Since Austin is one of the strongest commercial real estate markets out there, it’s no surprise that the multifamily and retail sectors are performing well. I recently met with Marcus & Millichap, and the firm had favorable things to say about both areas.
On the multifamily side as reported by the firm, jobs are helping to bolster the metro area. This year employment is forecast to rise 3.8 percent, or by 33,500 jobs. It’s a slight slowdown from 2013’s 4.3-percent job, but the numbers are still good.
Meanwhile, apartment construction is booming. Completions are expected to hit 14,120 new units this year, increasing the area’s multifamily stock by seven percent. That’s more than twice the number that were delivered last year.
Of course, this new product will increase vacancy rates for a time, when they are expected to rise 180 points, to six percent, but that still makes for a tight market and shows that apartment demand is strong.
This is all shaping up well for landlords. Rents are expected to shoot up 5.7 percent, to $1,080 per month. And that’s on top of a strong 6.1-percent rise in 2013.
Turning to Austin’s retail sector, construction is on the up in that are as well, with 1.1 million square feet coming online this year. That’s a major increase from 2013, when just over 460,000 square feet of new retail was built.
This is not spec retail building. Most of the space is pre-leased, and the area’s retail vacancy rate is expected to drop by around 60 basis points, to 4.7 percent.
As for the multifamily sector, asking rents for retail are expected to rise, up two percent, hitting $18 per square foot. That is a marked improvement from 2013, when rents slid 2.2 percent with lower-quality deliverables online.
Looking for assistance in your due-diligence and title needs in this vibrant market and other parts or Texas, which is one of the best-performing states in commercial real estate? Feel free to contact GRS Group at its Dallas office.
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