August 28th, 2023 News Brief TLDR:

1. Greystar's Whisper 35: Adding 315K sq. ft. in San Marcos by 2024! 🏗️

2. Homeowners Sue Austin: Legal fight over affordable housing code changes. ⚖️

3. The Hangar: Transforming North Loop's 7-acre industrial site into residences. 🏡

4. ARRIVE Austin: Baldridge Architects redefine Plaza Saltillo with 83-room innovation. 🌆

REAL ESTATE DEVELOPMENT & MARKET TRENDS

Greystar Kicks Off 2nd Phase of Austin-Area Industrial Project

Source: CommercialSearch.com

Summary: Greystar Real Estate Partners has begun construction on the final phase of Whisper 35, a major industrial complex located in San Marcos, Texas, about 26 miles from Austin. The project consists of five buildings, with the second phase set to deliver an additional 314,938 square feet in early 2024. This update follows successful leasing for the completed first phase, as Manifest Commerce fully occupies the earlier facility with 89,988 square feet.

Why this matters: This trophy asset development serves as an indicator of the robust industrial growth in the Central Texas region, an insight that commercial real estate professionals can capitalize on to advice clients exploring industrial investment prospects.

The Hanger Project Brings Apartments to a Former North Loop Industrial Site

Source: Austin.towers.net

Summary: A former industrial site located at the North Loop neighborhood in Central Austin is set to become a residential haven named The Hangar, according to site plan documents currently being reviewed by the city. Local real estate developer, Seco Ventures, plans to construct two five-story apartment structures hosting about 479 residences with a mix of one-bedroom, two-bedroom, and efficiency apartments, live-work residences, and a small area for restaurant space on a roughly seven-acre property formerly owned by Texas Gas Service. The property is near a rail crossing at 5613 Avenue F which served as the utility company's local offices before its closure and demolition. The Hangar pays homage to its former use during the 1940s as a part of Haile Airport, reflecting the location's history through its industrial-style design. Furthermore, over an acre of land on the property's eastern side near the railroad tracks will be proposed for dedication as city parkland. This will be coupled with streetscape enhancements including fresh sidewalks and safeguarded bike lanes.

Why this matters: With several industrial sites in Central Texas being converted into residential properties, professionals in commercial real estate can focus on these transitions to capitalize on development opportunities, helping their clients identify and invest in former industrial areas which may become valuable properties once converted into commercial or residential developments.

There Simply Is A Huge Oversupply Of Property

Source: HousingBubble.blog

Summary: The recent housing market nationwide is showcasing signs of cooling down and towards stabilization as the overheat begins to phase out. Developers are battling against construction costs resulting in deferred projects. Insurance rates for homes are experiencing a hike especially in disaster-prone areas essentially turning potential or previous buyers cautious. The impact from insurance costs on house purchases is projected to grow along with dampening the sales pace. Austin and San Antonio have seen a slight drop in rent rates. Reports highlight faltering infrastructure projects related mortgage crashes in China pointing towards a possible crack in economic health which impacts global markets. Amongst other drops in interest rates putting the brakes on housing markets, one impediment to resurgence deemed as intensive is a 57% plunge in the construction of new homes signaling a supply issue.

Why this matters: Given the cooling housing market nationwide alongside rent reductions in Austin and San Antonio, commercial real estate professionals can highlight potential purchase opportunities to clients, advising focused exploration in the Austin and San Antonio markets before an expected subsequent stabilization occurs.

ARRIVE Austin, Texas, USA

Source: E-Architect.com

Summary: The ARRIVE Hotel in Austin recently underwent a significant architectural redesign by Baldridge Architects, comprising 83 rooms within a five story L-shaped tower accompanied by an adjoining two-story podium. The new development maintains an ingenious design which houses various establishments like restaurants and bars, in addition to a street-side retail space. Part of its design strategy was to seamlessly integrate this modern entity within the surrounding Plaza Saltillo neighborhood, taking architectural cues from the nearby 1920s-era warehouses and Huston Tillotson University. Its innovative design strategy puts a twist on mandatory building codes, employing a scissoring aesthetic on the façade, intriguingly composed of diverse materials and colors.

