Market Monday: The Multifamily Edition

Welcome to Market Monday, a quick glance at all that’s happened in the Austin CRE market in the last week. Let’s dive into it:

Opening Bell 🔔:

1. New funding could be coming soon for Austin startups, as local 8VC closed a $1 Billion round for their latest VC Fund. They’ve previously invested in Harbor Health, Saronic, and ICON.

2. Just over 1 Million SF of Federal property space could be on the market soon as GSA briefly listed 5 buildings for sale last week. While they were taken down as the agency further assesses their needs, expect some shakeup to occur.

3. Wayfair is shuttering their Austin Development Center off S Pleasant Valley Rd. It’s 17,067 SF space should be on the market soon.

4. 5th & Red River Site downtown listed for sale by Stonelake Capital Partners. The surface lot was currently approved for development of a 37-story apartment tower.

Market Snapshot 📸:

After years of building, Austin’s multifamily deliveries have far outpaced the migration to the city. It’s left a largely renter friendly market as Multifamily owners get creative with concessions to attract new tenants with one developer up in Round Rock rumored to be offering a gold bar in exchange for a lease.

Beyond The Numbers 🌎️:

It’s often said the remainder of CRE sectors follow the rooftops of Multifamily development, but with such a vast oversupply, a bit more digging is required to see where people are actually moving to.

Location still rules with older spaces close to downtown like The Lola commanding nearly $1000/mt more than average for unrenovated units.

As the development dust settles, the market continues to reset itself as it figures out how to lease what is available, much like the office sector.

The Final Whistle ⏰:

Look for larger new complex development to be put on hold with an emphasis on small to mid size complexes. With even the newest buildings resorting to concessions to get leased up, 2nd gen and older spaces will have to do the same to keep up.

As a renter here myself, I’m not complaining about the much needed reset to a rental market that exploded faster than most anywhere else in the country in the late 2010s to 2023.

Thanks for joining us, we’ll see you next week!

Cory