Daily Briefing: 🚉 Ch-Ch-Ch-Changes: Austin's Next Real Estate Boom and Light Rail Revolution 🛠️

September 22nd, 2023 News Brief TLDR:

1. Austin City Council eyes Palm District Plan and affordable housing reforms: City Council's multi-pronged agenda could reshape Austin's skyline and affordability. 🌆

2. Austin Transit Partnership's $190M FY24 Budget: ATP allocates $115M for light rail and $52M for anti-gentrification. 🚉

3. JLL Secures $27M Loan in Suburban Austin: JLL dives into private credit amid a restive real estate debt market. 💵

4. October Best Time to Buy, Says Realtor.com: Inventory in Austin expected to spike 22% to 36% next October. 🍂

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REAL ESTATE & CONSTRUCTION DEVELOPMENT

Austin City Council: Future of HealthSouth building, police oversight implementation

Source: Kxan.com

Summary: The Austin City Council is considering various proposals which could notably impact the city's real estate landscape; this includes moving forward with the Palm District Plan geared towards guiding future development in eastern downtown, assessing plans for converting the former HealthSouth building into affordable housing, agreeing to an incentive arrangement for the expansion of Austin's NXP semiconductor operations, and implementing land management and Land Development Code reforms oriented towards enhancing affordability and climate resilience.

Why this matters: Real estate professionals can leverage the Palm District Plan and potential affordable housing transformations strategically to identify and capitalize on emerging investment and development opportunities in downtown Austin, thereby driving client value.

Empire Group of Cos. Breaks Ground on 276-Unit Build-to-Rent Project in Hutto, Texas

Source: ReBusiness.com

Summary: The Arizona-based developer Empire Group of Cos. has underway a new 276-unit build-to-rent residential project, Village at Hutto Station, on the northern outskirts of Austin. The residential project, offering private backyards in one-, two-, and three-bedroom homes, is abound with amenities such as a pool, outdoor grilling areas, fitness center, walking paths, community clubhouse and a dog park. Estimated to be constructed over a period of two years, the venture is financed via a $62.4 million loan from Arbor Realty Trust with Empire Group of Cos. acquiring the site last fall for $11 million.

Why this matters: As new development zones with amenity-packed residential projects expand on the periphery of Austin metro area, Commercial Realtors can explore lucrative partnerships with such developers to come up with innovative proposals that generate mutual benefits while meeting clients' specific investment goals.

This American City Is Spending the Most To Build New Homes

Source: 24Wallst.com

Summary: Groundbreaking residential construction was largely centered in metros within Texas, Florida, and California throughout 2022. In particular, Texas scooped the top position with the highest total value of authorized residential units. Among countless developers to note, notable issuances were recorded in Texas metros such as Dallas, Austin, Houston, and San Antonio, amassing more than 220,000 residential permits calculated at nearly $44 billion. Austin exhibited booming residential demand but struggled with a 16% permit decline from 2021.

Why this matters: While Austin's demand is sky-high, dwindling residential permits suggest potential stumbles in supplying necessary housing stock which presents an attractive opportunity for commercial developers and real estate investors and may inform their investment strategies in the metropolitan Austin, Texas, region in the year 2023.

Ten residential buildings with cantilevered hovering volumes

Source: DeZeen.com

Summary: The article highlights ten residential properties around the globe that feature dramatic cantilevered structures, pushing architectural boundaries. The designs vary from homes built on hillsides to structures overshadowing coastal landscapes. Notably, Austin, Texas, finds prominence in the list with "Caddy Shack," a residential building featuring a cantilevered deck with a swimming pool and hot tub, hinting at the ongoing architectural trends and potential customer value-adds in the local market.

Why this matters: Through aligning residential design innovations from Austin, real estate professionals can set a unique selling proposition for potential clients seeking edgy architectural designs, ultimately increasing their market appeal.

