AUSTIN, TX-Of all commercial property sectors, multifamily is perhaps the only one that developers can get excited about today, and even then, there are only certain markets that can absorb new product. Local experts say Austin is one of those few markets, encouraging developers to seek out land and break ground on new projects.
“The apartment absorption in Austin has been tremendous,” says Andrew Shih, a director with Apartment Realty Advisor’s local office. “Occupancies and rents have risen dramatically quarter over quarter. As a result, we expect the developers who have been on sidelines for number of years to start doing something again.”
Shih tells GlobeSt.com it’s quite possible Austin may even see an apartment shortage since new deliveries have dropped significantly. Data from MPF Research indicates there were only five apartment projects totaling 924 units under construction at the end of 2010. By comparison, 3,027 units in 12 projects were completed last year. Over the past decade, Austin averaged about 6,300 units completing annually.
“These totals are very low for Austin,” says Jay Parsons with MPF Research. “There’s a good chance that, for 2011, new supply in Austin will reach the lowest levels seen there in more than 15 years. [But], we do expect construction to pick up soon.”
In fact, Atlanta-based Post Properties Inc. recently broke ground on Post South Lamar, a 298-unit apartment property situated just south of downtown with a price tag of $41.7 million. Brian Vita, an associate with ARA’s local office says the REIT had put the project on hold as nation entered the recession. “Post had the project ready to go when the timing was right,” he tells GlobeSt.com.
Additionally, Colonial Properties Trust has land in Austin to develop a 296-unit project dubbed Colonial Grand at Cityway, and local experts say Simmons Vedder Partners has plans to move forward with another multifamily project in the Mueller master-planned community in the near future.
“A lot of developers are starting to hint that they’re ready to move forward with projects,” Shih notes. “And, we’re seeing developers walk through our door looking for well-located sites. Land deals are really starting to pop.”
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