Multifamily

In both Austin and San Antonio, consistent job creation and in-migration contributed to solid household formation and rental demand over the 12-month period ending in June. Many of these new households comprise younger professionals that favor the renter lifestyle. Following stretches of rampant construction, solid apartment demand from this demographic was met with fewer project deliveries in both markets over the past year. The decline in supply additions, coupled with strong absorption, reduced vacancy to near cycle-low levels in both metros during the second quarter. Robust leasing activity across all classes of apartments allowed the average effective rent to rise by more than 5 percent in each locale. These market conditions, paired with projected economic expansion and above-average first-year returns, boosted out-of-state buyer interest in Austin and San Antonio over the past four quarters, equating to notable spikes in transaction velocity. Austin: Class A Demand Austin’s reputation as a tech hub with a well-educated workforce has influenced many professional and business services-related companies to expand in the area, increasing the number of higher-earning residents in the metro. This has strengthened demand for luxury apartments, lowering Class A vacancy by 90 basis points over the 12-month period ending in June amid …

The joint effects of heavy supply additions, rising construction costs and the possibility of an looming recession have multifamily lenders in Dallas-Fort Worth (DFW) exercising caution and restraint on new construction financing, even as jobs and people continue to flow into the metroplex and fuel demand for housing. The sector’s fundamentals are very encouraging. According to data from CoStar Group, the metroplex has added approximately 23,000 new units over the past 12 months. At just over 25,000 units, absorption during that period has more than adequate. Vacancy currently sits at 7.5 percent. In addition to the market adding 80,000-plus jobs and 100,000-plus people for several consecutive years, strong demand for Class B properties with value-add potential has kept rent growth moving forward. Concessions have begun to sprout up in a handful of submarkets that have seen particularly concentrated levels of new supply, but the metroplex still posted overall rent growth of 2.9 percent over the last 12 months, according to CoStar. In addition, lenders are keenly aware of the construction industry’s ongoing challenge to add skilled labor. Labor stress is creating longer construction timelines and stabilization periods. “Two years ago, we had subcontractors walking off our job sites because they …

It’s an exciting time to be living in Lubbock, Texas. The amazing smells of Evie Mae’s Beef Ribs fill the air. McPherson, llano Estacado and English Wineries are producing gold medal wines, on point with anywhere in the country. The Texas Tech men’s basketball team was 30 seconds away from a national championship; the men’s track team won the NCAA Championship; and the Red Raiders’ Meat Judging Team continued its dominant reign. Winning has infected the community culture, translating into a strong local economy. Things are great for the local consumer, but how is that playing out for multifamily investors? Here, the message is mixed. We will begin by discussing the Lubbock economy as a whole, then the key numbers for the Lubbock multifamily market, followed by a general discussion. Economic Outlook The Lubbock economy continues to perform at record levels. Per the Bureau of Labor Statistics, the city’s unemployment rate in June was 3.2 percent. As amazing as this number is, it actually represents an increase from the unemployment experienced in the two previous months. Over the last 12 months, the Lubbock economy added an estimated 2,000 new jobs. Per the Lubbock National Bank Economic Report, some of the …