Thank you for sharing!

Your article was successfully shared with the contacts you provided.

AUSTIN, TX-Healthy economic fundamentals compared to the rest of the country have driven developers to the capital city, prompting increased multifamily development. Close to 5,000 units have come on line so far this year, with 12,000 to 14,000 units still under construction and anticipated to be completed in 18 months to two years.

At this point, researchers with third-quarter numbers say occupancies are still in good shape. Houston-based O’Connor & Associates’ October report puts occupancy at 90.6% in the 147,501-unit inventory. Marcus & Millichap Real Estate Investment Services’ report pegs occupancy at 92.6% while just-released statistics from M/PF YieldStar, based in Carrollton, TX, shows 94.2% occupancy for 161,800 units.

Greg Willett, vice president for M/PF YieldStar, says he’s worried about what lies ahead. Deliveries are accelerating, he points out. There have been 4,837 units already delivered this year and 13,366 units are under construction. Even with continued job growth, he says excess inventory could reduce overall occupancy to 91% in 2009. O’Connor & Associates shows 12,134 units are rising.

Patton Jones, sales director for Apartment Realty Advisors in Austin, admits there is a lot of construction, but points out there are two sides to the story. “Deals that were permitted and financed one year ago are currently under construction. That accounts for about 14,000 conventional units added to the inventory over the next to years,” he tells GlobeSt.com. With financing drying up and construction loans all but impossible to get, once those units come on line “then we drop off a cliff,” he says. “Not much more is coming after that.”

Steve Hollingsworth, associate in Austin for Marcus & Millichap, says that, in the short term, there could be a glut of multifamily product, particularly in the far north and far south areas where there aren’t many barriers to entry. “We’re overbuilt,” he says, “but in the long term, things will catch up.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


Join 1000+ of the industry's top owners, investors, developers, brokers & financiers at THE MULTIFAMILY EVENT OF THE YEAR!

Get More Information


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.