The rent changes have prompted some tenants to trade apartments built in the 1970s and 1980s in closer-in neighborhoods for newer apartments in suburban neighborhoods. Their new rents may still cost more than in the urban core, but rent reductions have made them more affordable, Greg Willett, M/PF's director of research projects, tells GlobeSt.com.
The biggest rent reductions have come in the suburban submarkets where building has been most intense. Rents in the far northwest submarket dropped 10.7% in 2001 and 9.8% the far north submarket. Of the 9,438 apartment units added to the market in 2001,3,000 were in the far north and far northwest submarkets and 1,865 were in the northern suburbs (Round Rock, Georgetown and Pflugerville).
M/PF says the average monthly rate in the Austin area is $778, the highest in Texas. The research firm says the metro average is skewed by the large proportion of newer complexes in the apartment base. Comparing rates at projects in the same age category, Dallas rents are equal to or higher than those in Austin. For example, the average rent in an Austin apartment complex built in the past 10 years is $940. In Dallas, the average rent in that category is $982.
Demand in the far north and far northwest submarkets remains strong, Willett says, but there are so many new apartments that occupancy rates for those submarkets are in the mid-80% range. Net move-outs increased in the fourth quarter, but the Austin market showed positive demand of 210 units overall in 2001, Willett says.
Demand is expected to fall in 2002 even as work progresses on another 10,700 units. "Even assuming that economic conditions stabilize, Austin apartment demand is forecast to fall far short of scheduled deliveries during the year term, Willett says. "Occupancy should dip further and additional rent reductions would not be surprising.
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