Hills land is for sale on the corner of Bluegrass and Bluffstone in northwest Austin, Texas. Zoning for the property is LR or Neighborhood Commercial allowing for both Office or Retail use. Rezoning or adding an overlay to allow for Residential is a possibility. $350,000.
The property is located one (1) mile south of the Arboretum at Capital of Texas Highway (Loop 360) and U.S. Highway 183. The location is convenient to several neighborhoods including Great Hills, Northwest Hills, and Lakewood.
Click here for a link to the property listing on Loopnet.com
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Anderson Mill land for sale, totaling 17.52 acres for $1,100,000. Price Reduction.
The site is located one mile west of North FM 620 and HEB Plus Grocery Store on Anderson Mill Rd. This Anderson Mill land is located three miles west of Lakeline Mall and the Highway 183 and State Highway 45 interchange. The area has excellent demographics and would be an excellent location for uses including office, retail, multifamily or single family home(s).
The land totals 17.52 acres in area and is on the market for $1,300,000.
The topography slopes from the northeast to the southwest. There are wo natural drainage channels on site. Located in Lake Travis Watershed. Limited to 20% impervious cover of Net Site Area. No 100 year floodplain.
The property is located in the Leander Independent School District. Water service is available from the City of Austin and is located 2,000 feet east of the property. Sewer service is located 2,700 feet east of property. A net site assessment is available.
For Loopnet listing information click here => Land for sale on Anderson Mill West Austin, Texas
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When considering a property purchase in Austin, determining the zoning is a critical part of the due diligence process and an Austin zoning determination is one of the first issues that should be addressed.
If the property is located within the City Limits a zoning category is assigned to the property. This will dictate the land use allowed. Zoning is a way for a municipality to provide some order to land uses in their jurisdiction. In a simplistic view of Austin zoning the more compatible land uses are located next to each other. The less compatible uses are located further away from each other. An example of compatible uses would include different kinds of housing being located next to each other. Incompatible uses would include houses for example not being located near manufacturing plants.
Therefore purchasers of land need to know and understand the zoning category assigned to the property they are interested in. By doing so they will understand what can and can’t be constructed on it. A real estate agent should be able to assist the buyer with this. Sometimes this can be done on the internet as is the case in Austin by using the Online City of Austin Zoning Information link.
In addition to a zoning determination the city will typically provide a list of uses that are allowed under the zoning category. If a property doesn’t have the zoning necessary for the use then an attempt can be made to have the zoning changed. This is a formal process accomplished through the local city government. This can be time consuming and costly and there is no guarantee that the request will be approved. A civil engineer, land planner and/or attorney should be consulted when a zoning change is being contemplated to make sure that the process and its risks are identified.
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US Highway 183 South Austin, Texas Land For Sale
A 10 acre parcel is For Sale with 658′ of frontage on a South U.S. Highway 183 hilltop. The northern boundary of the property has some topographic variation. Currently the site operates as a construction yard for contractor.
The property is located 8 miles south of Austin Bergstrom International Airport near FM 973 and US Hwy 183 South intersection. It’s also located just north of State Highway 45 and State Highway 130 in the Austin Extraterritorial Jurisdiction. It is across the street from San Francisco Javier Catholic Church located at 9110 South U.S. Highway 183, and to the north of and adjacent to MetaLink Fence & Supply at 9201 South U.S. Highway 183.
The asking price is $398,000 for 10 acres which totals $39,800 per acre. Possible land usage includes Industrial, Retail, or Office. There is no zoning on the property.
The utilities on site include water service provided by Creedmoor Maha Water District, Bluebonnet Electric Service and the sewer will need construction of a septic system.
For more detail email me at firstname.lastname@example.org or you can click here to view my listing on Loopnet.com => Loopnet Property Listing
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The Austin San Antonio Corridor’s future is shown in this graphic provided by lawnstarter.com
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Commercial land for sale in Kyle, Texas
Commercial land is available and for sale in Kyle Texas at the Hays Commerce Center project. This development is set to be the next major commercial development in Kyle. The project is planned for a variety of uses including industrial, office, and retail. The 100 acre site is located at the northwest corner of Interstate 35 and Kyle Crossing. Lot construction is set to begin in October of 2015 with finished tracts scheduled for delivery in July of 2016.
Location and Access
The site has excellent access and a convenient location Commercial land for sale in Kyle, Texas. The property is located at the northwest corner of Kyle Crossing and Interstate 35 along the northern city limits of Kyle, Texas. The property is easily accessible from Interstate 35 whether you are traveling north bound (Exit 215) or south bound (Exit 217).
