“When we selected the Miramont site, the multifamily occupancy rate in that submarket was around 88 percent,” says Joel DeSpain, an Opus West director of real estate for the market. “By the time we closed on the land [in 2002], occupancy was up to 90 percent. When the Miramont comes on stream next spring, we expect the neighborhood to be at or above 95 percent occupancy.” As of third quarter 2004, overall multifamily occupancy in the southwest area was 94 percent with an average rent of $0.91 per square foot.
As with all large development deals, DeSpain says, there was some speculation involved. “But it all still had to fall on sound strategy,” he says. “We studied the numbers and trends. We talked to people on the street. Then we made our commitments. We feel excellent about what we’ve anticipated for Austin.”
Austin’s eastern submarket is equally promising. The community is built largely around the Robert Mueller Municipal Airport site, Austin’s former airport. About four years ago, the city relocated the airport to the closed Bergstrom Air Force Base. The move left the 709-acre Mueller site vacant and the multifamily construction surrounding it in limbo. With properties that were primarily built in the 1960s, 1970s, and 1980s, the submarket had no major prospects on the horizon and still carried the stigma and values of a tough location, thanks to former airport noise.
But now Catellus Development Corp. has stepped in to revitalize the site. The San Francisco-based company plans to build a 30-acre children’s hospital, commercial development, multifamily and single-family homes, and more. During the eight years it will take to build the project, investors have a prime opportunity to purchase multifamily property surrounding this development at reasonable rates and pursue the upside of infill and rehab.
Austin Tomorrow Austin is smart, aesthetic and always promising. As such, its high peaks and low valleys generate great interest, particularly because investors realize how high this city can rise. When it’s at or near the bottom—like now—the best advice may be to grab as much as you can, because once giveaways burn off in the next 12 to 18 months, smart investors will be in for a great ride.