August 29th, 2023 News Brief TLDR:

1. Grant Cardone says Austin's real estate is overbuilt: Buyer, beware! 🏠

2. I-35 expansion amplifies noise concerns: Residents and Festival Beach gardeners uneasy. 🚗

3. Life Sciences thrive despite slowdown: Lab spaces outperform regular offices. 🔬

4. One Lady Bird Lake shifts to residential: Office vacancies prompt redesign. 🏢

REAL ESTATE & CONSTRUCTION

Are These the Worst Real Estate Markets for Investors Right Now?

Source: RealtyTimes.com

Summary: Noted real estate investor Grant Cardone recently claimed that Austin, Texas, and Seattle are among the worst real estate markets for investors at present due to them being overbuilt. This comes on the heels of Austin experiencing a significant real estate boom during the COVID period, fueled by remote workers moving in, attracted by low mortgage rates. Austin's popularity appears to have been a double-edged sword resulting in a swift overbuilding, followed by a drastic 22.4% drop in home sales year-over-year in 2021's first half, a 2.7% decrease in new listings, and a huge 170.2% increase in active listings. Cardone appears skeptical toward AI's capability to provide the most accurate, up-to-date real estate market information. Instead, he promotes investing in real estate through crowdfunding platforms for risk reduction.

Why this matters: Informed about Austin's possibly overbuilt state, commercial real estate agents can now more flexibly calibrate their market predictions, practices, and guide clients seeking to invest in commercial properties in Austin on negotiation strategies considering the current supply and demand status.

Life Sciences Outperform Despite Slowing Economy

Source: CommercialSearch.com

Summary: By 2023, despite an expected economic slowdown and rising interest rates, the life sciences sector continues to offer potential value, due in part to a robust supply pipeline and positive future prospects. While lab space sales declined, sold properties fetched much higher averages per square foot than regular office buildings. A potential supply surplus does exist, but is primarily confined to specific markets like Boston, San Francisco, and emerging markets such as Philadelphia and Houston. A harsh decline in job numbers from the office sector and increased national vacancy rates continue. Particularly, Austin has noticed a notable increase in these rates. Yet, construction for new commercial space continues to decrease amid economic shocks and changes to remote work.

Why this matters: The increase in office vacancy rates and slowing commercial construction in Austin noted in the article offers insight into Austin's market dynamics, guiding their decisions concerning areas for potential new developments and providing a market occupancy overview for client consultations.

Houston tops the charts for 3rd most new apartments built in U.S. since 2020

Source: Dallas.culturemap.com

Summary: Houston topped the charts for the third-most new apartments built in the U.S. since 2020, surpassing Austin, though Austin came in fourth, demonstrating sustained demand for rental units. Though Houston is still growing, other metros, including Austin, expect faster growth in their rental unit construction for 2023 despite the pandemic's setbacks. Interest has increased in developing single-family rentals to meet the needs of individuals not ready for homeownership.

Why this matters: The surge in apartment construction highlights a robust rental market, indicating potential investment and future developments for Austin-Centric commercial real estate professionals.

One Lady Bird Lake Office Tower Project Redesigned for Residential Use

Source: Austin.towers.net

Summary: The 15-storey tower project One Lady Bird Lake, first announced as an office building, has been redesigned to serve as a residential tower featuring a mix of apartment and condo units totaling 293 residences. The previous office space of about 475,000 square feet is now replaced with 17-story residential space and an added 14,000 square feet of retail and restaurant space arranged over the first two floors and three underground parking levels. Located in the South Central Waterfront planning area, the project is altered due to the high rate of local office space vacancies and co-created by New York-based development firm, the Related Companies, and the Texas Department of Transportation for developing a $25 million boardwalk structure.

Why this matters: Changing market trends are limiting office space in Austin, the redesign of One Lady Bird lake from commercial to residential underscores the shift towards home-based work, cementing the growing relevance of residential sectors in the city.

Mosaic, NexMetro Break Ground on Phoenix BTR Project

Source: MultihousingNews.com

Summary: Mosaic and NexMetro Communities have embarked on a $63 million, 197-unit single-family rental home community project, Avilla Palomino, in Glendale, Arizona, targeting its completion by next summer. Ranked as company’s third project breaking ground in the last 18 months, and NexMetro's 24th in the Phoenix area, Avilla Palomino is supposed to provide high-end rental home options in growing Phoenix metro. With plans to expand BTR communities in Texas and Arizona, Mosaic is also breaking ground on a 224-unit BTR community project for NexMetro in Austin this month.

Why this matters: With Mosaic and NexMetro Communities' expanding BTR portfolio, including the upcoming 224-unit community project in Austin, Central Texas commercial real estate professionals may explore partnering possibilities or competitive positioning for similar SFR or BTR models, keeping a pulse on the latest market trends.

Should you invest in real estate when interest rates are high?

Source: InvestForMore.com

Summary: The article discusses the dilemma of investing in real estate amid a high interest rate environment, emphasizing that property investment shouldn't solely be based on the interest rate climate. It enumerates several factors to consider when investing in such situations, arguing that properties can still prove profitable despite higher rates. Moreover, the author explains that while high interest rates might curb demand and thus affect property values sometimes, in many cases, it also reduces supply because existing homeowners tend not to sell and builders slow down – both actions will increase home prices. The author concludes the optimal time to invest in properties is determined by individual circumstances and urges the reader to carefully evaluate opportunities based on their own financial and strategic objectives.