The site is 100 acres in size and includes lots that range in size from one acre up to 16 acres with the flexibility of allowing for larger tracts if so desired.
The property is located in the city of Kyle, Texas, in Hays County.
Zoning and Use
The property is zoned Planned Unit Development or PUD which allows for a mix of uses including industrial, office and retail.
Bluebonnet Electric will provide electrical service, CenterPoint Energy will provide natural gas and the City of Kyle will provide water and wastewater to the site.
One to Sixteen acre lots are available for purchase at Hays Commerce Center. Page 5 of the 6 page pdf brochure below shows all of the lots as well as the internal roadway layout. There are two phases of construction planned for this development.
Pricing for the lots in the Hays Commerce Center start at $4 per square foot for lots internal to the project and range from $12 to $13 per square foot for lots with I-35 or Kyle Crossing frontage.
The first phase of Lot Construction is set to deliver in July of 2016. Depending upon lot demand the second phase will begin thereafter.
Kyle is located along Interstate 35 and is the second largest city in Hays County, the fastest growing county in the nation. Kyle is approximately 20 miles south of Austin and 60 miles north of San Antonio.
Contact Mark Pustka, McAllister & Associates for more information. email@example.com 512-486-3737 (office) or 512-970-8359 (cell)
Click Here for Link to Brochure
Click Here for Link to Site Plan
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The Austin Office Market for Quarter 3, 2015 continues to explore new heights of superlatives with the latest news regarding its performance. Highlights include:
- 649,339 square feet of positive net absorption for the quarter which is the highest quarterly absorption since Q4, 2012.
- Year to date absorption surpassed 1.5 million net square feet.
- If Q4 2015 net absorption is around 300,000 square feet this will set an all time high for annual net absorption.
- Year to date net absorption for Class A now totals 1.5 million square feet.
- The average asking rate is $31.53/square foot which is $2.30/square foot greater than one year ago.
- Class A average asking rate totals $36.36 / square foot, Class B is averaging $25.61 / square foot, and Class C comes in at $21.50 / square foot respectively.
- Highest asking rates remain in the Central Business District where they currently total $40.53 / square foot, followed by the Southwest market at $33.77 / square foot, and the Northwest at $31.43 / square foot.
- Vacancy rate is at 10.9%, the second lowest rate ever and the lowest since Q4, 2014.
- Central Business District vacancy tightened to 7.8% with Class A space at 8.8%.
- Finished construction has exceeded two million square feet year to date, the highest level of new product delivery since 2008.
- Two buildings totaling 340,000 square feet were delivered in the third Quarter with 28% of the lease space in these buildings pre-leased.
- New construction starts in the 3rd Quarter include Domain 8 which totals 291,000 square feet with none pre-leased to date.
CBRE Austin Office, Q3, 2015 Report
Permanent link to this article: http://atxre.com/austin-office-market-quarter-3-2015/
Austin is ranked second nationally for overall real estate market outlook for 2016 according to “Emerging Trends in Real Estate 2016” a recent report by the Urban Land Institute and PwC LLP.
The 2016 outlook for all property types in Austin is well above average according to the report with particular favorability shown toward single-family and retail.
The report notes that domestic and global investors are looking more at secondary markets such as Austin when considering locations to invest capital. Austin also ranks in the top ten markets for entrepreneurship in 2015 according to the Kauffman Foundation.
Austin is ranked first for new development across all 75 markets surveyed, second for homebuilding and fourth for investment properties.
Some of the reasons for this high ranking include:
- Austin has the highest % of millennials (those between ages of 16 and 35) with 32% surpassing Los Angeles and Madison, Wisconsin.
- The cost of doing business in Austin is 102% of the national average, far less than cities such as New York which is 160% and San Jose which is 129%.
- Prospects for jobs and homes continues to be a key for identifying top markets and both remain strong in Austin.
- Co-working office space is an emerging niche market in office lease space and Austin is one of the cities that seems to be embracing this new approach.
- Austin setting a 140 gallon per capita daily water goal and revising water conservation code to address long term drought conditions.
- Austin’s use of a high frequency bus network.
- Low cost of living and strong growth potential in the housing market.
- Austin is a market with hospitals, universities, trade ports, and strong infrastructure – which is important to investors.
- Austin properties have good tenant mix, are experiencing good growth, and rents continue to move upward.
