Courtesy Big Red Dog
Experts: development ‘far behind’ demand for rentals in Central Austin
The housing market in Central Austin is seeing an upswing in multifamily and mixed-use multifamily projects as developers respond to a demand for more centrally located units suited for younger tenants and families.
Charles Heimsath of Capital Market Research—a firm that specializes in real estate research, land development economics and market analysis—said the commercial zoning lining the main roads into downtown Austin has allowed for the height necessary to build the projects, and high occupancy rates have encouraged new project development. Commercial zoning allows for building up to 60 feet in height, more than sufficient for a mid-rise apartment building, Heimsath said.
“With that zoning in place already and some positive demographic growth within the area and proximity to downtown, which has higher rental rates, the corridors that are leading in and out of downtown are becoming increasingly desirable for multifamily development,” he said.
There are many projects in the pipeline for Central and East Austin. Burnet Flats and Burnet Pointe Residential are planned developments in North Central Austin, as well as a proposed mixed-use development on state-owned land on the east side of Bull Creek Road, south of 45th Street. There are several proposed zoning applications being analyzed by city staff that would change single-family zoning near McCallum High School to multifamily, and a nearby nonprofit—the Texas State Troopers Association—has a petition to change its zoning on North Lamar Boulevard to multifamily as well.
These instances help illustrate the surge of multifamily and mixed-use development coming to North Central Austin.
“It allows for more diversity of land use, and I think it’s been proven many times that land use diversity is more attractive to people that live in the area. They can walk to retail establishments of various kinds as opposed to having to get into their car and drive long distances,” Heimsath said.
There are a number of projects in various stages in South Austin, from the Tree development on South First Street, just north of Ben White Boulevard, scheduled for completion in summer 2013, to the Lamar Plaza redevelopment project, that closed on Sept. 17 and is scheduled to break ground in November.
“Those types of projects are ones that are near the urban core that have ground-floor retail that provide walkability, bikeability and just overall livability. You can do everything that you want to close to home. If you can’t bike somewhere close by, it’s a short drive or short commute,” said Michael Wilt of Big Red Dog, a civil engineering firm.
Another up-and-coming corridor is East Riverside Drive. Austin Apartment Association President Sandy Eckhardt works for Milestone Management, a management company, that plans to open the RiverView Austin Apartments in January 2013.
“I think it’s needed, and I think it’s been a vision for quite some time,” Eckhardt said. “And specific to RiverView, it’s teeming up there with the [Lady Bird Lake] boardwalk. That’s the other piece of this area, when you have the attraction of the trails and the lake at your fingertips, that speaks to the area and what Austin’s all about. There’s an excitement about seeing this area be vibrant again.”
Other projects east of I-35 include the Mueller communities, thinkEast, Eleven, and Big Red Dog’s coming Chicon Corridor project at 13th and Chicon streets.
“We’re about to put up 45 units [at 13th Street and Chicon], so the demand at every single price point is for these types of projects,” Wilt said.
The rising number of young professionals in town has contributed to a need for smaller units with many amenities, Eckhardt said, including dog parks, lounges, rooftop decks, and even jam rooms for musicians, a feature RiverView will have.
“There’s great eating establishments and nightlife venues that really make the core attractive to them. We’re also seeing a surge in individuals who have the ability to work from home, which makes it easier for them to live closer to the things that interest them personally,” Eckhardt said.
According to the U.S. Census Bureau, the percentage of housing units in multifamily structures in Austin from 2006–10 was 47.9 percent, and experts expect that number to climb. The Capital Market Research year-end Austin Apartment Market analysis for 2011 showed occupancy in Austin at 95.9 percent. While they report showed occupancy declined slightly in the South Central market area, occupancy increased in Central, East, and North Central Austin.
“You’re immediately going to have a pipeline of qualified tenants who are ready to move in on day one,” Wilt said. “I think the main trend is just to provide as much inventory as possible. We’re so far behind that even if we were to meet current demand, we still have to anticipate that our future growth is going to be robust.”
The multifamily developments being built span the spectrum from affordable communities—such as the Capital Studios development planned for 11th and Trinity streets with rents from $400–$650 per month with all bills included—to units costing 150–200 percent of the area’s median income.
“I think the multifamily development overall in the housing market is going to play a big role,” Eckhardt said.