Apartment occupancy climbing, keyed by job-seeking newcomers
Austin-area complexes move toward tenant-unit balance, but rents rising as perks fade
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.