How many buildings fit downtown?
February 13, 2007 21:40 Filed in: Market Analysis
Last June, the Austin Chronicle published a fascinating analysis of potential downtown development. The main point is simple: it is getting very difficult to assemble a downtown parcel large enough for a major project. The number of viable sites is rapidly dwindling. The mayor has set a goal of 25,000 residents downtown by 2015 -- 20,000 more than exist downtown today. While their may be enough downtown parcels to get there with very dense development, downtown capacity is very limited by the following factors:
(1) Capital View Corridors (shown on the map below in pink) that strictly limit the height of development
(2) Historic sites and large existing structure that would be difficult to develop
(3) Current projects under development
The Capital View Corridor is a unique Austin phenomenon. As part of the downtown master plan, the city has set aside a number of corridors, shown in pink below, where development is severely restricted. The corridor essentially requires all buildings to be short so that they don't block views of the capital from a number of predetermined angles.
Here is the map:
This explains why downtown land prices have skyrocketed -- there are very few remaining lots that are attractive for big projects. It's also why downtown projects seem to keep getting taller and taller -- developers need to build as many units as possible to cover the cost of land, pushing them higher and higher.
The result is probably good for downtown condo owners. Since prime downtown sites are limited by natural boundaries (I-35, Mopac, Town Lake, and The capital / UT) and severely restricted by capital view corridors and the historic structures, it's likely that downtown will reach near-maximum capacity in the next decade. After that, developers will need to move further out to less attractive lots or build on more expensive sites to continue to add units. If demand grows-- and it should as downtown comes alive with residents-- the most attractive projects will likely appreciate in value. The big challenge, will be in finding first time buyers for the large number of high-end luxury units hitting the market in 2008 and 2009.
The original article can be found at: http://www.austinchronicle.com/gyrobase/Issue/story?oid=oid%3A378608
(1) Capital View Corridors (shown on the map below in pink) that strictly limit the height of development
(2) Historic sites and large existing structure that would be difficult to develop
(3) Current projects under development
The Capital View Corridor is a unique Austin phenomenon. As part of the downtown master plan, the city has set aside a number of corridors, shown in pink below, where development is severely restricted. The corridor essentially requires all buildings to be short so that they don't block views of the capital from a number of predetermined angles.
Here is the map:
This explains why downtown land prices have skyrocketed -- there are very few remaining lots that are attractive for big projects. It's also why downtown projects seem to keep getting taller and taller -- developers need to build as many units as possible to cover the cost of land, pushing them higher and higher.
The result is probably good for downtown condo owners. Since prime downtown sites are limited by natural boundaries (I-35, Mopac, Town Lake, and The capital / UT) and severely restricted by capital view corridors and the historic structures, it's likely that downtown will reach near-maximum capacity in the next decade. After that, developers will need to move further out to less attractive lots or build on more expensive sites to continue to add units. If demand grows-- and it should as downtown comes alive with residents-- the most attractive projects will likely appreciate in value. The big challenge, will be in finding first time buyers for the large number of high-end luxury units hitting the market in 2008 and 2009.
The original article can be found at: http://www.austinchronicle.com/gyrobase/Issue/story?oid=oid%3A378608