|Month||Sales ||Avg. Price||$/SF||Avg SF||Avg Year||% Ask||ADOM|
In the month of June, only 8 downtown Austin condo units were transacted on the MLS with all the key metrics showing market stress. While the units were bigger, newer, and more expensive than the units sold in any month in recent history, the $ / SF dropped 3% and the % of ask dropped from 98% to 87% -- a big drop. Average Days on Market soared from 60 to 117 days.
While June sales show market weakness, the results also show the weakness of the MLS. While 8 units sold through MLS, approximately 15 units went under contract at the Shore alone, all of which were being transacted outside of the MLS. Over the last year, the MLS records a total of 94 downtown sales while we know that more than 400 units were sold at 360 alone. So while the MLS numbers show a surprisingly small transaction volume, it is difficult to know whether sales were weakening or whether the most recent sales were simply closed off MLS.
Interestingly, 3 of the 8 units sold on the MLS were in Milago. Looking at the last 10 Milago transactions, the average price has settled in at $286 / square foot. The 3 June Milago units were all under 1,000 square feet while the other 5 units sold were all over 1,000 square feet. Two June transactions were for units larger than 2,000 square feet --- very large by downtown Austin standards.
The new pay stations are accompanied by a new parking ordinance which includes an incentive to reduce carbon emissions of motorists in the urban core. Now two-wheeled vehicles, including motorcycles, mopeds and scooters will be allowed to park for free for up to 12 hours per day in parking areas at all City of Austin meters and pay stations.
To use the new pay stations, simply insert coins are a credit/debit card and choose the amount of time you want to park. Print a sticker and affix it to the inside of your windshield on the side closest to the street. The pay stations operate in multiple languages.
According to the city, the new pay stations will offer multiple benefits:
- Payment flexibility – Stations accept Master Card, Visa, and debit cards or coins
- Instructions in multiple languages – English, Spanish and Chinese
- Printed receipts provide a convenient record of expenses for business purposes
- Receipt can multi-task - allows the user to take the remaining time on the ticket to another parking spot with City of Austin meters
- Longer parking time – customers can pay for up to three hours at most locations and up to five hours at other locations versus the current two-hour limit
- Credit card safety – the built-in security features provide for an instantaneous credit card transaction and does not store the card information to prevent fraud
- Increased parking availability - parallel parking spaces will not need to be defined so cars can squeeze into a block as space allows. Cities normally see a 10-15% increase in parking availability.
- No more broken meters – customers can obtain a parking receipt from any pay station. The City will save time on repairs and have a predictable revenue stream.
Like every change, this one also has a few negatives:
- The new pay stations will eventually allow the city to more easily raise the price for street parking. With meters, it is difficult to go beyond the current price of $0.25 per 15 minute interval.
- Longer parking intervals, 3 hours v. 2 hours and up to 12 hours for 2 wheeled vehicles, means that fewer spots will be available at any one time
- 3,800 Fewer places to lock up bicycles downtown although the city plans to compensate with the installation of new bicycle racks downtown.
Why the change? An Austin Transportation Department analysis of the current Parking Meter System in Summer 2008 found the system to be in failing condition. Approximately 3,800 single space meters, with expected operational life of 10 years, had been in service 13 plus years. More than 18,000 meter failures were predicted for 2008-2009, increasing city staff labor costs to repair meters and forfeiting hundreds of thousands of dollars in revenue to the City.
The City Council on March 5 approved the replacement of 3,800 single-space meters with pay-and-display (Pay Stations) and authorized a purchase of up to 750 stations for $8,399,743. The City will use parking revenue from the Pay Stations to pay off the purchase in approximately eight years. The new pay stations have an expected operational life of 15 years.
The Parking ordinance passed by the City Council on June 11 maintains the existing fees and hours of operation previously established. Free parking privileges are continued for former Prisoners or War, Pearl Harbor survivors, and Purple Heart recipients. (State law provides free meter parking privileges for persons with a disability.)
The $8 million project will include 33-units, 9 of which are described as "work/live" units and 22 of which are purely residential. In addition, the two story project will offer underground parking and two commercial units. The project, which is named 904 West and located at 904 West Avenue, is scheduled for completion by this winter.
The building is trumping its green features including solar panels, tankless water heaters, and LEd lighting. Solar panels are unusual on high-rise condo projects because the roof area is such a small portion of the total square feet of the project. For a two-story development like 904 West, it is possible to harness enough solar energy to help reduce electrical bills.
Now, the bank has foreclosed and, in an unusual move, hired a construction manager to continue the project on its own. While the shell of the attractive modern project is nearly complete, the bank is looking at demolishing the building and replacing it with a much larger and uglier traditionally designed complex on the same site.
