Multifamily Supply Stream Starts to Take its Toll

Denton says Austin’s growth is starting to take a toll on supply.

AUSTIN, TX—Average Austin apartment rents increased in July for the seventh straight month, though the rate of increase from last year fell to a six-year low, according to Axiometrics, provider of apartment and student housing market intelligence. Employers added 38,400 jobs in the 12 months ending in June, a slightly slower pace than at the beginning of 2016. Some 10,173 new units are expected to come to market this year–the busiest of the current apartment cycle–and another 5,906 identified for 2017 completion.

Jay Denton, senior vice president of analytics for Axiometrics, tells GlobeSt.com: “Austin has had some of the best population growth in the country the past five years, but supply is starting to take its toll, particularly in the areas near downtown. Permitting has been steady, but at a very elevated level since 2012. The market has been averaging close to 21,000 new residential units permitted per year and about half of them have been multifamily. About half of the market’s properties under construction or in their initial lease-up are located within 2.5 miles of 6th Street and Congress, which is leading to negative rent growth in some of the neighborhoods.”