Why this matters: This detailed analysis of the impact of high interest rates on real estate investment translates into a wider understanding for Austin's real estate professionals, enabling them to guide their commercial clients towards informed decision-making in a fluctuating economic climate.

Todd Burgener jumps to Douglas Elliman

Source: TheRealDeal.com

Summary: Top-producing Austin residential real estate agent Todd Burgener shifted to Douglas Elliman from Twelve Rivers Realty, continuing an impressive sales track record that saw $180m in transactions from the start of the pandemic. Burgener's decades of Austin experience are flanked by partnership with his wife, Kim, working as his operations director. Moreover, Huntsville-based start CBRE promoted John Moake to oversee its San Antonio local office.

Why this matters: The narrative of these significant position transfers and appointments within the Texas real estate realm spotlights potential strategic collaboration opportunities and network expansion for professionals particularly in commercial real estate sector. Insights gleaned from observing steps of such top agents can influence career evolution strategies of budding realtors keen on efficiently utilizing their own network resources.

INFRASTRUCTURE & URBAN DEVELOPMENT

Noise concerns amplify as I-35 expansion in Central Austin nears

Source: Kut.org

Summary: The expansion of I-35 in Central Austin, starting next year, will increase noise levels significantly during its decade long construction and even after its completion due to higher vehicular traffic. Lower main lanes and some sections shielded, regulated by possible city and University of Texas funding, aim to control the sound levels. Further, the state also plan to erect 10 noise barrier walls to qualify for certain noise and effectiveness criteria. However, concerns persist about the efficacy of such barriers from previous experiences and the advent of new environmental concerns like diminished sunlight access and hampered air circulation. The implications extend notably, manifesting concerns among Festival Beach Community gardeners and residents at various apartments complexes adjacent to the impending expansion.

Why this matters: The onset of construction implies an increased clamor near properties around affected zones that commercial real estate professionals should account for when negotiating leases or purchases, its foreseeability dictating a relative market value of affected properties thereby marking a tangible impact on any potential real estate transaction.

Rally against lawsuit that could undo Austin code changes aimed at affordability

Source: Kxan.com

Summary: Roughly 50 individuals protested at the Travis County Civil and Family Courts against a lawsuit potentially overturning Austin's Land Development Code (LDC) changes aimed at affordability. The lawsuit was born out of alleged violation of homeowners' protest rights, revising programs supporting affordability under the law such as Vertical Mixed-Use II (VMU2) and "Affordability Unlocked" which ease restrictions for affordable housing.

Why this matters: By proficiency in the changed regulations and their potential repeal, commercial real estate professionals can offer expert guidance to their clients on property investment considerations, especially with regards to properties serving multiple functions-questioning previous rulings jeopardizing the vertical mixed-use or effectively utilizing the Affordability Unlocked' program.

TECHNOLOGY AND INNOVATION

Subletting app Kiki raises $6M by using dating app concepts to match listings and renters

Source: TechCrunch.com

Summary: Kiki, formerly Easy Rent, a startup for sublets that matches listers with tenants useful for up to 6 months, has secured $6 million in a recent seed funding round. Kiki will utilize these funds toward their fall relaunch in New York City. The startup focuses on users who travel regularly and would otherwise lose rent while they're gone. Kiki inconspicuously uses a defining innovation: swiping a trusted 'friend of friends' lister and renter match system akin to typical dynamics on a dating app, which utilises Instagram as its initial communication platform and validating authenticity. Notably, Kiki intends to unfold to Austin among other top 10 cities in the United States in its expansion map.

Why this matters: With the noticeable boom in Austin's real estate market and an influx of professionals due to increasing corporates headquarters and hubs, Kiki's unique approach could bring changes in rental dynamics as affordable workplace and domestic setup is a key preponderance for incoming professionals.

TODAYS PERMIT RUNDOWN

Starting up with a bang is Simon Property Group with a renovation on deck at The Domain - Building K. This project, aptly named 'South Interior Shell Work', defies easy categorization. It's all about transformation, picture this: 5 existing retail tenant spaces being metamorphosed into a cool, avant-garde 'cold dark shell spaces' for future tenants. All these with a budget estimate of $300,000, guided aesthetically by SJE ARCHitects. You'll want to plug into your GPS '11501 Century Oaks Terrace, Austin, TX 78758' to check the ongoing magic!

Well, the innovation train just keeps rolling with CapMetro. They're spearheading two major new construction projects, both part of the larger MetroRapid Expo Project aimed at improving mobility around the Medical School in Austin. Both the Southbound (SB) and Northbound (NB) projects, which entail sidewalk and bus stop renovations, are firming up at an investment of around $200k each. DAVCAR is the wizard taking the wheel on the design of the SB project whereas Huitt-Zollars is stamping its mark over the NB project. The SB project is shooting off at '1618 1/2 San Jacinto Blvd, Austin, TX 78701', while NB one gears up at '1605 1/2 Trinity St, Austin, TX 78701'.

Last but definitively not least is Palak Investment Inc.'s massive 'Fairfield by Marriot Austin' project. Build anticipation for a 17 story, 130 room hotel with a 7-story parking lot. Let's just say this one's a towering addition to the city skyline budgeted at a cool $19 million. This project is at the introductory phase, so a design firm is yet to be anointed. You can find this hotel-to-be at '76 E. Avenue, Austin, TX 78701'. The street might not be huge...yet, but we're expecting big things!

It's all happening in Central Texas, folks! Keep those hard hats ready!

investment decisions and advising clients eyeing the Austin property market.