Feb – March Austin Real Estate Market News
, Mar 12, 2008
I send a compilation of Austin real estate market news out to all of my clients, and I typically put it in the “market news” section of the website. I’ve decided to start blogging it so that you guys can comment. Sorry this is posted late, but here ya’ go:
TEXAS HOUSING MARKET ISOLATED, NOT IMMUNE
WASHINGTON, D.C. (Real Estate Center) – While Texas is somewhat isolated from the storms in the national housing market, it is not completely immune, said Real Estate Center Chief Economist Dr. Mark Dotzour during a series of speaking engagements yesterday in the nation’s capital.
“The difficulties in the mortgage market are impacting buyers in all 50 states, including Texas,†said Dotzour, speaking at the Economic Policy Conference of the National Association of Business Economics. The economist was serving on a panel discussing the regional differences in the housing markets across the country.
Dotzour noted that home prices are still increasing in most Texas metro areas, foreclosure rates are much lower than the national trends, and the inventory of unsold homes in Texas is currently at 5.7 months, well below the national average of 10.1 months. However, he also noted that the most recent numbers from the Office of Federal Housing Enterprise Oversight show the rate of price increases in most Texas metros to be getting smaller.
Earlier that day, when asked by Bloomberg’s Kathleen Hays about the efficacy of further rate cuts by the Federal Reserve, Dotzour stated that he “wasn’t a big fan of government intervention, but since they are going to intervene in a big way they should do something that might actually help solve the problem.”
Dotzour said that the recent “helicopter drop” of $150 billion would not help the housing situation and would only exacerbate inflation.
“If they really want to help solve the housing problem more quickly, we need to see a tax credit for people to buy a home,†he said. “We’ve got excess inventory that needs to be soaked up.”
Dotzour also noted that the ten-year treasury rate is moving back down to the 3.5 percent range because of the continued fear of the credit markets. When the rate gets near 3.5 percent, a short window of opportunity opens for existing homeowners to refinance their homes.
“I thought that window had closed a few weeks ago as the ten-year moved back toward 4 percent,†Dotzour said. “But news of continued difficulties in the banking system has caused the rate to move lower again.”
FANNIE, FREDDIE OVERHAULING APPRAISAL PROCEDURES
NEW YORK (Bloomberg) – Fannie Mae and Freddie Mac, the biggest sources of financing for U.S. home loans, have reached an agreement with New York Attorney General Andrew Cuomo to buy mortgages only from lenders that adopt new standards intended to ensure independent home appraisals.
The new rules announced yesterday prohibit mortgage brokers from using in-house staff to do valuations for any home loans the government-chartered companies purchase. Lenders will also be barred from using appraisal management firms they own or control.
“We believe the appraisals were often fraudulent because there were conflicts of interest and pressure on the appraisers,” Cuomo said.
Mortgage lenders that own appraisal companies include Countrywide Financial Corp., the nation’s largest home-loan originator.
LAP OF LUXURY IN FAR NORTH AUSTIN
AUSTIN (bizjournals.com) — Given the number of people making the move to Austin, two luxury apartment projects are underway in far north Austin. The 396-unit Broadstone Travesia is being built on Quick Hill Rd. across from La Frontera. Grand Avenue apartments will have 280 units at a site one mile south of Round Rock at the northeast corner of the intersection of Grand Avenue Pkwy. and I-35.
Alliance Communities, the Texas division of Alliance Residential Co., is the builder. Architects were the Houston office of Hensley Lamkin and Rachel for Broadstone and Steinberg Design Collaborative of Houston for Grand Avenue.
SHELTER MAKES ROOM FOR MORE
AUSTIN (Austin Business Journal) – Austin Children’s Shelter (ACS) broke ground yesterday on eight buildings that will nearly double its existing space.
ACS cares for about 300 abused and neglected children each year and has been “forced to turn away more that 350 children each year for lack of bed space in its current facilities,†a spokesperson said.
The organization has almost completed a $12.9 million capital campaign to fund the new space.
The new campus is at Rathgeber Village, just east of the former Mueller Airport.
DAVIS DEVELOPMENT SPRINGING UP
AUSTIN (Austin American-Statesman) — HPI Real Estate Services & Investments Inc. has begun a three-phase industrial/flex space development at RM 620 and Parmer Ln. West.
Davis Spring’s first phase consists of four service center buildings totaling 263,443 sf and should be completed in the next 60 days.
The second phase — beginning in 2009 — will be two- and three-story office buildings totaling 290,000 sf. The third phase will be 400,000 to 500,000 sf of Class-A office space.
The project will accommodate data centers and office, research and development technology users.
WAREHOUSE DISTRICT ADDING WESTIN
AUSTIN (Austin Business Journal) – Hixon Properties Inc. and Hines Interests LP are partnering on an 18-story hotel project on the site of the former Bitter End bar.
Located at Third and Colorado St., The Westin Hotel will consist of 300 rooms, 15,000 sf of meeting space, a restaurant, spa and a third-floor pool deck and bar.
Starwood Hotels and Resorts will manage the hotel.
Lake|Flato Architects of San Antonio is the design architect and Rabun Rasche Rector Reece of Atlanta is the project architect.
MUSEUM, OFFICE TOWER HEADED DOWNTOWN
AUSTIN (globest.com) – The Austin Museum of Art and Hines have made plans for a 40,000-sf, three-story museum and a 425,000-sf, Class-A office building.
Hines is seeking LEED certification for the 30-story Museum Tower, which would make it downtown’s first green office building.
Construction will begin at Fourth and Guadalupe Streets in 2009.
