Meeting the Multifamily Demands of a Growing City
- Mar 06, 2015
Austin, Texas—Wood Partners, one of the nation’s most active multifamily developers, is expanding to Austin, to meet increasing demand for multifamily housing in the Austin-San Antonio corridor, according to Todd Gaines, the company director who will head the new office. The new Austin office is the latest expansion by Wood Partners, which also is adding offices in Chicago and New Jersey this year, bringing the total to 18 offices nationwide. The company is pursuing more than $1.5 billion of new development and acquisition in 2015, and the Austin/San Antonio market will be among its targets.
Much of the reason is demographics. Austin is country’s fastest-growing city, according to the Census Bureau, with estimates ranging between 110 and 137 new residents arriving every day. The five-county Austin MSA is projected to exceed 2 million inhabitants by 2016. Austin is also the nation’s top market for Millennials, with 1.2 times the national average, according to a Nielsen study.
People are flocking to Austin because the jobs are there. The local unemployment rate is 4.6 percent, which is the third-lowest among the nation’s top 50 metro areas, and Moody’s Analytics projects job growth will average 4 percent this year. Last year, Forbes magazine listed Austin as the second-highest metro area for job growth prospects over the next three years, noting that Austin experienced the third-highest net migration rate in the nation over the last five years. Also, Austin’s median income of more than $75,000 is nearly 20 percent higher than the national median.
At the same time, median home prices in Austin have grown by about 10 percent annually since 2011 and are up 40 percent since 2008, keeping many would-be buyers in apartments and rental homes. The Austin-area apartment market has enjoyed increasing revenues for all but one quarter of the past four years, according to the Austin Multi-Family Trend Report, with annual rent growth of 4 percent to 8 percent and occupancy hovering between 94 percent and 95.9 percent. Absorption outpaced new unit additions in the third quarter of 2014, and developers expect to start construction on more than 8,000 units in the next six months, according to the report.
In San Antonio, where the population has grown by 430,000 in the past decade, city officials predicting that 1 million newcomers will arrive by 2040, nearly doubling the local population. The Alamo Area Metropolitan Planning Organization predicts that 675,000 jobs will be created in the county during that time.
According to the San Antonio Multi-Family Trend Report, demand for multifamily housing locally remains strong. Occupancy increased by 5 percent, and rents increased 1.2 percent, in the third quarter of 2014. Annual figures are putting 2014 on track to have the most units absorbed in recent history, the report notes, and occupancy in the new products continues to rise.