Concessions Creep into Austin's Multifamily Market

"In the short run, the lease-up of new communities, particularly in the suburban northwest market, is going to be challenging," Charles Heimsath of Austin's Capital Market Research tells GlobeSt.com. The deepest concession he's seen is six weeks free rent for signing a 13-month lease. "You would expect some concessions, but that's pretty aggressive," he says.

In contrast, there are few, if any, enticements being lobbed at prospective tenants in the Round Rock area, according to Heimsath. Other areas as well are escaping the bait tactic for now. "It's not pervasive throughout the market," he explains, "but we are beginning to see them where there's a lot of construction activity."

Citywide, some 7,000 to 8,000 units had been on the boards to deliver this year, Heimsath had said in January. Of that, 18% had been ticketed for the northwest market. Not any more, it's more realistic to expect a shade over 6,000 new units to come to Austin's market this year. It's not surprising that the northwest submarket is the first to experience the signing incentives since it's also the hardest hit in high-tech layoffs and sublease space availability.