Will Austin Continue to Add New Jobs?
- Jun 08, 2015
Forbes placed Austin on the 19th position on its list with best places for business and careers, right after San Francisco. Its major industries—technology, pharmaceutical and biotechnology—attract hundreds of people every day to relocate in the metro, heightening demand for housing in a market where inventory is scarce.
According to data provided by Marcus & Millichap, employers created 7,000 job openings in Q1 2015, while more than 29,000 people were hired in the past 12 months. This is a 3.3 percent increase from the previous year. 8,100 positions were opened in professional and business services industries, followed by trade, transportation and utilities with 5,600 jobs added to the market. By the end of 2015, 30,500 new jobs are estimated to be created in the metro.
Nearly 4,400 apartments were delivered in Q1 2015, and most units were located in the submarkets to the north and northwest, including Round Rock/Georgetown and Arboretum area. Nearly 14,600 apartments were completed in the past 12 months, more than double the number of units delivered in the previous period. Permits for 10,800 apartments were pulled for the following 12 months. This amount accounts for a 10 percent increase from the previous year, continuing a trend that started two years ago.
High demand in rental housing has impacted vacancy, bringing it down to 5 percent, even though absorption reached nearly 12,800 units. Vacancy gained 120 basis points in the last year in the Downtown/University, Southwest Austin, Near North Austin, Northwest Austin, and Far West Austin submarkets. Meanwhile, in East Austin, Southeast Austin, North Central Austin, Cedar Park, and San Marcus vacancy dropped by 400 basis points to 5 percent.
With vacancy clocking in at historical low and favorable demographics, average rents grew 5.9 percent in the last four quarters, reaching $1,088 per month. Concessions sit near 4.5 percent of average rents, having risen 500 basis points to 8 percent of average rents in the South Area submarket.
Sale transactions more than doubled from last year in the Hyde Park and St. Johns-Coronado Hills submarkets. The average price per unit rose 7 percent in the past year to $90,600, marking the fifth consecutive year with strong investor interest. This resulted in a nearly 60 percent increase in the average price per unit. Additionally, average cap rates plunged 10 percent in the metro over the last four quarters, reaching 6 percent. Initial yields for Class A properties fell in the low-to mid-5 percent. Equity firms and institutions are rapidly increasing their portfolios and the transactions above $20 million nearly doubled during 2014, a trend that will continue throughout 2015.
Charts and data courtesy of Marcus & Millichap