Multifamily’s Three Paths

The darling of commercial real estate continues to skip along happily. Hendricks-Berkadia senior director of research David Delich highlights three multifamily trends to continue all year: 

1) Apartments everywhere

David (left center, with his research team) says developers are active in both lower- and higher-priced submarkets and both big and small builders are shoveling dirt in Texas. The most active: JLB Partners, Greystar, and Trammell Crow, with a combined 21 projects and 7,400 units underway in Austin, San Antonio, and Dallas-Fort Worth.

2) Building in the ‘burbs

The majority of development is in the suburbs. In Austin, 1,900 units are underway in the North Travis and Southeast submarkets, where asking rents average are roughly $895/month, compared to metrowide asking rents of $1,026/month. Moreover, 46% of all current projects in the San Antonio metro are in the relatively affordable Bexar County submarket, where asking rents are 25% less than the marketwide rate. Based on the projects under construction, apartment inventory in centrally located submarkets will expand by 6.6%, compared to a 3.5% increase in suburban apartment stock.

3) Finding the finish line

Job growth moderated in San Antonio, and now hiring is poised for a rebound. Just 4,500 positions were created in the metro in 2013, following 23,600 new hires in the preceding year. Resurgent hiring in both blue- and white-collar sectors will bolster employment levels this year, as headcounts are predicted to expand by 17,000 workers. In Austin, population and employment growth will persist at a healthy rate, which will limit this year’s rise in vacancy to 90 bps, finishing the Q4 at a relatively healthy 5.7%.