FINANCIAL INVESTMENT & PLANNING

Austin Transit Partnership board passes $190M spending plan for FY24

Source: Statesman.com

Summary: The Austin Transit Partnership (ATP) approved a $190 million spending plan for fiscal year 2024. This fund is divided into $115 million for light rail, $23 million for Capital Metro projects, and $52 million for anti-displacement efforts, including land acquisition for affordable housing development and anti-gentrification programs. The ATP's initiative includes plans for stations, new rapid bus routes, changes to ad valorem property tax rates, and lowered negative impact on property rights. Significant investments will also be made in CapMetro projects, including the Red Line and new high-frequency bus routes.

Why this matters: The approved spending will influence commercial development around new stations and transit routes, opening up opportunities for real estate professionals to help clients locate strategically in these growth regions, delivering substantial value through foresight.

JLL Income Property Trust Closes Senior Secured Real Estate Loan JLL Income

Source: PRNewsWire.com

Summary: Property Trust has closed a $27 million floating rate first mortgage loan, secured with a newly constructed apartment community in suburban Austin, Texas. This strategic diversification by JLL IP marks an entry into the private credit sector amid a restive real estate debt market. Amid balance sheet and legacy portfolio challenges curtailing traditional real estate debt sources, this origin is projected to yield between 7 - 8% - a notably attractive anticipated yield against the current landscape.

Why this matters: With the promising yield projected from JLL's mortgage loan secured by a prominent real estate asset in Austin, understanding this strategy presents an opportunity for Central Texas commercial real estate professionals to identify potential future investments options or financing sources leading towards client value-add and strategic industry alignment.

3 Once-In-A-Decade REIT Buying Opportunities

Source: SeekingAlpha.com

Summary: Principal Asset Management advocates for greater investment into Real Estate Investment Trusts (REITs), positing extreme bearishness towards REITs and current large valuation discounts as compelling entry points for investors. Given the growing transition of sentiment towards favoring REITs and cheap relative valuations, potentially strong funds may consequently flow into REITs. Examples flagged for investment include BSR REIT which owns a portfolio of affordable apartment communities in the Texan Triangle (Dallas, Austin, Houston), and others like Crown Castle Inc., and Healthcare Realty Trust Incorporated with cell tower and medical office building portfolios respectively.

Why this matters: This data on under-valued REITs owning properties in the Texan Triangle, predominantly in Austin, will enable commercial real estate professionals to make informed client proposition strategies for attractive investment opportunities, leveling up both client satisfaction and possibilities for business growth.

MARKET TREND & ANALYSIS

New report explains why October is the best time to buy a house

Source: TheStreets.com

Summary: According to a recent report from Realtor.com, the optimal time to purchase a home in 2023 may be the first week of October. The number of active home listings across the country is expected to rise by 17%, meaning prospective buyers may find more inventory and gentler pricing conditions. Local markets expected to bucks the trend include Austin, where home inventory could spike 22% to 36% over the average.

Why this matters: Recognizing the projected market fluctuations can equip Central Texas real estate professionals to strategically advise their investor clients on timely purchases, potentially capitalizing on softer prices and expansive inventory.

STV Appoints Chris Haney, P.E., as New National Water Operating Group

Source: InformedInfrastructure.com

Summary: President STV, a professional services firm focusing on infrastructure projects, has welcomed Chris Haney, P.E., as the national water operating group president. Haney brings years of experience and expertise to expand STV's water practice and position STV as a prominent player in the water sector. STV's work with water and wastewater infrastructure in various states, including Texas, is detailed, underscored by their role as lead designer for several projects such as the improvement of the South Austin Regional Wastewater Treatment Plant and water projects in San Antonio and Dallas.

Why this matters: As STV is involved in major infrastructure projects in Austin including the rehabilitation and improvement of the South Austin Regional Wastewater Treatment Plant, central Texas real estate professionals should keep an eye on STV’s expanded water practice as it could hint at future infrastructural developments both broadly and which might enable new real estate development opportunities.

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