Behind the Deal: The Catherine
The 19-story multifamily luxury project, The Catherine, topped out this month on the site where a condo project failed to launch less than 10 years ago. StreetLights Residential CEO Doug Chesnut tells us why he wasn’t worried about lightning striking twice.
Borrowing a political catchphrase: it's the economy, stupid. But, it's more than that, Doug tells us. The primo location—next to the Hyatt at Barton Springs Road and South Congress—popped up on SLR’s radar in 2012, Doug tells us. Back in 2005, it was zoned, entitled, and planned as a high-rise condo project. Then, the site development permit was pulled when the economy tanked. When SLR discovered the site overlooking Town Lake with a view of the Austin skyline, it was snatched up as fast as a check could be written. The project was redesigned for 300 luxury apartment units. SLR started construction in 2013.
Doug says the location has access to hiking, jogging, biking, and all of the lake’s activities. A quick walk over the First Street bridge will put residents right into the CBD. Leasing for the project will start in October. ZRS Management is managing the project, project architect is Rhode Partners, and Hunt Development Group is the equity partner. Doug isn’t worried about competing for leases, he says. Although Austin is slated to deliver 11,000 units this year, he thinks demand will be above 10,000. Equilibrium for the market is around 93% and he anticipates the market hovering around 94% to 95% with pent-up demand absorbing those units.
Austin’s multifamily market has delivered more units in the last six months than it did in the last five years. In Q2 alone, 2,100 units were delivered while 2,400 units were leased. Add to that, rents were up 2.6% in the same quarter, he tells us. Multifamily developers paused over the last 18 months in Austin because they were concerned about the supply issues. But, it was like the hurricane that never came, Doug says. As a result, in 2015 the completions will drop to about 4,000 units while the job growth continues to top 20,000 jobs annually. More than 30,000 jobs are projected for 2014 through 2017, Doug tells us. SLR is also leasing up another luxury apartment community in Austin, The Kenzie at The Domain (pictured), which Doug says should be stabilized before year’s end. He’s practicing his French as he plans to take his wife to Paris in November. Bon voyage!
