An apartment market survey from Phoenix-based Hendricks & Partners says Austin's multifamily is suffering from decreased demand as "laid off workers double up or leave the area in search of new jobs." Austin had a negative 1.7% job growth rate in the first quarter, a loss of about 11,900 jobs.
Job losses translate to an 8.2% vacancy rate, up from 2.9% in Q1 2001. Also, the average rent increased just 0.4% to $729 per month in comparison to a 9.4% increase in the 2001 first quarter to $726 per month. On a quarter-to-quarter basis, the average rent dropped 0.3% from fourth quarter 2001. Hendricks' researchers say 75% of all properties are offering concessions, including 95% of the class A properties.
The submarkets hit hardest by office vacancies are getting slammed with apartment vacancies too. The northwest submarket, which has the highest office vacancy rate at 33.6%, also has the highest apartment vacancy rate, 10.7%.
There appears to be little interest among apartment buyers and sellers to do deals in the current climate. According to Hendricks, just four sales occurred in the first quarter--two each in the northwest and south submarkets. In comparison, nine properties traded in the 2001 first quarter. As for 2002 sales, the average price per unit rose 0.7% to $60,951 and the price per sf rose about 6% to $76.06.
Absorption in the first quarter was down by 1,226 units, compared to a positive absorption of 1,876 units in the 2001 first quarter. New deliveries fell to 377 units from 2,575 units. The number of apartments under construction, however, is still rising. More than 9,000 units are going up in the Austin area, Hendricks says. Building permits increased to 1,984 units from 1,392 a year earlier.
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