Central Texas Resonates with Hotel Investors
With strong economies, and a continued influx of both residents and businesses to Central Texas, the region has experienced increased hotel investments to the tune of one hotel per month sold there.
AUSTIN, TX—With a strong economy, and a continued influx of both residents and businesses to the Austin and San Antonio markets, Central Texas is boasting increased investments in the hotel industry. In fact, last year, CBRE Hotels sold an average of one hotel a month in Central Texas, totaling seven in Austin MSA and four in San Antonio. Dennis Drake, Michael Yu and Rahul Bijlani with CBRE’s hotels group arranged the transactions.
“With large companies continuing their rapid expansion in Austin, it is just a matter of time before the market stabilizes and resumes its rapid growth,” said CBRE senior associate Drake.
In Austin, the total number of hotel rooms increased by 12.4% within the last two years and is expected to increase by approximately 11% during the next two years, consistent with the market room demand increase of 9.5%, according to CBRE data.
“As demand begins to catch up with supply growth in Austin, some sellers are seeing an opportunity to diversify out of Central Texas, whereas the buyers for those assets have often been international or from out of state,” said CBRE senior vice president Yu.
The Austin hotels are Staybridge Suites Austin South, Holiday Inn Express & Suites–Bastrop, Holiday Inn Express & Suites–Hutto, Holiday Inn Express & Suites–Georgetown, Austin Suites Hotel, Best Western Marble Falls and Econo Lodge Austin.
In San Antonio, supply of new hotel rooms was expected to grow by less than 2% last year, correlating to 3% demand.
“Buyers seem to look at San Antonio as a good opportunity to buy a hotel as a steady investment opportunity in a growing city with limited new hotel construction and stable growth,” says Drake.
The San Antonio hotels are Holiday Inn Express & Suites San Antonio West–Seaworld, La Quinta Inn & Suites Floresville, Quality Suites San Antonio–North IH 35 and Best Western Plus–San Antonio Medical Center South.
“Interestingly, due to the rising cost of housing in Austin, two of the larger exterior corridor properties we sold this year are being converted to micro units and apartments,” Drake tells GlobeSt.com. “We have had strong interest from Mexican buyers in the last several months. We believe this is due to their concern over potential new economic policies that may be put into place. Central Texas offers these investors the promise of long-term economic growth.”