Pelli Clarke Pelli Architects of Connecticut is the development’s lead architect. Completion is scheduled for 2011.
CAPITAL CITY’S NEW INDUSTRIAL SPACE OUTPACES DEMAND
AUSTIN (Grubb & Ellis) – Positive net absorption in the Alamo City’s industrial market reached 214,289 sf during the fourth quarter, pushing the annual total to a record 3.4 million sf.
Most of the quarterly demand occurred in R&D and flex properties with 113,468 sf of positive absorption driving the yearly total to 774,026 sf.
Following closely, warehouse-distribution properties recorded 111,281 sf of positive absorption during the quarter, pushing the yearly total to 592,403 sf.
Meanwhile, standard industrial properties posted 10,460 sf of negative absorption during the survey period but still registered the highest annual absorption growth among all classes with 2.1 million sf.
Despite posting positive absorption for the sixth consecutive quarter, Austin’s overall vacancy increased by 90 basis points to 7.4 percent during the survey period, which was a result of new space deliveries outpacing demand.
During the quarter, new space deliveries totaled one million sf with the majority being warehouse-distribution product in the southeast submarket. Consequently, warehouse-distribution properties saw vacancy increase by 110 basis points to 6 percent during the quarter.
Following suit, R&D and flex properties witnessed an overall vacancy increase of 90 basis points to 14.4 percent while standard industrial type product vacancy rose by 70 basis points to 3.8 percent during the quarter, remaining the lowest vacancy recorded among all property classes.
MORE HILL COUNTRY OFFICE SPACE COMING
AUSTIN (Austin American-Statesman) – Trammell Crow Co. is constructing a $47 million office park on 26 acres at US 183 and RM 620.
The 272,000-sf Pecan Park, which will lease at $28 per sf, is expected to open by December.
Two other projects going up in the city’s northwest region are Aspen Properties’ Aspen Lake, an office building with 210,720 sf that will open in May, and Simmons Vedder Partners’ Crossings at Lakeline, with 235,000 sf to be open in June.
BEE CAVE’S CLASS-A LIVING
BEE CAVE (Austin Business Journal) – GE Real Estate and Trammell Crow Residential are partnering to bring 350 Class-A apartments to the FM 2222 corridor near Four Points.
The Alexan Ribelin will consist of 15 three-story buildings on almost 18 acres. It will be part of Ribelin Ranch, a master-planned project that will include residential, office and retail space as well as a new middle school and high school.
The first units are scheduled to be completed in November.
Trammell Crow Residential is serving as the general contractor, and Riverstone Residential Group will handle leasing and management.
LAKE TRAVIS TURNBACK BECOMES MAHOGANY
AUSTIN (Austin Business Journal) – Turnback Development LLC has purchased the 242-acre Turnback Ranch from Dallas-based Winston Capital Corp. The site, which is part of the Lake Travis development Lago Vista, has been renamed the Mahogany A Lake Resort.
Colorado-based Equilibrium Resorts will manage the development and operation of the property for Turnback.
Winston bought the property in 2006 and laid out a plan for 700 living units including condos and single-family homes.
WILLIAMSON COUNTY UNVEILS NEW HOSPITAL
ROUND ROCK (Austin American-Statesman) – Seton Medical Center Williamson celebrated its grand opening yesterday, bringing 181 hospital beds to the city and providing jobs for almost 1,400 people.
The $175 million, 365,761-sf Catholic hospital is expected to generate about 12,000 jobs over the next 15 years.
An additional building called Good Health Commons will open in April featuring acupuncture, music therapy, massage and a kitchen.
Officials expect the new area to develop into a health care and education plaza.
TWO HILL COUNTRY HYATTS
AUSTIN (Austin American-Statesman) – As part of its nationwide 200-hotel project, Global Hyatt Corp. has two Hyatt Place hotels in the works in the Hill Country.
One will be at La Frontera Blvd. and Sundance Pkwy. in Round Rock; the other will be at SH 71 and Thornberry Rd., near the Austin-Bergstrom International Airport.
INVESTMENT FUND PICKS UP NORTHPOINT
AUSTIN (Boston Business Journal) – Boston-based Intercontinental Real Estate Corp. has purchased the almost ten-acre Northpoint Centre on behalf of Intercontinental’s U.S. Real Estate Investment Fund LLC.
Northpoint Centre consists of two Class-A office buildings totaling 151,000 sf. The property is currently 92 percent leased to a variety of financial, legal, service and technology companies.
This marks the fund’s 12th purchase.
CRESTVIEW CLEANUP
AUSTIN (Austin American-Statesman) – A 73-acre, previously contaminated site has been cleared for a mixed-use development just south of US 183 on the Capital Metro rail line. Phase-one work begins today.
The $100 million Crestview Station will include 32,000 sf of retail, 32,000 sf of office space and the 340-unit Midtown Commons at Crestview apartment complex. The developers are Stratus Properties Inc. and Trammell Crow Co.
The apartments, developed by High Street Residential, will range from 550 to 900 sf and cost an average of about $1.50 per sf.
Additional phases of the project could include up to 900 more residential units. The entire development will take five to seven years to complete.
MORE METCENTER ROOMS
AUSTIN (Austin Business Journal) – With a little help from a local development partnership, the MetCenter business park will soon have more than 700 hotel rooms available for rent.
MetCenter developer Zydeco Development has sold a little over one acre within the park to BDS Gatekeeper LLC for the construction of a roughly 70-room hotel — the park’s seventh. The new hotel will likely be a Microtel property, which is part of the Hyatt brand.
MetCenter is just off US 71 near Austin-Bergstrom International Airport.
The Kucera Co. represented BDS Gatekeeper.
