Austin Home Building Plummets, Still Best in Nation

Across the country, housing starts are down dramatically.

During 1998, Austin builders started construction on slightly more than 8,000 houses last year. This was the lowest number in 11 years.

According to Metrostudy, a Houston-based research firm, ustin has experienced a 66 percent decline in housing starts from its peak in the third quarter of 2006 to the end of 2008. This 2/3 drop represents a mammoth market shift. The drop, both in Austin and nationally, is the result of reduced demand for new units, restricted credit for buyers and developers, and falling prices which have made speculative projects unattractive.

Incredibly enough, this 66% drop ranks Austin #1 of the 81 markets studied by Metrostudy. Austin's relatively strong economy, continued inbound migration, steady home values, and lack of a bubble run up have helped to limit housing market erosion during the current credit and financial crisis.

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Austonian Profiled in Architectural Record

An article published in Architectural Record, the leading national trade publication for architects, provides an extensive profile of the Austonian.

The article reveals new details about the projects green features including it's "Chilled water HVAC" and rainwater collection system. It also talks about the project's high-end touch screen controls for lighting, security, media, and climate which are included with every unit.

Here is the full story:

At 680 feet tall, the Austonian, designed by Houston-based firm Ziegler Cooper Architects, will be the tallest building in Austin when it’s completed in 2010.

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New Market Data: 2008 Downtown Condo Sales Analysis

With the help of urbanspace Realtors, we have put together a comprehensive analysis of recorded downtown Austin condo transactions in 2008. The analysis looks at MLS data capturing 2008 condo sales in area DT during the year 2008. Like all listing data, it excludes private transactions that were not listed on the MLS. This is a big exception considering that 360, the Four Seasons, the Austonian, and the W have taken commitments for more than 500 units. During the year, approximately 400 units were sold at 360 alone.

The data does, however, provide a very clear view of the downtown resale market. It shows the price per square foot that buyers are willing to pay for real units, provides information on building-by-building sales prices, and shows how long it takes for units to actually sell. Here is the summary of 2008:

Market Summary - MLS recorded 130 downtown Austin condo transactions during 2008 with an average sales price of $345,856 which represents and average price per square foot of $308. Units sold for 95% of listing price in an average of 91 days. The project with the most sales on MLS was Milago with 25 transactions. Here are the details:
- 130 DT Condo Transactions in 2008
- Avg. Sales Price: $345,856
- Avg. Listing Price: $362,750
- Sales were 95% of Listing Price
- Avg. Sold $/SF: $308
- Avg. Listing $/SF: $322
- Avg. Days on Market: 91
- Avg. Unit Size: 1,126 Square Feet

Old v New
- The MLS data clearly shows that the downtown Austin condo market is really 3 separate markets. Read More...

360 Rentals Hit Market Starting Under $2/SF

Earlier this year, the 44-story 360 condo project opened with most of it's 430 units sold out. A small number of owners held special investor deeds which allowed them to freely rent their units. Now, 20 units have hit the rental market with monthly rents ranging from $1,550 to $3,200.

20 units is a lot of units to hit MLS at once -- especially since they are being competitively offered by individual owners -- and the result is aggressive pricing on many of the units. For example, $1,550 will get you a 812 SF 1/1 on the 18th floor. $1,995 per month will get a 1,059 SF 2 bedroom / 2 bath on the 37th floor. These prices -- startingundert $2 / SF -- are very reasonable for a new downtown unit in tall building like 360. Plus, additional units are available on Craig's List.

With 12 units under $2,000, it's a good opportunity to live downtown and try condo life without making the full investment. While 360 is mostly sold out, some units do remain. In addition, 18 units are currently on MLS with prices ranging from $244,900 to $549,000.

Here are the units currently being offered on MLS:
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Is Downtown Austin Overbuilt: Understanding Austin Condo Supply & Demand

The national real estate markets are a mess. The economy is in recession, credit is very tight, jumbo rates remain high. While the Austin market has stayed alive -- and actually thrived compared to the rest of the country -- it is a very tough time to be selling real estate.

In this market, it is common to hear the Austin condo market referred to as “overbuilt.” This is an easy claim to make: any new unit is an excess unit in a market like this. What is important to note, however, is that it takes three to five years to bring a new project to market. With capital markets frozen, it’s is unlikely that additional projects -- besides those currently under construction -- will hit the market for another five or six years.

This leaves us with the available inventory in projects currently under construction as the total supply for years to come. If you look at the buildings currently rising, projects like the Austonian, BartonPlace, the Four Seasons, the W Hotel & Residences, Spring, and Zilker Park Residences, there are actually less than 1,000 units currently under construction in downtown Austin. According to Kevin Burns, there are approximately 360 unsold new condo units in the pipeline for the Austin market. This is the total available inventory for the next half decade. These units will sell out and the market will be tight before new units are able to be funded, planned, and constructed.

It is important to remember that the fundamentals of downtown living remain strong: people are moving to Austin, downtown is being rapidly transformed into the center of the community, and people from across the region are looking at downtown Austin as a great place for a second home. As downtown Austin reaches a critical mass, the downtown migration is likely to accelerate.

While the downtown Austin market is doing better than almost any other market, there is no doubt that there are more units than buyers right now. Especially on the high end, for million dollar units, inventory absolutely exceeds current demand. As interest rates drop there will be an opportunity for buyers to have the best of both worlds: negotiating power and cheap mortgage funding. Whether this is enough to drain inventory in advance of a true economic recovery remains to be seen. The difficulty in adding future downtown condo supply makes it likely that the current condo slump will reverse sometime in the next 12-24 months. Given that many of the most prominent projects are not scheduled for completion until late 2009 or early 2010, people who want to live downtown will be limited to unsold units in 360 and resale units in other recent projects until that time.

