August 25th, 2023 News Brief TLDR:

1. Dallas builds 76,660 new apartments since 2020, Austin not far behind. 🏗️

2. Austin's CitizenM Hotel hits "T/O" in Central Business District's building spree. 🏢

3. Adaptive Urban Regulations eyes affordable housing, shaking up zoning codes nationwide. 🏡

4. CIM Group cashes out, sells 182,700 SF East Austin office for $87M. 💰

REAL ESTATE & CONSTRUCTION NEEDS

Dallas tops the U.S. charts for the most new apartments built since 2020

Source: Dallas.culturemap.com

Summary: Dallas-Fort Worth leads in new apartment construction since the onset of the pandemic, with 76,660 new units between 2020 and 2022. The sectors like industry and technology have been driving this construction boom. Austin, a neighboring Texas city, ranked fourth nationally having developed 45,051 new apartment units in the same period. However, for 2023, Dallas dropped slightly and expectations are predicted that New York will take the top spot in completed units. Nevertheless, the North Texas region, including Dallas, continues experiencing a population surge, evidencing massive incoming residency and thereby hinting at an increasing demand for housing.

Why this matters: Understanding the apartment construction boom happening in Dallas-Fort Worth and its rank among Texas cities including Austin clarifies broader real estate construction trends within the region for professionals and will help them anticipate demand levels, thus enhancing informed advice services to their commercial clients.

Austin | CitizenM Hotel | 204 Feet | 16 Floors | T/O

Source: SkyScaperCity.com

Summary: With an exclusive report on the booming high-rise construction scene in Austin's Central Business District, the piece discloses that around 3.5 million square feet of office space is currently in various stages of development, signaling an escalating trend in infrastructural progress. Notably, the skyscraper developments include the CitizenM Hotel, a 16-floor structure standing at 204 feet.

Why this matters: This insight into Austin's bustling construction scene provides valuable market context that commercial real estate professionals can utilize to guide their clients towards strategic property investments and anticipate fluctuations in downtown Austin's commercial real estate values.

Here’s a New View of Block 32, Building a Double Dose of Towers Downtown

Source: Austin.towers.net

Summary: Local developer Manifold Real Estate proposed the Block 32 project - a two-tower residential addition to a site located one block away from the Austin Convention Center, increasing downtown population density. The two towers aim to bring a significant amount of residential stock to the area, with a total of 726 apartments between the towers, retail spaces, and a 216-room hotel included.

Why this matters: With downtown Austin's rising popularity mixed with high consumer demand, Real Estate professionals advising clients interested in commercial retail spaces, residential investment or partnering in hotel operations should track this development closely to take advantage of related opportunities.

Harbor Group Makes Austin-Area Acquisition

Source: MultiHousingNews.com

Summary: Harbor Group International has expanded their Texas portfolio with the acquisition of The Warner, a luxury apartment complex in the Austin suburb of Round Rock. The development, consisting of six buildings with 336 units, bridges proximity to technology major offices such as Dell, the forthcoming Apple office campus, and Samsung's future semiconductor plant due in 2024. Harbor Group now holds over 8,647 units across 23 communities in three Texas cities further solidifying their presence in upscale residential properties in promising tech-forward areas.

Why this matters: This purchase reflects a strengthening investment trend in suburban areas of Austin due to their proximity to major tech corporations, suggesting increasing value in suburban properties for commercial real estate professionals representing similar complexes or parcels destined for residential development.

CIM Group Sells 182,700 SF Office Building in East Austin

Source: RebusinessOnline.com

Summary: Los Angeles-based CIM Group recently sold a large office building, Fifth + Tillery, in East Austin, covering a staggering 182,700 square feet. Equipped with outdoor amenities, the property was acquired in 2019. The office building has been purchased by Capital Metro, local transportation authority, for nearly $87 million.

Why this matters: Since major transactions bear an impact on the overall pricing and transaction trends in the commercial real estate market, being abreast of such activities could influence decisions concerning client advisories, market valuations, and entry or exit strategies.

ECONOMIC PERSPECTIVES & INVESTMENT STRATEGIES

Why Kingbird Investment Management Sees Opportunity in Higher Interest Rates

Source: WealthManagement.com

Summary: Kingbird Investment Management is strategically intending to take advantage of the market's current distress due to rising interest rates. The firm plans to focus more on loan refinancing challenges due to potential distress situations from owners confronted with higher interest rates. Alongside its traditional focus on multifamily properties, Kingbird is expanding its assets towards the industrial real estate sector to capitalize on its demonstrated fortitude. Mark Pasierb, who recently assumed presidency at Kingbird, presents versatile strategies to provide mid-teens risk-adjusted returns to their investors mentioning their flexibility to invest across the capital stack. Pasierb also emphasizes Kingbird’s preference for forming partnerships with property owners and operators, leveraging off-market deals instead of relying on broker marketed properties.

