Daily Briefing: 🌆 From Sky-Scraping Towers to Mini Homes: Austin's 2023 Story 🏡

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

1. Austin office spaces define skyline; Central Business District towers lead. 🏢

2. Housing construction surges in Texas; Austin's 10,880 new homes spotlighted. 🏠

3. Mortgage rates in Austin hit a 23-year peak of 7.57%. 📈

4. Mustard Seed Village, Austin's tiny home answer, meets affordability needs. 🏡

Commercial and Retail Real Estate

Austin-area Office Buildings, Multitenant

Source: Austin Business Journal

Summary: The article focuses on a detailed list of office buildings in the Austin area, particularly those that define the city's skyline. Most of these large structures are multiple-story towers located in the Central Business District. The properties are ranked by square footage of office space, and the data provides valuable insights into occupancy rates, direct lease and sublease opportunities, and the cost of leasing, which frequently changes.

Why this matters: Understanding the current leasing opportunities, occupancy rates, and costs in Austin's Central Business District can equip real estate professionals to better advise their clients on commercial real estate decisions, thereby bolstering their reputation as industry experts.

Austin-area Office Parks, Multitenant

Source: Austin Business Journal

Summary: The 2023 list of office parks in the Austin area provides insights into the various multi-building complexes ranked by square footage, from The Domain in northwest Austin to the "creative" offices at the MetCenter in southwest Austin. The list includes both direct lease and sublease opportunities and excludes owner-occupied and single-tenant properties. The data provided by Cushman and Wakefield Inc details the total available square footage and lease rate information as of September 2023, highlighting the largest single-building properties.

Why this matters: This comprehensive breakdown of office parks and their leasing options provides Central Texas commercial real estate professionals with an up-to-date understanding of the office space market in the region, which will allow them to better advise their clients on potential investment and leasing opportunities.

Retail Centers in the Austin area

Source: Austin Business Journal

Summary: The 2023 list of Austin-area retail centers is tracking leasable square feet for properties across Travis, Williamson, Hays and Bastrop counties. In collaboration with the real estate firm Weitzman, ABJ has updated trade-area data for a 5-mile radius around each center, including big-box anchors such as Home Depot and HEB. Retail developments currently under construction or set to break ground can be added to the watchlist.

Why this matters: Understanding the details of new retail developments in the Austin-area not only helps commercial real estate professionals stay informed about market trends, but also provides them with valuable information that can be used to advise clients looking for retail space.

Two newly built, adjacent retail properties in suburban Austin secure acquisition financing

Source: Austin Business Journal

Summary: JLL Capital Markets has secured acquisition financing for two new retail properties situated in the Kyle Crossing mixed-use development in Kyle, Texas. The properties form part of the Kyle Crossing Phase II development and are fully occupied under a triple-net-lease arrangement. The development is home to a host of businesses and is located near a Target, Kohl’s, Petco, Ross and HEB, as well as the Village at Kyle, which features a hospital, medical office space, and a Wal-Mart Supercenter and Lowe's.

Why this matters: Understanding the financial arrangements behind successful developments like Kyle Crossing provides commercial real estate professionals with valuable insights into securing investments and developing attractive, fully-leased retail spaces within mixed-use projects.

6 safe havens for commercial real estate as markets like Austin and San Francisco plummet

Source: Business Insider

Summary: The real estate bubble caused by the pandemic is reportedly bursting in tech hubs like San Francisco and Austin, Texas, according to a recent Moody's report. The report, which grades each market's health via factors such as supply and demand, has revealed some unexpected commercial real estate safe havens, including Albany, New York, Hartford, Connecticut, and Toledo, Ohio. It classifies markets into green (healthy), yellow (warning), and red (stress) categories, advising investors to use this data in informing their investment strategies.

Why this matters: Given the reported decline in Austin's commercial real estate market, local professionals should look at these findings as an opportunity to diversify their portfolios and advise their clients accordingly on potential investment opportunities in emerging markets.

Market Analysis and Trends

Mortgage rates hit 23-year high which may deter some Austin homebuyers

Source: KXAN News Austin

Summary: Long-term mortgage rates in Austin have risen to a 23-year high of 7.57%, with predictions they may even breach 8%. This increase significantly affects the average income required to afford a typical home in Austin. The uptick is linked to the 10-year Treasury yield that lenders use for pricing loans. The increasing rates particularly impact first-time and lower-income buyers, forcing them out of the market due to unaffordability. Although the rates have soared, the home-purchasing potential has only diminished by about 4% compared to 2022.

Why this matters: Understanding these mortgage trends can enable commercial real estate professionals to better advise their clients on investment strategies and financial planning in the Austin market, especially in cases where residential property acquisition is part of a diversified portfolio.

Austin multifamily units see high supply, low demand in 2023

Source: Austin Business Journal

Summary: Thousands of new multifamily units have been added to the Austin market over recent years, but demand hasn't kept up. As of September, nearly 20,000 more units were delivered than absorbed.

Why this matters: With the current oversupply of multifamily units in Austin, commercial real estate professionals can help their clients strategize to ensure their properties stand out in the saturated market, potentially enabling better occupancy rates and return on investment.

Residential Real Estate

Housing construction booming in Texas

Source: Austin American-Statesman

Summary: See where Austin ranks according to new report New housing construction is flourishing in Texas, notably in Austin, Dallas, and Houston. Austin has seen the construction of 10,880 new homes this year, with an average of 1,116.5 new homes per 100,000 residents. This growth is supported by the city's thriving tech industry, vibrant culture, and its strategic location along the Interstate 35 corridor. The average home value in Austin as per Zillow was $557,292 in July 2023, down 9.8% from the previous year due to new housing supply meeting demand. Of the new homes built, 4,810 are single-family homes, and 6,070 are multiunit residential homes. The housing market in Austin is stabilizing as prices, pending sales, and days on the market become steady.

Why this matters: The surge in housing construction, particularly multiunit residential homes, signifies an increased demand for housing in Austin, indicating a growing population and business growth. Commercial real estate professionals can leverage this information to guide investment decisions and client recommendations, particularly around multifamily residential properties.

First tiny home village in Austin suburb sees big demand

Source: Austin American-Statesman

Summary: A new tiny home village, Mustard Seed Village, has been developed by Joseph Claypool in Round Rock, an Austin suburb, to tackle the issue of affordability. The homes, while small, are designed to be spacious and rents are capped at under $1,400 a month. The development has met with strong demand, underlining the need for affordable housing options in Central Texas.

Why this matters: This development represents a novel approach to addressing the housing affordability problem in Central Texas, suggesting a potential market trend that commercial real estate professionals could capitalize on to provide affordable housing solutions to their clients.

No Parking Downtown Austin Apartment Building Foreclosure Due to Insufficient Demand

Source: Urbanize Austin

Summary: The Capitol Quarters, an apartment complex in downtown Austin targeted at middle-income workers keen on reducing vehicle use, has been repossessed due to low occupancy rates. The property was returned to the lender, North Carolina's Churchill Real Estate Holdings, in a deed-in-lieu transfer, marking the end of its operations under Weaver Buildings.

Why this matters: Observing this trend, real estate professionals can focus on properties with ample parking spaces as it appears that the demand for no-parking properties is low, thereby ensuring better investment advice for their clients.