Click here to download the pdf report version.
Permanent link to this article: http://atxre.com/austin-2-in-2016-real-estate-outlook/
South Lamar affordable housing is under construction at Bluebonnet Studios a multi family project consisting of 107 efficiency units at 2301 South Lamar. The project is being constructed for Austin based Foundation Communities and will be dedicated to low income tenants. SpawGlass is the contractor for the project and its anticipated to cost about $15 million dollars and will include 60,000 square feet of air conditioned space. Completion is scheduled for August of 2016. The project was designed by Dick Clark + Associates and Forge Craft Architecture + Design.
The project is intended for tenants such as low wage workers in the service and entertainment industries that work downtown and need to be close to work.
Permanent link to this article: http://atxre.com/south-lamar-affordable-housing-bluebonnet-studios-coming-soon/
If you are looking for land to purchase in Austin, there are several important items to consider.
I’m an Austin Real Estate Broker and am experienced in selling and helping Buyers purchase land. Austin land purchase considerations should include:
- What is the cost of the land? If I pay $1,000,000 for 10 acres to build a shopping center does that cost fit within my budget? Or is $500,000 the most I can pay and still have a profitable project? What have comparable properties in this same area been selling for? If you can buy in this price range then you are “buying right”. How much am I going to pay in annual property taxes? A buyer will pay for a pro rata share of the taxes owed when the property is purchased, but remember that this is also an ongoing obligation. How much are annual property taxes and can I afford them?
- Does the location work for the intended use? For example if someone is trying to build a convenience store is the site in a high traffic area? If it is a retail use is it “on the driving home side” of the street? Or if someone wants to build expensive homes is the location suitable or is it too close to commercial uses like an office building or a shopping center? What do the adjacent properties look like? Would I want to locate my intended use for the property next to what is currently located adjacent to this property? Is the property next door taken care of or if I purchase next to it will it diminish my property value?
- What governing jurisdiction is the land located in? The City Limits? Is it in the Extra Territorial Jurisdiction (ETJ) of the City? Is it outside of these areas and in the County? The jurisdiction that the property is located in will dictate which rules and regulations need to be followed. They will be different if you are in the City Limits vs in the Extra Territorial Jurisdiction vs in the County. It might be advantageous to be in a particular jurisdiction – City A vs County as well. There might also be state and federal laws that will impact the development of the property.
- If the property is in the City, what is the zoning category assigned to the property? The zoning category dictates the land use allowed on the property. If a property doesn’t have zoning or if a zoning change is to be requested then that will add to the time and cost. Something to keep in mind is that zoning change requests are not always approved.
- Deed restrictions are private agreements and restrictions specific to the land in question. They are noted in the deed, and restrict the use of the real estate in some way. Deed restrictions can be attached to property whether it is zoned commercial or residential and are in addition to local, state and federal rules. Deed restrictions can be more restrictive than other governing rules.
- Are there utilities to the site? Utilities would include water, wastewater, electricity, natural gas, telephone, and cable television. Water is the most important. Water and wastewater are typically the most expensive utilities to extend to a property. There are work arounds for a lack of water and wastewater such as drilling a well for water or constructing a septic system for wastewater. However these work arounds also involve ongoing maintenance and a limited lifespan.
- Is any portion of the property in a floodplain? If so then the buildable or developable area of the property will be reduced. This in turn typically will reduce the value of the property.
- What are the topographic conditions of the land? Is it flat or is there slope to the land? The more steep the slope the more it will cost to develop the land because of the necessary cutting and filling of the soil. In general flat land is preferred although a hillside location for a home or office can provide a very nice view.
- Is there roadway access to the property? If so is there an existing driveway and curb cut in place or will this have to be permitted and constructed? How likely is it that a permit can be obtained at this location or is there already a driveway nearby which might diminish the chances? Is the roadway in a state of disrepair? If so then what are the chances that the roadway will be repaired and how might this affect my planned use?
- An easement is a legal right to use another’s land for a specific purpose. Are there any easements on the property that might restrict or otherwise unduly affect my ability to improve the property? Examples of easements include public utility easements which allow utility providers to install and maintain utilities. Easements can also be the means of providing access to properties that do not otherwise have roadway frontage.
- A lien is an encumbrance on one person’s property to secure a debt the property owner owes to another person. Before purchasing property it is important to determine through the Title Search and Commitment process if there is an outstanding lien on the property. It is best to have the property owner take care of liens before the buyer closes on the property because it is easier to leverage a lien being released.
