For investing in land and property in the United States, the capital of Texas has consistently ticked the majority of the top boxes related to recent real estate market attractiveness. The Real Estate market in Austin has benefited from a diverse economy that was affected in a minimal way by the global financial crisis, a growing population base made up of an educated labour force, and the undeniable “hip” factor that makes Austin attractive to the millennial dominated workforce.
Despite Austin’s growing popularity, it remains a comparatively small market in terms of investment opportunities. While Austin is unlikely to attract a meaningful amount of off-shore capital, it tops many domestic investors’ wish lists. This makes the market very competitive. Despite the amount of competition, local, regional, and national real estate participants operate in relative harmony in the market. This cooperation has helped keep adequate levels of debt and equity capital available for investment opportunities.
The interest in Austin has spawned a phrase that rivals the city’s own “Keep Austin weird” slogan. The real estate equivalent is: “I want to find the next Austin.” This reputation does, however, come at a price. ULI focus group participants expressed concern about transportation issues that continue to be a problem in a rapidly growing market. In addition, the cost of living and the cost of doing business in Austin have been on the rise. While these costs are still competitive with those seen in other top secondary markets, the uptick has not gone unnoticed in the market.
The 2017 outlook for major property sectors remains good. The housing market, both multifamily and single-family, appears to be making adjustments to match supply with the requirements and locations desired by the changing population base. To address transportation concerns, the market is likely to continue to see more mixed-use development not only to bring compatible uses together, but also to enhance the experiential feel of developments. Austin remains focused on encouraging an environment where local and national tenants can coexist.