August 31, 2016
I’ve written in the past about the Austin apartment market in Austin Apartment Long Term Trends – 1930 to 2015 and 17 Apartments, over 5,000 units delivered in Austin in 2015. Supply has poured into Austin at a frenzied pace, especially in and near the CBD with units capturing higher average rents than historic norms for the market. Needing room-mates (plural intended) to make the rent has become the norm for millennials in Austin, not necessarily the case 10 years ago.
That being said, rent growth is slowing now in Austin, and someone mentioned to me just this week that she saw a “body-for-hire standing outside Hanover waving a sign that said they had leasing specials available right now. Never seen that for any of the luxury apartments.”
But construction continues. How much more can they build? I recently reviewed parcels in Austin that are zoned in such a way as to be likely candidates for multifamily construction. These could be empty parcels, parcels that are currently parking lots or car washes or even single family homes sitting on a couple of acres. For example, the images below show properties zoned in such as way that multifamily properties could be constructed on these sites:
(Image Credit to Google Street)
(Image Credit to Google Earth)
So how many sites like this are out there?
Using the Hidden Opportunity Module of Project Atlas, powered by Zonability, we’re able to target the nearby cities showing the most potential for new multifamily development. In Austin the total number, according to Project Atlas, is 5,212. So rest easy, Austin. As of now there could only be another 5000+ apartments (buildings, not units) plopped into the city.
But is that a lot? Compared to what?
I also took a look at the surrounding areas and found 8,704 parcels in Hutto, 935 in Taylor, and 825 in Buda. While Round Rock and Pflugerville don’t have the high number of available parcels, both could add millions of more square feet of multifamily.
But the real powerhouse in the region for unrealized multifamily construction potential is San Antonio:
That’s 20,318 parcels to Austin’s 5,212 zoned in such a way that a multifamily project could be built there. In square footage terms, 1.05 billion potential square feet of multifamily development for San Antonio (against 133 million square feet actually on these parcels), 273 million for Austin (against 95 million existing). In addition, the median assessed value for these parcels is $63,063 in San Antonio, $374,826 in Austin.
You can read my colleague’s blog San Antonio: The Lone Star State’s Next Boom Market for more on why this becomes a compelling development story which matched with the changing demographics of that city.
So as Austin works to fill the onslaught of multifamily supply built in the past few years, San Antonio appears to be the market to watch in central Texas.
Project Atlas is a GIS mapping platform designed specifically for commercial real estate research. The Opportunity Module, powered by Zonability, is an add-on which leverages local zoning and other data to instantly uncover the “true market” as well as provide instant calculations for a parcel’s potential.
To request a demo, please contact [email protected]!