Remember one of the most basic questions that should be asked about the property is – “Why is it vacant and why hasn’t something been built on it?”
Permanent link to this article: http://atxre.com/austin-land-purchase-considerations/
Presentation at Real Estate Council Austin by Dr. Mark Dotzour. Dr. Dotzour is the Chief Economist and Director of Research for the Real Estate Center at Texas A&M University in College Station, Texas.
He earned his Ph.D. in the Department of Finance at the UT Austin in1987 and served as Associate Professor of Real Estate and Finance at Wichita State University for 10 years. As Chief Economist, he is currently doing market research to monitor how global and national trends are likely to impact residential and commercial real estate markets.
Article and Insights provided by Patrick Johnson, President of First State Bank Central Texas, firstname.lastname@example.org (512) 899-2212. Patrick has extensive knowledge of the commercial lending process and is a dedicated, results oriented commercial banker. His bank delivers first class deposit, treasury management, and loan solutions throughout Central Texas. His specialties include Commercial real estate, equipment, and general commercial/industrial lending; bank depository and treasury services.
Yesterday, I had the opportunity to attend RECA Exchange, a great program. Dr. Mark Dotzour, Chief Economist for the Texas A&M Real Estate Center, spoke. Dr. Dotzour is always a good show, and his research center is an excellent resource for all of us – I encourage you to become familiar with the resources available on their website. As part of RECA Exchange, we received some helpful data from Capitol Market Research and Cushman & Wakefield/Oxford Commercial on the various commercial real estate classes and their 2015 occupancy rates. I always appreciate these firms providing such good summary information. Please see their summaries, and Dr. Dotzour’s presentation, attached.
Here, I take some liberty to blend some data from the RECA Exchange breakout sessions and, with permission, Dr. Dotzour’s comments with my own observations.
Overall, the commercial real estate market is very strong in Austin in all areas and asset classes, and that is a very good indicator that the Austin economy is strong. Job growth contributes to continued real estate demand and absorption. But, it feels a lot like 2006. Do a crane count, and listen to all the bulls say it’s not going to end. Granted, as long as Austin continues to create jobs, the real estate market and economy will remain healthy. The trick is, usually events outside of Austin, at unknown times, cause the job market to stall. Additional points:
Austin and Texas
- Acquisition, Construction and Development Loans, even at conservative loan to values (65% or less) typically granted by smaller regional and community banks, are constrained by oppressive, broadly applied, federally mandated regulatory rules that do not account for regional demand, conservative leverage levels, or market expertise. Despite high demand for housing in Texas, regulated banks simply can’t meet the demand for lot development loans and construction loans. This has particularly constrained single family lot supply. In many cases, these loans are being made in the private sector, at higher rates, which, in combination with limited supply, leads to higher real estate development costs (and ultimately – higher costs to the end user/consumer).
- The Austin Multi-family (Apartment) market is still 94% occupied, but I would keep an eye on this asset class. Will we overbuild here? Probably. The question is when. If job growth slows, apartments will feel it first.
- Texas has created, net, more than 2.5 million jobs since 2001 and leads the nation in job creation. Illinois has lost 150,000 jobs since 2001. Make your own conclusions on the types of economic policies and tax environments that create jobs, and those that destroy jobs.
- Home affordability in Austin is increasingly becoming an issue. Overall, affordability in Texas has greatly contributed to companies relocating here. In order to continue to have that competitive advantage, we need to be able to build enough affordable housing, of all types.
- Affordability, infrastructure improvements, and traffic, if not addressed, will ultimately limit Austin’s ability to continue to attract jobs and grow.
- It is still difficult to get commercial projects through the City of Austin. Mayor Adler is focused on this, and some improvements are noted. The long promised, new development code, CodeNext, isn’t coming anytime soon. More of the same here, for the foreseeable future.
- In Texas, the construction industry continues to have a labor shortage, both in residential and commercial construction. There are simply not enough trained trades people to meet demand. Skilled labor is demanding a higher wage. Subcontractors, as a result, have pricing power. Subcontractors that can deliver skilled crews on time are able to charge a premium. Overall, construction costs (based on client feedback) have risen by 15% to 20% in the past 2 years – largely driven by increased labor costs.
