Daily Briefing: 🚧 Austin's Retail Riddle & Airport's $39M Liftoff ✈️

Welcome, Construct Intel Austin!

As we kick off another week with our fingers on the pulse of the construction and commercial real estate world, we've got some groundbreaking news to share in our Thursday morning brief.

Here’s what you need to know about CenTex CRE Today:

1. Austin battles retail space crunch amid tech boom and policy hurdles. 🚧

2. $39M FAA grant takes Austin airport's expansion plans off the runway. ✈️

3. Marcus & Millichap brokers mega 73K sqft self-storage sale in Austin. 📦

4. Highland Lanes strike leads to 300-unit apartment development. 🎳

Commercial Real Estate and Development Trends in Austin

InterFace Panel: Macroeconomic, Institutional Market Obstacles Hinder Retail Supply Growth in Austin

Source: REBusinessOnline

Summary: Austin's retail market is facing a critical shortage of quality space due to the barriers presented by volatile U.S. capital markets and restrictive local policies. The city's impressive population growth, driven by the tech sector, has outpaced the development of essential housing and infrastructure, thereby stifling retail development. Local bureaucratic processes are viewed as slow, and together with national debt market disruptions, they have made the financing and building of new retail spaces challenging.

Why this matters: By gaining insights into the bottlenecks facing the Austin retail market, commercial real estate professionals can better predict market trends, devise more comprehensive development strategies, and deliver value-added advisory services to their clients considering investments in retail properties.

Freehill Development Co. adds to fast-growing industrial portfolio across Austin metro

Source: Austin Business Journal

Summary: Freehill Development Co. is growing its industrial portfolio across the Austin metro area. This development comes during a period of rapid growth in industrial real estate, fueled by major manufacturing plants by companies like Tesla and Samsung, indicating a potential surge in demand for industrial property.

Why this matters: As industrial real estate continues to boom in Austin, commercial real estate professionals can leverage this trend to identify promising investment opportunities for their clients, particularly those interested in industrial properties.

Marcus & Millichap closes sale of 73,263-square-foot self-storage facility in Austin

Source: REJournals

Summary: Marcus & Millichap, a renowned real estate brokerage firm, has successfully brokered the sale of a 73,263-square-foot self-storage facility located approximately 6.5 miles south of downtown Austin, Texas. The property is set to comprise 786 units upon completion, with it being positioned on a 3.52-acre land featuring excellent street visibility. The transaction was assisted by Tim Speck, the Texas Broker of Record. The property was initially marketed on behalf of a limited liability company by investment specialists from the firm’s Columbus, Ohio branch.

Why this matters: This transaction signifies the active and strong investment interest in commercial real estate within the Austin area, particularly for self-storage facilities, which could be indicative of broader market trends, offering professionals a potential focus area for their future investment strategies or client advisories.

Austin Bowling Center Making Way for Apartments

Source: Connect CRE

Summary: The Austin-based Highland Lanes bowling center is slated to be replaced by a 300-unit multifamily development as it closes by year's end. The planned development is a vertical mixed-use project with 12% of the units being affordable housing, complemented by 4,000 square feet of commercial use space. The tract of nearly 3 acres was valued at around $7.3 million in 2023. Highland Lanes' owners also ran Dart Bowl, another bowling center which shuttered during the COVID-19 pandemic and did not reopen.

Why this matters: This article underscores the trends of repurposing and redevelopment within the commercial real estate sector in Austin, highlighting opportunities for professionals to advise clients on potential investment or leasing options in mixed-use developments, particularly in spaces previously occupied by businesses that have closed during the pandemic.

Camden expects a ‘transition year’ for supply, with the highest concessions in Nashville and Austin

Source: Multifamily Dive

Summary: Camden Property Trust expects 2024 to be a transition year with a challenging rental growth rate of 1.4% within the Sunbelt region due to supply issues. The company expects apartment absorption to be over 400,000 units nationwide, with more than half in Camden's markets. CEO Ric Campo stated that multifamily homes are taking market share from single-family homes due to reduced home affordability and continual in-migration to Sunbelt markets. Revenues are expected to fall between 0.5% to 2.5% in most markets. However, Austin's growth is expected to stabilize around plus or minus 1%. Camden's 2024 plans include modest acquisitions and developments, primarily awaiting improved market conditions.

Why this matters: The insight that Austin is among the most challenging markets with significant concessions can guide commercial real estate professionals on how to adapt their strategies in the Austin market, informing their clients on realistic revenue growth expectations and the current state of the rental market. 

Infrastructure and Economic Development Projects

Austin airport receives $39M in federal funding for expansion

Source: Community Impact Newspaper

Summary: The Austin-Bergstrom International Airport has received $39.51 million in federal funding to modernize and expand the airport, with projects including a new 20-gate concourse and improvements to the international facility. The funding is part of the Bipartisan Infrastructure Law, which has contributed about $29 billion to Texas investment projects. The expansion aims to meet the airport's growing passenger volumes, with construction set to start this year.

Why this matters: The expansion of the Austin airport signifies a growing demand for travel to and from the region, indicating a strong potential for sustained commercial and residential real estate growth in the surrounding areas, an insight valuable for commercial real estate professionals in their investment strategies.

Bryan to receive $1.6M EDA infrastructure grant

Source: Newstalk Texas

Summary: Bryan, Texas is set to receive a $1.6 million grant from the U.S. Department of Commerce’s Economic Development Administration (EDA). This grant is part of a $4.1 million investment in Texas infrastructure. The funds, matched with $5.4 million in local support, will be used for roadway improvement and to promote the expansion of manufacturing businesses at the Texas Triangle Park. The EDA predicts this project will create 130 jobs and generate $165 million in private investment. The funds come from the 2023 Disaster Relief Supplemental Appropriations Act.

Why this matters: The grant's impact on local infrastructure and business expansion presents opportunities for commercial real estate professionals in Central Texas to capitalize on potential commercial property transactions within the expanding Texas Triangle Park.

The Prolift Rigging Company Expands Texas Operations with New Branch Serving Austin

Source: PR Newswire

Summary: The ProLift Rigging Company, an industrial construction services supplier, has announced the opening of a new branch in the Greater Austin-San Antonio Metropolitan Region. The new branch located in San Marcos, Texas, boasts a 228,000 square foot office and operations facility offering a wide range of industrial services such as heavy lifting equipment, machinery relocation, heavy-haul transportation, and warehousing. This is the company's third branch in Texas.

Why this matters: The expansion of ProLift Rigging Company into the Austin area suggests significant industrial growth in the region, presenting commercial real estate professionals with opportunities for industrial property sales or leases and potential partnerships with a growing business.

New Real Estate Developments and Investments

New multifamily development signs onto Thomas Ranch

Source: Newstalk Texas

Summary: Wasatch Premier Properties has acquired 58 acres of land within the master-planned community, Thomas Ranch, for the development of a 600-unit multifamily project. The project will feature 100 townhomes and 500 apartments, with various layouts, starting at sizes of 1,400 and 650 square feet, respectively. The development will also provide amenities such as a pool, fitness center, clubhouse, and a dog park. The land was sold by Areté Collective, with Hensley Lamkin Rachel Inc. listed as the project's designer.

Why this matters: Knowledge of this sizeable development can aid real estate professionals in understanding the potential growth and demand in the Central Texas area, giving them the ability to guide their clients towards strategic investments.