Money Matters “Investors continue to have a strong appetite for multifamily,” says Matt Counts, associate producer for GMAC in Austin. He sees investors very willing to be aggressive in their multifamily buys. “This is a good time to buy,” he says. “Austin’s multifamily pipeline has settled and it’s just a matter of time before jobs pick up and rents turn around.”
On the lending side, Counts says lenders are always looking for multifamily product to finance. “Interest rates have been at all-time lows over the last 18 to 24 months, so this is a very good time to borrow money at great rates,” he says. “Loan structures range from three-, five- and 10-year terms with 30-year amortizations to 20-year fully amortized product. Whether it’s a refinance or acquisition placement, they can’t seem to get enough.”
Site By Site Among all areas of the city, Austin’s northern suburbs are rebounding the fastest, even though they were hit the hardest by the tech decline. Predominantly young, professional renters in areas such as Lakeline are attracted to newly built Class B+ and A-units. Average rents in this area range from 79 cents per square foot to 88 cents per square foot. Occupancy is between 92.5 and 93.5 percent.
The northwest submarket, which is located near the intersection of Highway 183 and Loop 360, offers shopping and employment opportunities that rival downtown. Also in the northwest segment is the major highway intersection near the Lakeline Mall, which is a sector expected to be a major growth area with significant new single-family and multifamily development.
Due north on MoPac (the Missouri Pacific thoroughfare) is the La Frontera mixed-use development, one example of residential lifestyle available to Austin renters. With easy access off I-H 35, La Frontera totals 328 acres of commercial, retail, and residential development that sits adjacent to Dell’s corporate world headquarters, Farmer’s Insurance regional headquarters, and numerous big-box retail centers. La Frontera and the land surrounding it will soon become even more accessible with the widening of MoPac Boulevard from Parmer Lane to I-H 35.
In this submarket, newer Class A complexes prevail, as do larger transactions by significant investors. The sale of the Enclave at La Frontera and the Preserve at Rolling Oaks helped solidify investor belief in the future upside of Class A properties. Both of these properties were built in 2002 and sold for $81 per square foot and $78 per square foot, respectively.
Downtown Austin is an equally prime landing spot for buyers. According to a recent article in the Austin Business Journal, the downtown market “offers a glimmer of hope for multifamily rental properties.” The Multi-Family Trend Report quoted third-quarter downtown occupancy at 92 percent, with an average rent of $1.12 per square foot. In the campus area, some efficiencies are renting for as much as $1.20 per square foot, with smaller 30- to 60-unit properties that remain attractive to the smaller individual investor.
Also part of downtown is the South Congress market—known to the locals as “SoCo.” Less than a decade ago, SoCo was dilapidated and full of empty retail, with apartment rents in the 68-cent-per-square-foot range for mostly 25-year-old, less-than-100-unit properties. However, revitalization efforts during Austin’s latest real estate boom helped transform SoCo into a destination for the trendy and famous. The area is now thriving with boutique shops, restaurants, and live music venues. SoCo’s mostly high-end apartments are marketed to the downtown worker, the young and affluent, and renters that desire to be close to the entertainment and dining of the 6th Street Music and Warehouse districts.
One of these projects is the Alexan Congress, a 253-unit gated apartment property built by Trammell Crow Residential in 2000. Alexan Congress has all of the amenities expected in a Class A urban project, such as Berber carpet and hardwood floors, 9- and 10-foot ceilings, fireplaces, garden tubs, pool, fitness center, business center, and a Starbucks gracing the community entrance. Other retail shops occupy the building’s first floor. Units range from 579 to 1,461 square feet, and rent from $895 to $1,955 per month.
In southwest Austin, Trammell Crow Residential and Phoenix-based developer Opus West Corp. are now building the Alexan Miramont, a 276-unit property slated for completion in spring 2005.