USA and Global
- Dr. Dotzour’s very good point: The American Consumer is spending, has less debt as a % of income, and has more capacity to spend. Regardless of what politicians or the Federal Reserve does, the American Consumer is the ultimate driver of our economy. The American Consumer, with its $84 Trillion net worth, can buy China’s $1.6 Trillion in US bonds in heartbeat. We, the People, vastly outpower the Federal Government and Federal Reserve Bank. The American Consumer is in a relatively good mood, which is a good thing. As the American Consumer goes, so will our economy.
- There are more than 5 million job openings, of all types and skill levels, in the United States of America. We don’t need more jobs; we do need more qualified workers. We do need more people willing to work.
- The rest of the world is suffering from major headwinds. Although these headwinds certainly don’t, on balance, help the USA, they have a much broader and deeper effect in the rest of the world. In addition, our competitive advantages (Freedom, Relative Security, Our Own Oil, the American Consumer, Capitalism, Smart People) shine in comparison. These global headwinds are: Global Terrorism, Lower Oil Prices, Bad Government Economic Policies, Cyber Warfare, Government Debt, Communism, and Currency Wars. The worst actors here: China, North Korea, Russia, and Iran. Honorable mentions: Europe (Greece) and Japan.
- Dr. Dotzour does not buy into the argument that long term, materially higher interest rates are around the corner. Demand for the safety of US Debt is just too strong, and we are a safe haven in a dangerous world. The fed can raise the overnight rate, but the 10 year US Treasury (which drives long term rates and your mortgage rate) is largely driven by the market, not the Fed. I will note that we have been hearing for 8 years that rates are going up, and our experience is that rates have never been lower.
- I personally do think that, regardless of the US Treasury market, banks will ultimately have to start raising rates to account for increased regulatory and capital requirements mandated by Basel III and the incredible regulatory burdens of Dodd Frank and the CFPB. Ultimately, the consumer loses.
- In the USA, we may still have some more room to run on this expansion cycle, but eventually, there will be a recession. That is the way capitalism works. Are you preparing your company and family for the next downturn? Make sure you are in a cash position to withstand the next downturn, and that you have not overleveraged yourself or your company. With some planning and plenty of cash, you may even be able to take advantage of some opportunities, as not all of us will be prepared when the music stops.
Permanent link to this article: http://atxre.com/austin-real-estate-market-mid-year-2015-update/
Quarter 2 2015 Austin Office Market Report was recently released by Colliers International. The citywide average office rental rate
increased by 3.7% to $29.20/SF over the previous quarter according to a quarterly update provide by Colliers International. The average Class A rental rate
decreased from $42.64/SF to $41.58/SF. Suburban office rates
increased slightly to $32.87/SF.
Citywide vacancy increased from 10.2% to 10.4% from Q1 to Q2 continuing its gradual increase since Q3 of 2014. Suburban vacancy increased from 10.7 % to 11% due primarily to a large increase in Class A suburban office vacancy. Average CBD Class A vacancy increased from 10.5 to 10.8%. Citywide Class A vacancy increased from 10.7 to 11.4%.
Austin has surpassed Silicon Valley as the No 1 City in the U.S. for startups according to the latest Kauffman Index report claiming 180 startups.
Job growth continues steadily as the technology sector has expanded 17.8% since 2011 according to Forbes – primarily due to the relocation of California based companies.
Click here for the => Colliers International Q2 Office Market Report
Permanent link to this article: http://atxre.com/quarter-2-2015-austin-office-market/
A 2015 Austin Multifamily Forecast was recently released by Integra Realty Resources. According to this report, multifamily should continue to lead all commercial market subcategories in 2015 according to a recent report by Integra Realty Resources (IRR) as reported by the Real Estate Center at Texas A&M.
In 2014 Class B continued to outperform Class A with regard to occupancy. The 2014 Multifamily market continued on a path of expansion, with strong occupancy rates, and historically low capitalization rates – early signs of a shift in the market may have been revealed in 2014 numbers according to IRR.
Click Here for the Full Report Integra Realty Resources (IRR) 2015 Multifamily forecast
Permanent link to this article: http://atxre.com/2015-austin-multifamily-forecast/
RETAIL PROPERTY FOR SALE IN GIDDINGS, TEXAS
- Address: 3950 E Austin Street, Giddings, TX 78942
- $325,000 or $29/building square foot
- Location: Highway 290 frontage at corner of County Road 226, Giddings, Texas. Adjacent to Ramada Inn Hotel and in front of Giddings State School
- Building: 11,099 Square Feet, Vacant/Owner-User
- Acreage: 1.95 acres
- Jurisdiction: Giddings, Texas
- Utilities: City of Giddings Water and Wastewater, Bluebonnet Electric
- Potential Uses: Neighborhood Retail Center, Day Care Facility / Nursery, Free Standing Building, Retail, Restaurant, Office. City of Giddings offering Development Incentives for Family Style Restaurant. Previously a Restaurant and a School District Learning Center.