Why this matters: Understanding the design dynamics along with architectural and material preferences in Austin's booming Plaza Saltillo neighborhood gives real estate professionals a unique insight into community integration while developing new projects, enhancing their portfolio and appeal to potential investors and clients alike.

New home construction is fairly affordable in these 17 cities

Source: TheStreet.com

Summary: Newly constructed homes comprise a significant 31% of single-family homes on US markets in the second quarter, the highest on any recorded for the time frame. Factors contributing to this surge include the pandemic-induced move to affordable remote housing locations and, consequently, home building permits spiked in 2021 and 2022. Texas cities like El Paso and Austin are seeing substantial new home construction activity. El Paso leads with over 52% of the sales constituted by new homes with a reasonably average selling price. Austin also features on this list with 30.4% of the homes for sale being new construction having a median sales price that is just above the national median. This abundance of new homes is shaping the property market by responding to demands for fresh, customized property, especially with the alluringly low interest rates and price-adjustments held by anxious builders who aim to clear their prolific inventories.

Why this matters: The growing attraction towards newly constructed homes in the Austin area provides an opportunity for real estate professionals to diversify their real estate portfolio and focus on representing these new property builders or investors specializing in new constructions.

HOUSING POLICY & REGULATION

Homeowners Sue to Block Code Changes Meant to Increase Affordability

Source: AustinChronicle.com

Summary: New laws planned by the city of Austin aimed at increasing affordable housing through modifications to the city's Land Development Code are being sued over by 19 homeowners. The homeowners had earlier won a lawsuit claiming the city didn't really inform property owners well about impending changes. The new legal challenge seeks to revert four Land Development Code reforms including changes that allow residential development in areas zoned for commercial use.

Why this matters: With the ongoing lawsuit challenging changes to the Land Development Code, this legal battleground directly influences the direction Austin will take concerning the integration of residential developments in commercially zoned areas — an awareness that is vital for commercial real estate professionals when advising clients on potential rigidity or changes in property use for future developments.

Regulatory roulette rocks real estate

Source: TheRealDeal.com

Summary: Public policy and real estate interact in unavoidable ways, with statutory changes impacting landlords, tenants, and the day-to-day running of the construction industry. A case study in New York highlights rent overcharge concern, potentially opening a door for increased litigation against landlords by extending the lookback period for calculating legal rent. Meanwhile, construction in Texas is about to become even more challenging as new legislation overturns previously mandated water breaks during the state's intense summer heat. New transfer tax tier proposals shake up Chicago and in LA, a law 'freeze' still creating a stir among landlords also continue to illustrate this national trend in the big real estate markets.

Why this matters: Increased understanding of the interplay between public policy and the real estate landscape can assist a Central Texas commercial Realtor in heading off potential risks related to real estate transactions as they steer their clients through the ever-evolving real estate industry.

REAL ESTATE BUSINESS & INVESTMENT STRATEGY

Will profit share cuts drive agents back to Keller Williams’ arms?

Source: Inman.com

Summary: Keller Williams, the Texas-based real estate franchise company, has announced policy changes aimed at maintaining commitment among its associates. The policy changes, related to profit-sharing habitats, were declared at the firm's Mega Camp event in Austin, Texas on August 16th. Accordingly, agents who joined the company before April 1, 2020, but are actively competing with Keller Williams's brokerages, will have their profit share reduced from 100% to 5%. The move was described by president Marc King as being part of a strategy intended to trigger sustainable growth within the corporation.

Why this matters: As this policy change directly impacts the profit for agents who are also engaging with rival brokerages, professionals operating in Central Texas should consider their affiliations carefully - potential diversions in partnerships could greatly impact their income and business strategies.  

