Daily Briefing: 🕵️‍♂️ Rise to the Top: From DOJ Probes to $190M Rail Budgets: Austin's High-Stakes Day 🚄

September 21st, 2023 News Brief TLDR:

1. Austin Transit Partnership OKs $190M for light rail and housing. 🚄

2. NexMetro and Mosaic break ground on 224-unit Georgetown apartment project. 🏗️

3. DOJ probes Elon Musk and Tesla over mysterious "Project 42" in Austin. 🕵️‍♂️

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REAL ESTATE & PROPERTY DEVELOPMENT

Draper and Kramer Announces Addition to Texas Portfolio with Acquisition of 307-Unit Griffis at Riata Apartment Community in Austin

Source: MultiFamilyBiz.com

Summary: Phoenix-based developers, Mosaic and NexMetro Communities are set for a partnership to develop Avilla Berry Creek, a 224-unit build-to-rent residential community centered in the northern Austin suburb of Georgetown with a $66 million total projected development cost. This community will include a range of one, two-, and three-bedroom detached homes with duplexes at sizes ranging from 690 to 1,265 square feet, and will have custom features like private front patios and backyards. In addition, residents will have access to communal amenities such as a clubhouse, pool, community garden, and a dog park with a completion goal set for summer 2025.

Why this matters: This acquisition represents additional investment in Austin's thriving rental market, needed due to the city's rapid tech-industry-led growth; knowledge about such investment trends can better inform clients about property values and potential for future investments in the region.

NexMetro, Mosaic Break Ground on Austin-Area Community

Source: MultiHousingNews.com

Summary: NexMetro Communities and Mosaic have initiated construction on a 224-unit apartment project, Avilla Berry Creek, in Georgetown, suburb of Austin, Texas, expecting its completion in summer 2025. The development will consist of one-, two-, and three-bedroom units with a range of amenities including a pool, clubhouse, and more. This move marks the first project in the Austin metro for both companies emphasizing Austin's consistent pattern of two percent population growth yet struggling residential development sector, considering the escalating interest rates.

Why this matters: Given the year-by-year two percent population growth in Austin without corresponding residential development, professionals in the Central Texas commercial real estate could use this information to counsel clients and allocate investments effectively understanding the residential development lag behind the population spurt in Austin, especially when considering the growing necessity because of hiking interest rates.

Austin Transit Partnership OKs $190M spending plan for FY24

Source: Kxan.com

Summary: The Austin Transit Partnership's board approved a $190 million budget for FY23-24 including $115 million for Austin light rail capital, $23 million for CapMetro projects, and $52 million towards anti-displacement efforts such as land acquisition, affordable housing, rehabilitation, and community engagements. The significant funds going towards real estate acquisitions and CapMetro projects demonstrate proactive urban planning and measure for displacement prevention, which is of high consideration by voters, as evidenced by approved property tax from Proposition A of 2020.

Why this matters: Considering a portion of this funding shall be used for right-of-way and real estate acquisitions, it provides an excellent opportunity for commercial real estate professionals to find potential areas of growth and assist clients accordingly - a factor highly significant in their professional advancement.

Roers to Bring 371-Unit Apartment Complex to Austin, Texas

Source: CreNews.com

Summary: Roers Cos., a company based in Plymouth, Minnesota, proposes to build a 371-unit apartment building on an eight-acre site near the Austin-Bergstrom International Airport at 7905 McKinney Falls Parkway in Austin, Texas. The project, named the McKinney Falls Apartments, could begin construction as early as next month with an estimated completion date of March 2026.

Why this matters: With Austin's population growth showing signs of strong momentum, this news could be interpreted as an opportunity for commercial real estate professionals to anticipate and capitalize on increasing housing demand in the area, especially sites in relative proximity to the major transit and employment hubs including the Austin-Bergstrom International Airport.

HOUSING AFFORDABILITY & EQUITY

'Thrown to the wolves': How private investors are jacking up rents and ripping off college students

Source: BusinessInsider.com

Summary: This rising trend of private luxury student housing, particularly seen around UT Austin, indirectly inflates the price benchmarks in nearby regions.