- A portion of the parking lot is in the FEMA floodplain.
Permanent link to this article: http://atxre.com/for-sale-retail-property-giddings-texas/
The Austin Multifamily market continues to expand due primarily to the area’s continued population growth, new business growth, and low unemployment. Vacancy has been steady at under 5% in recent years and is expected to slightly increase in 2015 because of new product becoming available in the market. Rental rates continue to increase with central and west Austin experiencing the highest rates. Capitalization rates are steady across the market but will likely decrease slightly through 2015. Downtown continues as a hotspot for new development with approximately 2,000 units under construction.
Integra Multifamily Annual Viewpoint
Permanent link to this article: http://atxre.com/austin-multifamily-market-outlook-2015/
Citywide average rental rates
continue their steady rise in the Austin Industrial Market at the end of the first quarter of 2015. Since the first quarter of 2014 average rental rates have increased by 4.5% quarter to quarter up to $8.35/SF NNN and are up 21% on a year to year basis from $6.90/SF NNN. Average rental rates for industrial lease space in the southwest sub-market is at $14.13/SF NNN up 1.7% since Q4 and up 6.9% year over year. The next highest rental rates were in the east sub-market at $13.39 up 30% quarter over quarter and up 145% year over year.
Vacancy is slightly up at 8.8% from 8.4% in Q4 2014. Among sub-markets the southwest has the lowest vacancy at 1.7% followed by the south at 2.7% and then the east at 4.2%. The Round Rock sub-market has 17.6% vacancy.
Q1 absorption totaled a negative 20,000 SF with the southeast sub-market having the largest number of SF of negative absorption at 387,000 SF. Q1 positive absorption by sub-market was led by the far northeast with 327,000 SF absorbed.
One building totaling about 200,000 SF was completed in Q1 2015 with just under 700,000 SF still under construction in the area.
SOURCE: Q1 2015 Industrial Market | Colliers International | Austin Industrial Market Research Report
Permanent link to this article: http://atxre.com/q1-2015-austin-industrial-market-report/
Austin ranks as the sixth (6th) most desired office and investment acquisition location for domestic investors in 2015, up two spots from 2014. The only other Texas city that made the top 10 list was Dallas (Houston fell out of the top ten list likely because of energy market concerns). The cities ahead of Austin on the list are much larger in population and include locales such as San Francisco, New York, Dallas, Los Angeles and Seattle.
The survey data was generated by CBRE Group and is the opinion of 80 of their largest U.S. investors. North America Investor Intentions Survey 2015
Industrial properties are the hottest category for acquisitions, followed by Office. Austin has several large office properties on the market with the local industrial market not being big enough to impact this survey.
Austin Business Journal Article: Jan Buchholz | 4/23/15 | Big-time investors rank Austin commercial real estate among best in U.S.
Permanent link to this article: http://atxre.com/2015-austin-commercial-real-estate-market-attractive-for-investors/
Oxford Commercial’s recent first quarter of 2015 Austin Office Market update demonstrates the strength of the local office market with occupancy rates and average rents up compared to Q1 2014. Occupancy is up to 91% from 90% a year ago and Class A rental rates are now at $35.60/SF compared to $32.70 a year ago.
New construction of Class A office helps with the supply side of things but according to Jason Steinberg with Equitable Commercial Realty there aren’t enough new projects under construction to keep up with demand. Ryan Kasten with Cushman & Wakefield | Oxford Commercial notes that nearly 950,000 square feet of new Class A office was delivered to the market in the first quarter of 2015 but 83% of the space was pre-leased.
According to CBRE Austin is among the nation’s top 10 large markets for tech-driven office leasing demand. With this downtown Austin has seen “an incredible transformation of culture in the last decade” primarily because of tech companies wanting to locate in the downtown office market. Two of the largest deals in the first quarter included the tech firms Google leasing 200,000+ square feet downtown and Indeed leased 220,000 square feet in the NW submarket.
Austin American Statesman article by Shonda Novak – Tech keeps office demand high
Permanent link to this article: http://atxre.com/q1-2015-austin-class-a-office-market-report/