Downtown Apartment Market Softening

Over the next year, the central Austin rental apartment vacancy rate is expected to jump significantly from 3.6 percent to 9.4 percent.

This negative trend is in stark contrast to what is happening in the rest of the City, where employment growth and migration are reversing the current apartment supply glut. According to market data from Marcus & Millichap Real Estate Investment Brokerage, citywide apartment vacancy rates are expected to drop 9% this year. In hot areas of the city -- such as the south central area near South Congress Ave, vacancy is expected to drop significantly as more units are absorbed.

Across the city, rents dropped 3% last year as more than 10,000 new units hit the market. This year, rents are expected to increase slightly (2.4%) as only 2,860 new units are expected to hit the market.

In downtown Austin where rents are highest, tight spending is limiting absorption of new units. Central Austin apartment rents average $1,014 -- significantly higher than the citywide average of $864.

According to the firm, "the city is forecast to add 19,100 jobs this year, prompting a rush of new residents and a rise in demand for residential rentals. At the same time, the apartment development pipeline has drastically thinned out, with 2,860 new units expected this year, down from 10,340 in 2009."

With a strong supply of downtown apartments, potential renters will be able to negotiate better rents and more attractive incentives, especially for higher-end units.

Exclusive: Summer Downtown Condo Sales Stay Strong

We've updated the AustinTowers | urbanspace Downtown Austin Condo Market Index for June and July, 2010. With the new results loaded, we are pleased to announce that year-over-year sales volumes have increased for the 13th month in a row. In addition, more expensive units are starting to sell, prices are rising, and average days on market is dropping. The downtown Austin condo market continues to gain strength as it enters it's second year of growth and recovery.

Month
Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Jun-09

8

$431,738

$292
1,400
2000
87%
117

Jun-10

18

$387,241

$324
1,160
1999
95%
100

Change

125%

-10%

11%
-17%
-1.00
9%
-15%

Month

Sales
Avg. Price
$/SF
Avg SF
Avg Year
% Ask
ADOM
Jul-09

12

$265,450

$265
1,021
1987
97%
88

Jul-10

14

$338,192

$298
1,121
1999
96%
74

Change

17%

27%

12%
10%
12.00
-1%
-16%

During June and July -- key summer selling months -- 32 units worth a total of $11.7 million were transacted on the MLS: 12 more than during the same period in 2009. In addition

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Swim! Pictures of Downtown Condo Pools

Ten years ago, if you wanted to live downtown in Austin in a place with a nice pool, your options were slim. Now, most of the new projects feature resort-like pools which are key selling points for the buildings. In the future, nice pools will likely be standard on new Austin condo buildings. As the new generation of resort-like projects comes to fruition, it's possible that units in buildings without pools with sell at a discount when compared to units in buildings with this key amenity.

While resort-like pools are to be expected on high-end projects like the Four Seasons Residences, the Austonian, and the W, the pool scene is equally as important at more reasonable projects like 360 and Spring.

Here are the pictures of the new downtown Austin condo pools:

Spring
Spring Austin Condo Pool

See more cool pools!
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New Profile Posted: 904 West

We've updated the AustinTowers downtown Austin new condo guide to include 904 West, a new $8 million low rise project on 9th and West near Whole Foods and the Nokonah.

The 33 unit project is a green conversion of solidly built commercial structure. The new condo project is being constructed in phases with the first 7 units complete. Prices start at $191,000 and rise to $326,000. We've already added the project to our listings page and a full profile is here.

While the project features an attractive modern design and a quiet location, the most interesting features are the flexible floor plans (some include live/work spaces) and the green features. In general, condo projects utilize significantly less energy than equivalent single family homes. This project should utilize less energy than almost any condo project. Some of the energy efficient features include:

- Dedicated solar panels for each unit
- 100% LED lighting
- Tankless water heaters
- Spray foam insulation
- Rainwater collection
- Double-paned, low-energy glass and windows

Already, the project has been recognized for these attributes with the Austin Business Journal Going Green Award [Winner: Green Building - Residential] and the Envision Central Texas Community Stewardship Awards [2010 2nd Place Finalist].

While the building is only two stories tall it does have an elevator and a swimming pool. So far, one quarter of the available units have been sold.

Here are some additional details from the Statesman:

"The city and Austin Energy are working toward a goal of having 65 percent of new single-family construction be capable of zero net energy consumption by 2015, meaning the homes potentially could generate as much electricity as they consume, with solar panels and advanced energy-efficiency features.

The 904 West project is attracting interest from professionals, empty-nesters and second-home owners who want to live downtown but in a neighborhood setting, Clouse said.

Although zoning rules would have allowed a much taller project, "we didn't want to be a 40-story beacon in the middle of this neighborhood," Clouse said. The surrounding neighborhood mostly has two-story houses used as apartments and offices.

"Instead of being involved with sprawl development, we focused on sustainable development," said Clouse, who also owns Fortis Realty Services, which was involved in designing the first phase of the Bel Air condominium project on South Congress Avenue.

The solar systems cost a total of $515,592, Cordova said. The city returned $365,107, about 71 percent of the cost, to the developers as rebates, he said.

The solar installations will generate an estimated 113,839 kilowatt-hours per year, Cordova said — enough to provide electricity to about 10 average-size Austin homes for a year.

Put another way: the savings are equivalent to planting 2,583 trees in Austin's parks, or the removal of 132,278 vehicle-miles or 17 cars from Austin roadways, Cordova sa
id.

Zilker Park Residences Withdrawn From Market

As developer prepare for a third iteration of Zilker Park Residences, the project has been withdrawn from the market.

In 2007, developers announced plans for 74 units to be developed on the eastern edge of Zilker Park on Barton Springs Road. With units starting at $300K and topping out near $1.3 million, the 3 building project was to sit on the border of the park with direct access to the hike and bike trails. Although the project featured a unique and highly desirable location, it was marketed at the bottom of the downtown condo market.

As a result, the plan was changed substantially in 2008 when the developers reduced the size of the project from 74 to 40 larger units, added a 65 room boutique hotel, and an announced the expansion of the site through the purchase of an adjacent restaurant (formerly Wanfu Tool).

The 2008 Plan for Zilker Park Residences
Zilker PArk Residences

With the revised plan, Zilker Park Residences was supposed to include 40 units ranging in size from a 1,515 square foot one bedroom to the largest 3,241 square foot unit. With the larger units came prices ranging from $659,000, one of the highest starting prices of any project in Austin, to $1.4 million.

Now, developers have begun notifying prospects that the project has been withdrawn from the market. According to the developers, they are redesigning the project to better meet market needs. In particular, they now plan to build a 90 room boutique hotel, spa & fitness center along with 15 large residential condo units.  Currently, they plan to begin construction and marketing for the redesigned project sometime next year.