Zoey Multifamily Marks Entrance into Austin for Michaels Organization
Construction is underway on the Zoey, a $59 million multifamily development which marks The Michaels Organization’s first entrance into the Austin market, one of the fastest-growing cities in the country.
AUSTIN, TX—The $59 million multifamily development called Zoey marks The Michaels Organization’s first entrance into the Austin market. Berkadia secured a capital partner for the new luxury living rental community.
Berkadia’s joint venture equity and structured capital group led by Chinmay Bhatt, Noam Franklin and Cody Kirkpatrick identified and then helped structure the deal between the capital partner and the developer.
“We were excited to help a long-time Berkadia client, The Michaels Organization, in finding the right capital partner for an exciting project in the one of the most vibrant markets in the country,” said Kirkpatrick.
Located at 5700 East Riverside Dr., the Zoey is near the Colorado River waterfront, employment, entertainment and recreational centers, and within close proximity to major highways and public transportation.
When complete in late summer 2021, Zoey will offer 307 apartment homes in a mid-rise building featuring both five and six stories. Amenities include structured parking, fitness areas, co-working spaces and lounges. Outdoor amenities will include a pool, bike storage and a dog wash station, along with green spaces.
“Michaels has always loved the culture and energy of Austin,” said Steve Hillebrand, managing vice president of development at The Michaels Organization. “Our team is looking forward to delivering an exceptional high-quality, value-focused asset to Austin that reflects our mission to lift lives wherever we build and manage.”
Although this is Michaels’ first entry into the Austin market, the organization is not new to the state, having owned and managed affordable living communities in both Houston and Midland, TX. Later this summer, Michaels will open Mission Trail at El Camino Real, a new mixed-income housing community in nearby San Marcos, TX that will serve the city’s growing workforce.
Apartments at Zoey will be offered in a variety of floor plans, ranging in size from studios to three bedrooms. All will feature granite countertops and spacious closets. Of the 307 apartments, 38 of the studios will be designated as affordable.
MSC Architects LLC of Dallas is serving as the master architect and Michaels Construction is the general contractor. Michaels will also provide property management services, ensuring Zoey remains a community asset for the long term.
This is Berkadia structured finance team’s second ground-up multifamily deal in Austin in the past three months. The team also arranged the capital partner for Stillwater Capital Investments, a transaction that closed last year.
“Austin’s fundamentals remain very strong, with an occupancy around 95% and annual rent growth just over 6% at the end of 2019,” Kelly Witherspoon, Berkadia managing director, tells GlobeSt.com. “Given the job growth numbers we’re seeing, the young demographic continuing to move here daily and the increasingly expensive single-family market, we think the rental market will have another healthy year in 2020.”
With Austin employment forecast to grow 2.2% this year, net migration is expected to accelerate to help underpin the health of the local multifamily market, according to Berkadia’s Austin 2020 Outlook report. Austin’s relative affordable business costs compared to California are attracting new residents as well as corporate relocations and expansions. Apple and Google will add thousands of jobs in the coming year as these tech positions keep nearly a quarter of Austin’s population within the Millennial cohort. These individuals will sustain apartment absorption during the next four quarters. Amid limited price appreciation, the single-family market’s sales are expected to rise, drawing some potential renters away from multifamily.
Multifamily builders will work to fill the housing gap adjacent to employment nodes. The targeted development will lead to a metro-leading 1,813 units coming online in the Cedar Park submarket as developers provide amenity-rich options near the new 133-acre Apple campus that will initially house 5,000 employees. Metrowide, nearly 8,750 deliveries are expected this year. The supply side pressure will shift down occupancy to 94.7% by year-end, nearly on par with the average rate this cycle. Simultaneously, monthly effective rent is forecast to increase 2.8% annually to finish the year at $1,350, says the report.