Apart­ment oc­cu­pancy climb­ing, keyed by job-seek­ing new­com­ers

Austin-area com­plexes move to­ward ten­ant-unit bal­ance, but rents ris­ing as perks fade

Austin American-Statesman - - BUSINESS - By Shonda No­vak

Cen­tral Texas’ apart­ment mar­ket ap­pears to be on its way to sta­bi­liz­ing, new data shows.

Oc­cu­pancy rates were 90.9 per­cent in the sec­ond quar­ter, the high­est in al­most two years. The jump of 3.6 per­cent­age points from a year ear­lier was the largest such in­crease since 1988, ac­cord­ing to Austin In­vestor In­ter­ests, an apart­ment mar­ket re­search firm.

Robin Davis, man­ager of Austin In­vestor In­ter­ests, said the mar­ket has shown the strong­est re­cov­ery this year since the re­ces­sion started.

“It’s a pos­i­tive sign that sta­bi­liza­tion is on the way,” she said.

Austin’s job mar­ket has started to re­cover in re­cent months, and Cen­tral Texas con­tin­ues to at­tract new res­i­dents, both con­di­tions that cre­ate de­mand for apart­ments.

Ad­di­tion­ally, new em­ploy­ers have moved into town. Davis said one key fac­tor boost­ing oc­cu­pancy is that new com­plexes are fill­ing up.

Oc­cu­pancy lev­els at top-qual­ity apart­ment

com­plexes have been ris­ing for the past five quar­ters, reach­ing 88.9 per­cent in the sec­ond quar­ter. Rentals at so-called Class A com­plexes ac­counted for 85 per­cent of the re­gion’s to­tal in the past 12 months, she said.

How­ever, 84 per­cent of those com­plexes were of­fer­ing in­cen­tives to lure ten­ants, with an av­er­age $121 per month dis­count from mar­ket rents.

For in­stance, Gables Res­i­den­tial is of­fer­ing six weeks of free rent at its 5th Street Com­mons com­plex west of down­town, and up to two months of free rent at its Gables Park Plaza com­plex near West Ce­sar Chavez Street and North La­mar Boule­vard.

How­ever, those in­cen­tives are less ag­gres­sive than what was of­fered last year, when new com­plexes were of­fer­ing three months or more free rent.

Over­all, av­er­age monthly rents were 94 cents per square foot, or $798 for an 850-square­foot apart­ment. That’s 2 per­cent higher than a year ago.

In ad­di­tion, con­struc­tion of apart­ment com­plexes has fallen sharply.

Dur­ing the first six months of this year, 1,581 new apart­ment units were added, com­pared with 4,848 units in the first half of 2009.

In a sep­a­rate re­port this month, Charles Heim­sath, a lo­cal real es­tate con­sul­tant, said the mar­ket has ab­sorbed about 4,800 ad­di­tional apart­ment units since De­cem­ber, push­ing the oc­cu­pancy rate to 92.7 per­cent and the av­er­age rent to 95 cents per square foot.

Heim­sath said that was “pretty re­mark­able,” con­sid­er­ing that the job mar­ket has only re­cently picked up.

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