As published in Scotsman Guide's Commercial Edition, September 2009.
A strong economy and job market haven't fully shielded Austin, Texas, from the woes facing commercial real estate. There are signs, however, that the country's second-fastest-growing metro area will come out ahead.
What the Locals Say _____________________________________
"We didn't have the bubble. We didn't get overbuilt. We just didn't get carried way. We're well-diversified, and job growth has continued through this recession."
— Douglas Hodge, owner, Republic Commercial Properties
From this past January to July, total commercial property foreclosure postings in the Texas capital increased 139 percent compared to the same period in 2008. Within that, multifamily properties — which comprised 23 percent of the total — saw a 127-percent increase.
Despite the sector's increased foreclosures, apartments do appear to be a bright spot in the Austin market. With a growing population, demand should continue.
In the first quarter of this year, asking and effective rents, as well as absorption, increased from the first quarter of '08, according to Reis Inc. data. In addition, Marcus & Millichap forecasts about 10,500 total units to be completed this year — a 25-year peak.
This bodes well for what CB Richard Ellis calls the fifth-strongest U.S. job market. Despite Austin seeing its highest unemployment rate in almost 20 years this past June, its affordability, diversity and high quality of life continue to attract new residents. In fact, the U.S. Census Bureau noted a 2.5-percent population gain in Austin from July '07 to July '08; neighboring Round Rock, Texas, saw 8.2-percent growth.
↑ Population: 757,688
Population in 2000: 656,562
Rank (U.S.): 15th-largest
Metropolitan-area population: 1.6 million
Metropolitan-area rank (U.S.): 36th-largest
↑ Average commute: 23.1 minutes
Average commute in 2000: 22.4 minutes
U.S: 25.3 minutes
↑ Median household income: $48,966
Median household income in 2000: $42,689
↑ Median age: 31.4 years
Median age in 2000: 29.6 years
U.S.: 36.7 years
↑ Unemployment (MSA): 7.1 percent
Unemployment in June 2008: 4.5 percent
U.S.: 9.5 percent
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