Category: Central/South Texas Market Reports

Major Texas Retail Markets are Back to Pre-pandemic Vacancy Levels

Posted on by Sarah

The pandemic hasn’t exactly been kind to retailers as residents across the nation were asked to stay home for months on end last spring and summer. However, despite the ongoing nature of the COVID pandemic, there are not only signs of life for Texas retail, but an indicator that the health of the retail market is strong. Recent reports from NAI Partners specifically look at the markets in Austin, San Antonio and Houston, and offer compelling evidence of a return to normalcy.

Perhaps the biggest story in Texas retail at the moment is the success of the San Antonio market. According to the NAI Partners report, San Antonio retail rents have actually reached a new all-time high. Inflation concerns aside, the average triple net lease asking rent has risen by nearly a dollar from $16.08 in October 2020 to $17.06 this October. Vacancy and availability is also down in San Antonio. The current vacancy is just 5.2% while the availability rate is just under 7%.

The report also notes that this October was the first time in three years that the amount of net absorption was higher than the volume of deliveries between January and October, suggesting that demand is beginning to outpace supply.

There were a number of big deals that helped push the leasing activity well over 2 million square feet. Floor and Decor took 91,000 square feet at 13905 North I-35 while gyms LA Fitness and Crunch Fitness leased 50,000 square feet and 30,000 square feet respectively.

The story is similar in Austin as the city continues to witness tremendous population growth and investment. The vacancy rate currently hovers just under 4%, which is the lowest rate in three years, according to the report. This means that this is not only back to a pre-pandemic vacancy level, but this level of low vacancy predates the pandemic by at least a year. A year prior, the vacancy rate was slightly higher at 4.6%.

Also similar to San Antonio, overall availability is down and net lease prices are up. The overall availability this October was 5.7% — down from 6.3% a year prior — while triple net lease rents were up a few cents to $21.38.

There is less than 700,000 square feet of new retail space under construction in Austin, which could see vacancies and rents continue to head in the same direction as demand increases. Leasing activity was more or less unchanged between October 2020 and October 2021 at 1.78 million square feet.

Notable leases include H-E-B’s 102,000-square-foot lease in Liberty Hill and a 62,000-square-foot lease in Taylor, the report highlights. Ashley HomeStore claimed a 40,000-square-foot space in Cedar Park, also making it one of the biggest lease deals of the year for Austin.

And finally, we take a look at the Houston retail market, which is also quickly gaining ground. Unlike the office market, which has struggled in this last year, the retail market in Houston is back to pre-pandemic vacancy levels, the report reveals.

Overall retail vacancy was down to 5.8% this past October, which is a slight improvement from 6.1% during the same period in 2020. Availability is mostly unchanged at 3.925 million square feet versus the 4.046 million square feet from October 2020.

However, the big story here is leasing activity and net absorption. Year-to-date, Houston has witnessed 6.39 million square feet of lease deals and had 4.87 million square feet of space absorbed. The net absorption is almost double the number from the same period of January-October 2020. In fact, it’s the first time since 2016 that the city has seen a similar absorption rate, the report indicates.

The leases highlighted in the report include a 136,000-square-foot deal by Target in Montgomery County, the 77,697-square-foot lease by AXXA Auto on Gulf Freeway and Hobby Lobby’s 56,000-square-foot lease renewal in Willowbrook.

UPDATED: Legal Teams Lay Out Arguments in Austin’s Appeal Over Stalled Land Development Code Update

Posted on by Sarah

Austin’s appeal to a court ruling against its land development code rewrite process opened Nov. 17 with brief arguments from lawyers representing the city and the nearly two dozen property owners seeking to stop the revision.

Austin’s land development code covers what may be built in the city and where, and the rewrite process has now played out for nearly a decade without resolution. Some officials and housing advocates have pointed to the code, first laid out in the 1980s, as a barrier to expanding new and affordable housing options in Austin.

Both sides’ Nov. 17 arguments before a panel of three justices in the 14th Court of Appeals followed their previous comments at trial and from court filings.

Jane Webre, representing the city, stuck to Austin’s assertion that the homeowners’ rights to a notice of intention to rezoning and their ability to protest such actions should not come into play if every part of a city is rezoned. Click to read more at www.communityimpact.com.

Institutional Property Advisors Brokers 10 Class A Multifamily Property Sales in San Antonio for $568.45 Million

Posted on by Sarah

SAN ANTONIO, November 19, 2021–(BUSINESS WIRE)–Institutional Property Advisors (IPA), a division of Marcus & Millichap (NYSE: MMI), announced today the sale of 10 multifamily assets totaling 2,290 units in San Antonio, Texas over 10 weeks. The properties sold for a total of $568.45 million.

“Market conditions for investors in pursuit of Class A multifamily assets in San Antonio are stronger than ever,” said Will Balthrope, IPA executive director. “Household formation in the booming Interstate 35 corridor is lowering vacancy, while single-family home prices surge, and the low inventory of homes for sale is boosting demand for top-quality apartments.” Construction in the metro declined this year to its lowest level since 2012, demand grew faster than supply, and availability decreased, paving the way for increased rent growth, according to Marcus & Millichap’s San Antonio Metro Area Research Report.