In summary, while downtown Austin inevitably appears overbuilt today, there are just 360 units to sell over the next five years. Over this period, the current trends are almost sure to reverse, likely making the next twelve months seem like an ideal opportunity to enter the market.

New Zilker Park Residences Renderings

Zilker Park Residences, the high end condo and boutique hotel project on the edge of Zilker park has released a series of renderings which illustrate the design and site plan for the project. Zilker Park Residences will be a 40-unit high end development with condos ranging in size from a large 1,515 square foot one bedroom to the largest 3,241 square foot unit (although multiple units have already been combined to form condos as large as 6,700 square feet).

The project as designed will include three separate 5-story condo buildings and a fourth building dedicated to the boutique Hotel Zilker , restaurant, and bar. The project, which was reportedly 40% sold as of September, is slated to begin construction in March.

The new renderings include the first images of the planned Hotel Zilker, the 65 room boutique hotel that shares the site with the ZIlker Park Residences. The small boutique hotel, which is slated to open in Fall of 2010, may be the only hotel ever developed on the border of Zilker park. For events like Austin City Limits, it will be a very desirable place to stay. According to the developers, Hotel Zilker will provide condo owners with multiple amenities.The project will include a neighborhood restaurant, bar, and hotel itself will serve as extra guest bedrooms just steps away from the residences.

Here are the new renderings:

ZIlker Park Residences Project Rendering
Zilker Park Residences

Interior Rendering
Zilker Park Residences Austin Condo Interior

Zilker Park Residences Site Plan
Zilker Park Austin

Hotel ZIlker
Hotel ZIlker Austin Picture ZIlker Park

Free Guide Book: Downtown Austin Urban Life Style Guide

UrbanSpace Realtors, a large real estate firm focused on the downtown residential market, has published a comprehensive guide to downtown neighborhoods and living options as well as dozens of their favorite dining, entertainment, and cultural destinations. The guide is amazingly comprehensive: it profiles more than 80 rental and condo projects in and around Austin and shows nearby Urbanspots -- the cool community destinations that draw people downtown. The guidebook groups projects by downtown neighborhood and includes written profiles and a variety of useful maps.

The Urban Lifestyle and Residential Guide is the most comprehensive listing of downtown properties -- including buildings just to the East, South, North, and West of the downtown core covered by AustinTowers. Through special arrangement with UrbanSpace, a free copy of the guide will be mailed for free to any AustinTowers reader who requests one. To get your copy of the guide -- while they last -- click here.

urbanspace urban life condo guide austin

You can get your free copy of the Guide here.

AMOA Tower Cancelled

Less than a year ago, the Austin Museum of Art announced a new project which would combine an 40,000 square foot museum facility with an adjacent 425,000 feet of commercial office space in a new 465,000 square foot project on the AMOA-owned site adjacent to Republic Square Park in the center of downtown Austin.

Yesterday, the developers option on the project expired. While the project was supposed to commence construction in early 2009, Hines Interests, LP has been unable to secure the funding required to develop the new building. As a result, AMOA’s latest plan for a significant downtown home are no longer viable.

The project, which was to be designed by the world renown architecture firm, Pelli Clark Pelli, would have been the first major downtown office building since the Frost tower was constructed in 2004. While the cancellation is not surprising in this very difficult commercial financing climate, it does represent a major setback for AMOA which has abandoned multiple plans for a new downtown building over the last decade. Yet, with a prime downtown block under their control, AMOA should be able to find a future partner to revise the project. Even with a development partner, however, it will be difficult for AMOA to rally its patrons to support another capital project after so many failed attempts.

AMOA Rendering Austin Museum of Art Tower Pelli Clarke Pelli

Here is a summary from the Austin Business Journal:

The economic downturn has claimed a major downtown Austin project as victim, the proposed Museum Tower office building and the Austin Museum of Art’s proposed new home.

Hines Interests LP will not renew its option on the land owned by the Austin Museum of Art when that option expires this afternoon, the last day of 2008. That land had been slated for a 30-story, 425,000-square-foot office building dubbed the Museum Tower and a new home for AMOA.

AMOA had planned to sell a portion of the block it owns just south of Republic Square Park to Hines for the tower. As part of the deal, the Houston-based real estate company was also going to build a new 3-story, 40,000-square-foot home for the museum.

In response to questions from the Austin Business Journal , Hines released a statement from Travis Overall, Hines vice president, saying: “Due to the uncertain economy, we made the difficult decision not to renew the option in 2009. However, Hines is still interested in developing an office building in Austin when the market recovers, and we hope it will be in conjunction with AMOA and its museum. The project will not restart until the market improves. Our hope would be to get a new deal together in 2009 or 2010, and then move full steam ahead. We see great potential in the long-term viability of the city of Austin.”

The Museum Tower would have been the first new, large-scale office project in downtown since construction was completed on the Frost Bank Tower in 2004.

For the museum, the project also represented a chance to achieve its longstanding dream for a new downtown home. The new museum space was planned to double AMOA’s exhibit and education space from the 16,000 square feet it currently inhabits at the 823 Congress office building.

“Hines has been an excellent partner, and AMOA looks forward to building a new home for AMOA-Downtown when economic conditions become more favorable,” AMOA officials said.

This is the latest blow for AMOA, which has been trying since the late 1990s to develop a new facility downtown. In August 2006, AMOA said it was planning to partner with local developer Tom Stacy on the creation of condo tower and new museum on the site south of Republic Square. But the deal never materialized. The museum ultimately had to taper its wishes -- and even cut staff -- when the economy went south after the dot-com bubble burst.