The bank is hoping for construction to restart within 90-days and for the project to be completed within the next 18 months. Neigbors who are relieved to see construction proceed are concerned that the bank will over-develop the lot with a large structure and minimal setbacks. For interesting modern building such as the original project on Enfield, a change in architects can be disastrous as the resulting building leverages the original frame but "tones down" the interesting modern elements to meet the needs of the new owner and developer. .
Bidding for Bel Air units will start at $90,000 for the least expensive unit, originally priced at $273,000, and will rise to $130,000 for a unit that was previously priced at $399,900. The auction will be run by Kennedy Wilson -- the same firm that completed the Brazos Place Auction. The opening bid does not mean that units will be sold at those prices, there is often a separate higher minimum bid which must be met for a unit to sell.
For the Bel Air auction, bidders will need to bring a $2,500 cashier's check in order to participate. Winning bidders will need to submit a personal check for 3 percent of the purchase price.
While potentially good for buyers, condo fire sale auctions like these infuriate existing owners who paid much more for their units and will likely see the value of their units reset to the auction price. While the auction is painful for existing owners, the large developer inventory of 25 unsold units is equally problematic as a large new inventory makes the resale of existing units difficult. The sale of remaining units and elimination of inventory could help by pulling inventory off the market. While the auction will be public record, the sales will likely not be recorded in MLS and will not appear in realtor comparables. As with the unfounded worries about the Brazos Place auction, the biggest worry for residents should be a failed auction: it would be bad if a large number of units went unsold, especially if some units sold at prices far below recent comparables.
Bel Air Lofts is located far south on Congress Avenue, close to Ben White. With original prices starting at $273,000, the project was charging downtown-like prices for a far south Austin location. The auction will provide a much clearer picture of demand and price sensitivity for condo projects located outside of downtown.
Bel Air Lofts
Last year alone, more than 1,200 new downtown rental units emerged. Unbelievably, more than 900 of these have already been rented. These units fetch some of the highest rents in central Texas. At the Ashton, a new project in the 2nd street district across from the Dell Discovery Center, rents average $2,500 a month. That will rise to about $3,000 once incentives of two months of free rent ends. The 36-story $110 million project features marble-tiled bathrooms, two-story penthouses, a wine cellar and private movie theater.
Summary: Recent Downtown Austin Rental Projects
|Monarch||800 W Fifth St|
300 N. Lamar
|300 N. Lamar|
Red River Flats
|901 Red River St.|
|201 Lavaca St|
Robertson Hill Apartments
|1000 San Marcos St.|
AMLI on 2nd
|421 W Third St|
|127 E. Riverside Dr.|
Legacy on the Lake
|43 Rainey St.|
Gables on 5th St
|1611 W. Fifth St.|
|300 S. Lamar|
|101 Colorado St|
Gables Park Plaza
|W Cesar Chavez St @ Lamar|
|507 Pressler St.|
While units are being absorbed at a record rate, it's taken lots of incentives to get leases signed. Most projects are offering 1-3 months of free rent to get people to sign leases in this soft, hyper-competitive market. Downtown rents vary greatly, from close to $1,000 per month to more than $6,000 per month.
Here is a summary of incentives from the Statesman:
- At the 29-story, 305-unit Monarch on West Fifth Street, developers are offering two months of free rent on some two-bedroom units, and three months of free rent on the four remaining penthouses. The project is 97 percent leased.
- At Greystar Red River Flats, at Red River and Ninth streets, rents for one-bedroom units have been lowered to $1,250 a month from $1,650, and two-bedroom units are renting $1,850 a month, $575 off the market rate, said Candiss Escobar, regional property manager. The project is 96 percent leased.
- On top of rent discounts, some complexes are offering incentives for tenants who sign a lease within 24 to 48 hours of seeing a unit, said Shannon Sullivan, leasing consultant for Robertson Hill Apartments on San Marcos at East 10th Street. With the three-month rent special, one-bedrooms at the complex now start at about $950 a month, down from $1,260 a month, and two-bedroom units normally priced at $1,800 a month are renting for about $1,400 a month, she said.
- At Cole, 119 new apartments on South Lamar Boulevard just south of Lady Bird Lake, it's been "extremely busy," said Jessica Higgins, a leasing professional with Lincoln Property Co. On average, five new leases a week have been signed since leasing began April 15, Higgins said. With current specials, studios start at $1,202 a month compared with the $1,420 a month market rent; one-bedrooms start at $1,384 a month, down from the $1,636-a-month market rate, and two-bedrooms start at $1,947, down from $2,301 market rent.