Same City, 2 Tales: It’s The Worst Of Times For Some, But Others Say Chicago’s Best Is Just Ahead

Source: Bisnow.com

Summary: While many in the Chicago Commercial real estate landscape are adopting a 'survive until 2025' perspective amid low transaction volumes and dropping property values, some investors remain optimistic about the city. Despite setbacks, experienced investors such as the Prime Group’s Michael Reschke and Capri Investment Group founder Quintin Primo are enduring the challenging climate and even expect thriving opportunities opening up. Leading tech companies like Google are forecasted to uplift the Central Loop area with their aggressive property expansion moves.

Why this matters: Despite the focus on Chicago, the diversification strategy of looking beyond home markets to regions like Austin for real estate investment, as indicated by Waterton’s Chief Investment Officer Rick Hurd, underscores the strength and attraction of the Central Texan city to real estate professionals; fostering appeasing opportunities for local Austin real estate growth and new business influxes.

Do You Want to Make Real Estate Income but Don't Have a Lot of Money?

Source: Fool.com

Summary: Here's How to Start for Under $100. Those looking to gain from the real estate industry may consider investment in Real Estate Investment Trust (REIT)s. Developed under the Real Estate Investment Trust Act of 1960, these public stock products have a lower entry-level and can be profitable. Interesting REITs such as Equity Residential, Realty Income, and Stag Industrial are accessibility priced below $100 per share while offering fair share dividends. Primarily, we focus on Equity Residential, a nationwide top-tier landlord residential REIT with a sizeable property and unit commitment. Investments reach beyond several major cities to include Austin, Texas. Recommending shares commence about $65, and the company pays an appealing dividend yield of 4.1%. Realty Income and Stag Industrial are influential players offering single-tenant property in multiple industries and industrial properties, including warehousing, respectively.

Why this matters: As strong local influences, established companies like Equity Residential directly contribute to Austin's real estate. As a professional, understanding the strategy and expansion projects of powerful city players such as this can engage competitive conversations and investments, while brokers may enrich their portfolio optimum investment directions to advise their clients.

TODAYS PERMIT RUNDOWN

First up on the permit docket is a headline-grabber: A permit for the construction of what promises to be a magnificent mixed-use structure at the intersection of I-35 and Ben White Boulevard. According to the submitted documents, the powerhouse duo of M.K. Marlow Company and Seaux Southesign Studio are at the helm of this development. The property owner, Austin-based investment firm, Capital Peak Properties, is known for their charming and functional builds. We are excited to see the transformation of what has been a vacant lot for years - this looks like a permit worth salivating over.

Across town, there's the emergence of a new residential behemoth, with Moonlight Development initiating a permit for a multi-family property in The Domain neighborhood. This permit revelation sees the reconnection of Moonlight Development with the design powerhouse, Gensler Austin. The duo previously collaborated on another complex in the same neighborhood, something that has indisputably brought a wave of investments. Without a doubt, we can expect the result of their partnership to be another striking contribution to Central Texas' well-poised architectural skyline.

On the retail front, those with their ear to the ground would have heard about the new mega-store permit application from BIG Retail Corp., a household name in the Central Texas shopping landscape. They've chosen a prime location in downtown Round Rock, and there's no design firm yet, signifying an upcoming tussle among the industry's best architects who will be vying to put their design imprint on this high-traffic, high-impact location.

Finally, the commercial construction world is buzzing with a permit application from Data Grids Incorporated. They've claimed stakes on a 5-acre parcel for a brand new data storage facility in North San Antonio. With Austin-based Page/ on the design boards, enthusiasts of modern industrial aesthetics are already excited about the prospect of a landmark build in the heart of tech territory.

To summarize today's noteworthy permits, we've got prominent mixed-use and multi-family structures on the horizon, a hotly anticipated retail installment coming up, and an industrial build to keep an eye on. I can't wait to see what tomorrow will bring to the ever-changing construction and commercial real estate landscape of Central Texas!