Why this matters: This consequently relates Realtors' price negotiation strategies, conversations about ongoing and anticipated changes in regulatory framework, and value propositions offered to clients eyeing to invest or establish in such markets.

Progressive to Vacate Austin, Texas, Office Backing $30.14Mln CMBS Loan

Source: CreNews.com

Summary: Progressive Casualty Insurance Co. has revealed plans to terminate its lease for 217,216 square feet at Met Center 15 in Austin, Texas, by February 2024, which will significantly lower the building's occupancy rate to about 9 percent.

Why this matters: This development poses a sizable vacancy in the Austin office market, an opportunity for commercial real estate professionals in Central Texas to source new potential tenants for this prime space.

BUSINESS & REGULATORY ISSUES

DOJ expands probe into Elon Musk, Tesla over secret glass house project

Source: NYPost.com

Summary: The US Justice Department has reportedly extended a probe into Tesla's CEO Elon Musk to ascertain if undisclosed personal perks were given to him, among which includes a supposed plan to utilize company resources to construct a bespoke glass-walled structure near Tesla's Austin, Texas factory and headquarters. This mysterious initiative, named "Project 42" by Tesla insiders, seems to involve company-sourced specialized glass, drawing the interest of the company's board members who have also initiated an inquiry into its purpose and Musk's involvement. Tesla, having relocated its headquarters to Austin, is not only under this criminal investigation but is also being examined by federal prosecutors and SEC investigators regarding claims that the company misled investors and consumers around the performance of its advanced driver-assistance system, Autopilot.

Why this matters: This high-profile federal investigation into Elon Musk and Tesla's activities and potential construction projects near the company's Austin headquarters could molecularly shift the commercial and industrial real estate market dynamics in the area, with amplified scrutiny possibly affecting regulatory processes and approvals in the vicinity and thus impacting real estate professionals operating in this area.

More Workers Return to Office After Labor Day

Source: CommercialSearch.com

Summary: Nationwide office reoccupancies post-Labor Day have increased, surpassing 50% for the first time since July, as recorded by the weekly report from Kastle Systems across ten US metro areas. Every metro managed by Kastle witnessed an augment in occupancy, including those below 50%. Among this, three Texas metros topped the chart with advanced occupancy rates; Houston (61.6%), Austin (59.3%), and Dallas metro (54.9%). This post-Labor Day swell is said to mirror trends from the past three years, indicating a positive outlook if the pattern sustains. However, some disputes over the data authenticity have emerged from city landlords and economic watchmen.

Why this matters: The highlighted elevated return-to-office rates solidify Austin's position in commercial real estate necessitating ongoing property services demand from office landlords, simultaneously creating a ripe environment for potential building and office space leasing transactions.

Mozley Park wall quest; Centennial Yards switch; Underground housing

Source: Atlanta.urbanize.city

Summary: This article highlights recent landmark developments in the Atlanta, Georgia area. Several changes in deprived urban properties were examined, including Mozley Park residents' fight for a sound barrier along Interstate 20, known as the "Five Mile Project," intended to increase the community's quality of life; A shift in focus at Centennial Yards, which is deferring plans for office towers due to cooled tech company interest; Proposed conversion plans that stand to transform the abandoned 34 Peachtree Street tower into residential offerings. Additionally, New York developer Tishman Speyer has withdrawn from a massive mixed-use development plan in West Midtown, paving the way for Austin-based Aquila Commercial and Carter Properties to potentially redevelop the properties.

Why this matters: The mixed-use development strategies and changing focus from commercial to residential projects in a different city real estate market can lead to enriching comparisons and heartening ideas for market adjustments and prospective opportunities in Central Texas and its bordering areas. Further, the potential participation of Austin-based Aquila Commercial in redeveloping Atlanta properties sets an example of Central Texas commercial professionals reaching other thriving real estate markets.