Q4 2022 Multifamily Real Estate Report: Austin, TX
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
Austin, TX is known for its vibrant music scene, diverse cultural attractions, and thriving tech industry. Unemployment in the city declined throughout Q4 2022 from 2.8% in October to 2.6% at the end of December.
The larger metro area of Austin increased by 2.79% from 2021 to 2022, growing to well over 2 million residents.
In Q4 2022, Austin’s multifamily real estate market saw declining rents, positive absorption, and decreasing sales volume.
General Area Overview & Demographics
Austin is a bustling city with a population of over 1 million people. The population demographics are diverse, with approximately 49.3% White, 35.1% Hispanic or Latino, 7.7% Black or African American, 8.7% Asian, 4.4% two or more races, and 2.3% other race.
Austin, TX Median Household Income & Population
Median household income varies widely, with some neighborhoods experiencing higher levels of wealth than others. The city’s growing tech industry has contributed to an overall increase in median household income, and the city remains one of the most prosperous in the country.
Austin has a relatively young population, with many residents under 35. This has created a vibrant cultural scene in the city, with a thriving music and arts community.
Higher education is a significant part of the city, with several universities and colleges within the city limits. The University of Texas at Austin is one of the state’s largest and most prestigious institutions.
There are many major attractions in that draw tourists and locals alike to Austin. Some of the most popular include the Texas State Capitol, the Lady Bird Johnson Wildflower Center, and the Barton Springs Pool.
The weather is generally warm and sunny, with hot summers and mild winters. The city experiences occasional thunderstorms and heavy rainfall during the summer months, but overall the weather is pleasant and conducive to outdoor activities.
Summary of Austin Multifamily Real Estate Performance in Q4 2022
Vacancies for Austin multifamily real estate held steady on a quarterly basis at 5.2% in Q4 2022. Even as new construction levels remain elevated, vacancies declined on a year-over-year basis by 0.3%.
Higher-quality top-tier units saw lower vacancies in Q4 2022: Rates for Class A multifamily space declined by 0.7% throughout 2022.
Multifamily absorption was positive in Q4 2022, with 1,366 new units absorbed. This brought the annual total to 7,684 units. Austin’s overall multifamily absorption has remained positive since 2013.
What are multifamily rents like in Austin?
After notable multifamily rent growth between Q1 and Q2 2022, rents for Austin multifamily real estate have steadily declined throughout 2022. Nonetheless, the city remains one of the most expensive to lease commercial real estate.
Rents for Austin multifamily real estate decreased from $1.94 per square foot ($1,590 per month) in Q3 2022 to $1.90 per square foot ($1,585 per month) in Q4 2022.
While rents declined, asking rents increased more than 50% higher than the national rate, keeping Austin in the country’s top 15 cities with the highest rents.
Purchase & Leasing Activity
Sales volume for Austin multifamily real estate slowed in Q4 2022 on both a quarterly and annual basis: Q4 2022 saw around $500 million in sales volume, Q3 2022 recorded $620 million, and Q4 2021 posted $1.5 billion.
Price per unit averaged around $254,000, a slight quarter-over-quarter decrease but a 4.8% year-over-year increase.
Notable Multifamily Real Estate Deals in Austin in Q4 2022
There were several notable deals reported for Austin multifamily real estate in Q4 2022:
- Bell Partners purchased South Shore District for $178 million.
- Housing Authority of the City of Austin purchased Bridge at Canyon Creek for $107 million.
- TerraCap Management purchased Latitude at Presidio for $92 million.
These are select examples among other activity.
New Multifamily Real Estate Development Activity in Austin in Q4 2022
There were over 4,000 new multifamily units delivered in Austin in Q4 2022, bringing the annual total to 10,250 units, the highest total in recent years.
At the close of 2022, there were over 42,000 units in the pipeline.
Market Forecast for Austin’s Multifamily Real Estate Market
Both subdued demand and growing supply will cause a slight softening of property fundamentals in Austin in 2023, with the next 12 months on track to deliver more new units than the previous two years combined.
As a result, renters will face increased competition, leading to upward pressure on local vacancies. Experts predict that the vacancy rate for Austin multifamily real estate will likely increase in the coming quarters and end 2023 at around 5.5%.
Despite this increase, the rate will remain below the five-year average, and the market should eventually stabilize due to Austin’s high population growth.
Takeaways for Multifamily Real Estate Investors
Austin’s strong fundamentals of economic and population growth will likely keep its multifamily market performing well.
Do your research, stay diligent, and happy investing.
Find & Connect With Commercial Agents & Brokers in Austin, TX for Free on MyEListing.com
MyEListing.com is a completely free-to-use commercial real estate listing and data platform. We also maintain one of the largest databases of commercial agents & brokers in the country.
Use it for free to find an agent or broker in Austin, TX.
Other recent articles
Article Search
Share
All Article Categories
