Austin Rental Rates are expected to climb an estimated 4.5% this year!
Just when the local Real Estate Council of Austin has demanded changes to the city’s development to enable more affordable housing, a new report indicates rents in the metro area will jump another 4.5 percent in 2015 to an average of $1,185 per month.
Berkadia, a brokerage and financing firm that specializes in the multifamily market, expects the rise in rent even though 10,400 new apartments are projected to deliver this year.
Renters quickly absorbed 9,150 of the 9,340 new apartments that were delivered in 2014. The overall vacancy rate stands at 4.5 percent, the lowest since 2006. The vacancy rate is the lowest in eastern Travis County — 3.4 percent.
Here’s a look at some more highlights of Berkadia’s latest market report:
• Inventory is expected to increase by 10,670 new units in 2015.
• Nearly four out of 10 new units will be delivered in Central Austin or along the U.S. 183 corridor in Northwest Austin, Cedar Park, and Leander.
• Multifamily developers are expected to request building permits for an additional 12.340 units in 2015.
• Vacancy rates will drop even lower in 2015.
• The lowest vacancy rate in the metro area is in the far north-central submarket at 3.8 percent.
• The highest vacancy rate is in San Marcos at 6.8 percent.
• The highest average monthly rent is in the central submarket at $2,070.
• The lowest average monthly rent is in the far north-central submarket at $788.
• Rents increased the most in 2014 North Travis County and far South Austin at 7.2 percent.
• Rent increases were lowest in San Marcos at 2.9 percent.
• Out-of-state institutional investors continue to be enthusiastic about the best-in-class assets, even willing to take the risk on new communities that are just beginning the lease-up phase.
• Cap rates are as low as mid-4 percent in the central submarket, generally meaning prices are high and favor the seller.
• Cap rates increase to the mid-5 percent range in suburban Class A assets.
• Speculators are seeking older apartments and investing an average of $15,000 per unit, increasing rents by $100 or more.
All information came from and was provided by Jan Buchholz who covers commercial and residential real estate, construction and architecture and retail and restaurants for the Austin Business Journal.- Date taken- 01/19/2015