Healthy Demographics Push Up Demand in Austin
The metro’s multifamily demand is expected to remain strong, sustained by an estimated population growth of 2.8 percent in 2018.
Austin rent evolution, click to enlarge
Austin remains one of the most coveted real estate markets in the nation. Further strengthening housing demand, the metro’s population is expected to grow by 2.8 percent in 2018. After several months of contraction, rents have stabilized, inching up 0.1 percent year over year through February to an average of $1,282, roughly $80 behind the national average. Despite experiencing delays, construction activity is strong, bringing the average occupancy rate down to 94.1 percent as of January, down 40 basis points in 12 months.
Although the metro faces affordability and transportation issues, its status as one of the most green cities in the U.S. has maintained Austin’s popularity as a destination with extensive outdoor recreation options. As a result, the city’s leisure and hospitality sector is thriving: The segment added 6,500 jobs in 2017, boosted by the 1,048-key Fairmont Austin, which is the hotelier’s largest location in the country. In January, Oracle began its relocation to a new 40-acre campus southeast of downtown, which will accommodate as many as 3,000 employees.
Transaction volume reached $102 million by February 2018, fueled by investors seeking value-add opportunities. Some 1,700 units came online as of February, with another 19,300 underway, 12,800 of which are slated for completion in 2018. By year-end, we expect rents to rise by 1.6 percent.