Why this matters: The focus on robust markets like industrial sector in addition to multifamily properties amidst changing market conditions signals a notable shift indicating potential new avenues of investment opportunities for commercial real estate professionals in Central Texas – particularly when considering industrial areas expanding in the region.

The One-Way Bet On Property Is Now Waning As The Myth That Prices Will Keep Rising Has Been Broken

Source: HousingBubble.blog

Summary: The global property market is currently undergoing a precarious dynamics shift with significant economic impacts. This is a departure from sustained growth trends seen earlier; a phenomenon that can likely be attributed to variables such as highly inflated property prices and skyrocketing interest rates driving these shifts. Reports from San Antonio and Austin, Texas reveal a declining trend in home sales and median home prices, with an averaged-down evaluation of properties in the parts of city observing high-interest rates. Distressing insights about sellers’ inclination towards reselling properties sometimes spot a steep loss in their original invested input hinting at financial dilemmas accelerating the deflating market bubble. Furthermore, these market trends along with mounting interest rates have led investors became apprehensive, mirroring a similar path to an on-going Japanese economic crisis.

Why this matters: For Central Texas commercial real estate practitioners, this industry trend draws attention to potentially increased inventory and pricing sensitivity when counseling clients, proactively adjusting strategies to the realities of cooling markets in order to maintain profitability.

URBAN DEVELOPMENT & SUSTAINABILITY

Adaptive Urban Regulations: Navigating Change in Affordable Housing, Infrastructure, and Sustainability in the U.S.

Source: ArchDaily.com

Summary: The "Adaptive Urban Regulations: Navigating Change in Affordable Housing, Infrastructure, and Sustainability in the U.S." article presents today's urban development challenges and discusses innovative regulations aimed at affordable housing provision, decongesting infrastructures, and enforcing sustainable energy practices. For instance, California's law reforms aim to develop 300,000 to 400,000 affordable houses by overriding local zoning codes, and New York City's "Get Stuff Built" approach plans to construct 500,000 affordable housing units by 2030. There's also a congestion pricing law in New York for improved public transit and an initiative by the Austin City Council to increase housing production in limited-size lots to handle over-congestion.

Why this matters: Given the shortcomings around the area of affordable housing and infrastructure congestion common in the real estate market, translating local policies' inspiredness such as lessening the standard lot sizes and elevating affordable housing units capacity can help formulate snap-shot solutions while doing business and advise the real estate strategy buyers and sellers request in Central Texas.

What To Know About Sustainable Architecture

Source: FamilyHandyman.com

Summary: The article emphasizes the increasing importance of sustainable architecture due to its role in mitigating climate change. Construction, due to the use of concrete, steel, and aluminum, contributes to 23% global emissions, raising the need for an environmental course correction through sustainable building. Elements within sustainable architecture include both active design, such as geothermal heating/cooling systems, and passive design that leverages the natural environment, such roadmap could reshape future development trends. Interestingly, in Austin, Texas, an energy-efficient recreational property, the Edgeland House, has been identified as an example of sustainable implementation.

Why this matters: In an area like Central Texas that continues to grow and develop, this value placed on sustainable architecture can deeply influence the course of future commercial property investments, as client preferences shift towards more environmentally conscious choices, driving changes to both demand and property valuation.

TODAYS PERMIT RUNDOWN

Put on your hard hats and lace up your steel-toe boots, folks, as we dive into the thrilling world of Central Texas Construction! Here are the crown jewels of today's permit table:

Starting off with the grand project at 205 E St Elmo, where we're seeing a dazzling transformation, a metamorphosis on a grand scale. What was once a forgotten warehouse is rising like a phoenix into a 2-level shell office space. The maestros conducting this symphony are none other than the team at chioco design. And the visionary behind this transformation? 201-207 E St Elmo Rd Owner LLC, with their hefty investment of a cool $7 MILLION! This is a potential construction Cinderella story happening at 205 E St Elmo Rd, Austin, TX 78745.

Next up is the Winsupply Austin project, a rousing warehouse renovation rising at 1307 Smith Rd Building B, Austin, TX 78721. Our heroic Plumbing/HVAC supply company is getting a facility worthy of its industry stature, thanks to the work of FrameWork Architects. The project’s owner, 1307 Smith Westward LTD, is backing this groundbreaking work with a significant $3 MILLION - let's hear it for transformation!

Last, but not the least, we swing by the famous One American Center where the Salesforce Austin team is revamping its 2nd floor. About 2,500 sq.ft gets a fancy facelift with new non-structural partitions and other minor tweaks. True to its name, INTERIOR ARCHITECTS are hands-on with this project, spinning their transformation magic while making sure all building core components remain untouched. CSHV-ONE AMERICAN CENTER LLC isn't skimping on costs too - they've allocated just shy of $190K to this rhythm of renovation right in the heart of Austin at 600 Congress Ave.

Stay tuned for more enthralling updates from our bustling construction scene!

investment decisions and advising clients eyeing the Austin property market.