Balthrope and IPA’s Drew Garza represented the sellers and procured the buyers, consisting of real estate investment and pension funds, developers, private investment companies, local, national and global investors. “Our IPA team in San Antonio is generating over 20 property tours on each sale, which produces great competition and drives optimal pricing for our sellers,” added Garza. Click to read more at www.finance.yahoo.com.

52,000 Apartments Were Completed in Major Texas Cities Over the Last 12 Months

Posted on by Sarah

Developers have invested $16 Billion in the Dallas-Fort Worth apartment market so far this year, the most of any major metro in the country.

To meet the tremendous demand for new housing across much of Texas, developers have been adding tens of thousands of new apartments throughout the state’s major metros at a feverish pace. There has been so much construction activity, that just in the last 12 months, developers have completed over 52,500 apartments in the Houston, Dallas-Fort Worth, Austin, and San Antonio markets, a new report from CBRE indicates. And by and large, these units are getting scooped up renters rather quickly.

The latest stats on the Texas multifamily market are substantial. To help illustrate how much new construction there has been in Texas, the report indicates that the top five markets for recent deliveries — which includes New York, Houston, Dallas, Washington, DC and Los Angeles — account for 27% of all the nation’s new apartments in the last 12 months. And while over 50,000 new apartments were built across the state’s largest metros in the last year, nearly 85,000 units were absorbed during this time.

Breaking it down by each market, the completion numbers are staggering. In the last 12 months, Houston has seen 15,600 new units added to its market, Dallas has had 13,600 new apartments delivered, Fort Worth saw 8,100 residences completed, Austin witnessed the completion of nearly 10,000 units and San Antonio had another 5,400 added to its total inventory.

But all of this new construction is coming at a cost. While the biggest cities in Texas have seen a steep increase in total supply of apartments in the last year, rental prices are also moving in a vertical direction.

According to the report, four of the highlighted cities have seen double-digit rent growth in the last 12 months. Austin rents have increased by an eye-watering 18% year-over-year according to CBRE, Dallas rent costs are up by 11.7%, San Antonio apartments are up 10.8% while Fort Worth rent prices have increased by 10%. El Paso rent growth is just under 10% while Houston’s stands at 8.5%.

The high absorption rates and quickly increasing rent prices have lured a lot of investment to Texas cities. The Dallas/Fort Worth Metroplex has actually led the nation year-to-date for the amount of dollars invested in new rentals: $16 billion. Developers have invested $7.38 billion in the Houston apartment market so far this year, while Austin has seen $5.16 billion invested in new development.

If you’re a recent transplant to Texas shell-shocked by the prices and competition for new rentals, you’re not alone. So long as Texas’s population growth and economy continue on an upward trajectory, there will likely be similar increases in new apartment deliveries, absorption and rent growth in the coming years.

Lennar Homes Plans To Build A Neighborhood Of 3-D Printed Homes In Austin

Posted on by Sarah

3D-printed housing has arrived and is ready for the big time. Homebuilding giant Lennar Homes has committed to building the largest neighborhood of 3D-printed homes yet developed. Breaking ground in early 2022 in the Austin area, the 100-home innovative community is co-designed by BIG-Bjarke Ingels Group, using ICON’s building technology.

The announcement deepens a relationship that began with Lennar’s investment in Austin-based ICON’s recent $207-million financing round and offers a promising path toward delivering affordable, technology-driven homes that meet rising demand.

There is a shortage of housing in the country, and labor and materials shortages are a frustrating bottleneck for the homebuilders. 3D printing construction has the potential to deliver better, more resilient, more sustainable and energy-efficient homes at stunning speeds, with less waste and more design freedom.

Lennar’s investment in ICON’s Series B financing round in August was facilitated by LENX, which drives a focused strategy within Lennar to integrate technology solutions across the home building industry. Click to read more at www.forbes.com.

Austin Slips 2 Spots Among Country’s Hottest Commercial Real Estate Markets

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Austin has lost a bit of its luster on an annual list of the country’s hottest commercial real estate markets.

The latest Emerging Trends in Real Estate report from professional services firm PwC and the nonprofit Urban Land Institute puts Austin at No. 4 among the U.S. commercial real estate markets to watch in 2022. Austin ranked second in last year’s report and first in the 2019 report. Since 2010, Austin has appeared at No. 7 or above in the closely watched Emerging Trends report.

The report, released October 14, bases its rankings on interviews with hundreds of commercial real estate professionals.

The report groups Austin with four other metro areas in a first-time category called “supernovas.” The four others are Nashville; Raleigh-Durham, North Carolina; Boise, Idaho; and Jacksonville, Florida.

“In astronomy, a supernova is the explosion of a star that creates unusual brilliance, but more generally the term refers to things that explode into prominence or popularity. So it is with the five metro areas in this new category,” according to the report.

“Austin has long been among the brightest stars in the constellation and a darling for investors and developers alike, first breaking into the [top 10] markets to watch in 2009,” the report adds. Click to read more at www.austin.culturemap.com.