Vast job growth and high demand for rental properties have driven developers to build 1,120 units in the North Austin area during the next 12–16 months with 8,120 units expected to be built in the overall Austin area, said Robin Davis, manager at Austin Investors Interests LLC, which provides market research on multifamily apartment properties and trends for the Austin and San Antonio areas.
“Employment in those [North Austin] areas is going to justify those units,” Davis said. “I think that’s an area where some major employers are adding positions, and there is a bit of growth.”
Since September, more than 2,200 new jobs have been announced by companies including HID Global, Indeed.com, General Motors, Yodle and SecureNet. On Dec. 6, the City of Austin approved a $1.6 million economic development agreement package for Visa Inc. that would create 794 jobs in Northwest Austin.
Overall apartment occupancy in Austin is 95.8 percent. In the North Austin area, occupancy is at 95.5 percent, which is the highest since 2000 when occupancy topped 97 percent, according to the historical absorption report for North Austin area ZIP codes from AII.
Few apartment complexes have been built in the area to help fill demand, and in the past year, only one new complex has opened, Promesa off RM 2222.
By next fall, many of the new apartment complexes will have the first units available for renters.
At The Domain, three developments are under way on Esperanza Crossing: Domain III, Domain IV and The Kenzie. Domain III is expected to be completed in May with rent projected to be between $899–$1,365, leasing agent Oscar Mendoza said. At the corner of Domain Drive, Domain IV is slated to be completed by summer and will have 228 units and about 14,000 square feet of retail space, said Jonathan Brown, senior associate at JHP Architecture.
Next to the Westin Hotel, The Kenzie is scheduled to open its first units by fall and be completed in summer 2014. CEO Doug Chesnut of Dallas-based StreetLights Residential said target renters for the property include young professionals employed by Apple Inc., IBM Corp. and Dell Inc.
“Northwest Austin is a strong technology job market that continues to grow,” Chesnut said. “This market provides a concentration of young professionals working for IBM, Dell and Apple. StreetLights also values the urban condition of The Domain. The Domain has great walkable streets to restaurants and shops that our residents value.”
A fourth apartment complex, Domain V, located on Esperanza Crossing between Domain Drive and Burnet Road, is now in the design phase, Brown said.
Near The Domain at Burnet Road and Esperanza Crossing, Endeavor Real Estate Group is planning a multifamily building that is scheduled to start construction in 2013. Dubbed the Addison on Burnet in site plans submitted to the city, the project would have 392 units and is expected to open in early 2014.
South of US 183 off North Lamar Boulevard, construction on Phase II of Midtown Commons is under way and is expected to be completed by July. The new construction includes 246 units with rent projected to be between $1,000–$1,500. Midtown Commons is located adjacent to the MetroRail Crestview station.
Mark Fowler, vice president of development and a principal with Dallas-based Trammell Crow Co., said the primary reason for developing Phase II is because demand for new apartments has been strong and consistent since Phase I opened in 2009. He said depending on how well Phase II does, additional complexes could be built.
“Our leasing has been in the 95th percentile occupancy rate for the last two-plus years,” he said.
East of I-35 on Parmer Lane near where General Motors is planning its IT innovation center, the Springs at Tech Ridge Apartments is under construction. Jean Jones, marketing project specialist for Continental Properties Company Inc., said the first units are scheduled for completion in June with the entire complex to be finished by January 2014. The gated community will feature 342 units in 12 buildings with rent projected to be from $675–$1,325.
Two other projects have the potential to be built. Broadstone at the Arboretum, 10011 Stonelake Bvld., is waiting on permit approval and a project at 14900 N. I-35 near Wells Branch Parkway is waiting on funding for two multifamily projects on the 45.6-acre tract.
One project that might not come to fruition is a 300-unit complex that was planned for 8100 Burnet Road where a Ross Dress for Less now stands. The multifamily development project has been dropped, likely because of neighborhood opposition, Davis said, citing AII’s recent records. Driving demand
In the past 10 years, average rent prices have increased from $639–$826 in 2002, depending on unit size, to $768–$1,082 for the third quarter of 2012, according to AII’s Market Comparison Report, which includes data for the 78726, 78727, 78729, 78750, 78758 and 78759 ZIP codes.
Davis said rent has increased about 5 percent each year because the supply of apartment housing has not been able to meet high demands. However, once the new units enter the market in the next 12–16 months, rent is less likely to continue to rise at the levels it has been, with the exception of higher-end apartments that are entering into the overall Austin market, she said.
Sandy Eckhardt, president of the Austin Apartment Association, said one reason demand is so high is because many people are preferring apartment living despite their ability to purchase a home. For those moving to Austin, apartment living is often the preferred choice, she said.
Although some may prefer apartment living, the housing market in Northwest Austin is one of the hottest in the city, said Leonard Guerrero, chairman of the Austin Board of Realtors. He said home sales are up 20 percent for the entire Austin market.
“That is a pretty substantial number and pretty noteworthy for any marketplace,” he said.
Some developers have attributed the growth of new apartment construction to the vast number of jobs flooding into Austin. Construction is under way on Apple’s Americas Operations Center at Parmer Lane and Delcour Drive. The company plans to hire more than 3,600 new employees.
Across the street from the new center will be Monterra Luxury Apartments at 13401 Legendary Drive. It will have 256 units ranging in rent from $875–$1,400 with the first units slated to open this summer, Epoch Properties President Kyle Rivas said.
“Our primary rationale for building it is that there continues to be a need for rental communities in that area with all of the job growth that is there today and what plans to be there with Apple,” he said.
Eckhardt said Apple’s expansion will bring not only new Apple employees to the area, but also people constructing the facility.
“This area is prime for those particular renters,” she said.