apartment development rises in the suburbs · austin total nonfarm employment advanced 3.3%, or by...

MARKET AT A GLANCE

OCCUPANCY AND RENT TRENDS

AUSTINMULTIFAMILY REPORT SECOND QUARTER 2018

APARTMENT DEVELOPMENT RISES IN THE SUBURBS

A rise in apartment demand amid elevating inventory growth kept occupancy healthy in the Austin metropolitan area. Abundant land and strong demographics created strong interest from developers over the course of this cycle. Over the last four quarters, developers brought 10,025 units online. The latest batch of deliveries were up 11.0% from one year prior. A metro-high 1,782 units were added to the I-35 South submarket since mid-2017. With more rental options available, the submarket also led leasing activity with 1,337 net units absorbed. With inventory growth outpacing absorption, I-35 South average occupancy lowered to 89.5% in June 2018, down from 91.0% one year prior. This supply-demand imbalance trend was reflected in the metro, though to a slighter degree as Greater Austin occupancy lowered 10 basis points annually to 91.0% in mid-2018. The dip moved occupancy only 30 basis points below the five-year average. Even with occupancy lowering, operators accelerated annual rent growth. After advancing 1.2% since mid-2016, rent increased 2.4% during the last year to $1,224 in June 2018. In the I-35 South submarket, rent advanced 2.3% since June 2017 to $1,125 per month one year later.

$800

$900

$1,000

$1,100

$1,200

$1,300

88%

89%

90%

91%

92%

93%

3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18


Occupancy Rate Effective Rent

OCCUPANCYRATE

EFFECTIVERENT

TOTAL INVENTORY

91.0%

$1,224

220,724

Down 10 bps since 2Q17

Up 2.4% since 2Q17

a Berkshire Hathaway and Jefferies Financial Group company

DELIVERIES AND DEMAND

ECONOMIC TRENDS

BERKADIA

AUSTINMULTIFAMILY REPORT

DELIVERIES

NETABSORPTION

3,566

5,194

Units YTD

Units YTD 0

3,000

6,000

9,000

12,000

2013 2014 2015 2016 2017 2018*


Deliveries Demand*Year to date

UNEMPLOYMENT*2017 2018

EMPLOYMENT*2017 2018

EXISTING SFH SALES**2017 2018

MEDIAN SFH PRICE**2017 2018

10-YEAR TREASURY**2017 2018

3.2%

1.03m

33.2k

$297.5k

2.19%

3.0%

1.06m

41.2k

$306.5k

2.91%

Austin total nonfarm employment advanced 3.3%, or by 33,800 net jobs, annually through May 2018. Local growth was more than double the 1.6% U.S. average increase at the same time. Contributing to the growth of the Austin labor force was job creation in the professional and business services sector. Employers added a metro-leading 10,700 net jobs since May 2017, for a 6.1% annual increase. Hiring was also robust in the leisure and hospitality industry, with 9,400 personnel recruited for a metro-high 7.5% growth. Contributing to the expansion was a hotel boom in the metro, with the opening of the 1,048-room Fairmont Austin and 103-room TownePlace Suites. With hotel occupancy at the second-highest rate in the state, the near term should remain positive for the metro. The hotel boom is also supporting the construction sector, as work was underway on the 37-story Fairmont, the 32-story Aloft, the 31-story Austin Marriott Downtown, the 140-room Canopy by Hilton, and the 24-story Hotel ZaZa. With employment growing, unemployment was 3.0% in May 2018, down 20 basis points year over year.

-20 BPSCHANGE

3.3%CHANGE

24.1%CHANGE

3.0%CHANGE

70 BPSCHANGE

U.S. SHARE OF WALLET METRO SHARE OF WALLET

U.S.ANNUAL RENT

26.5%share of wallet

METROANNUAL RENT


SECOND QUARTER 2018

*May; **June

SUBMARKET BREAKDOWN

BERKADIA


SECOND QUARTER 2018

© 2018 Berkadia Real Estate Advisors LLCBerkadia® is a registered trademark of Berkadia Proprietary Holding LLCDocument sources: Apartment Data Services; Berkadia Research; Federal Reserve Bank of St. Louis; Moody’s

SUBMARKET NAME# OF

COMMUNITIES # OF UNITS SIZE (SF)PRICE

($ / MO.)RENTAL RATE($ / SF / MO.) OCCUPANCY

Downtown/SoCo/Barton Springs 60 11,915 878 $2,074 $2.36 92.8%

UT/Mueller 66 9,561 824 $1,548 $1.88 92.8%

St Edwards/South Lamar 50 8,865 780 $1,227 $1.57 92.3%

Northeast 62 11,858 825 $955 $1.16 90.6%

Research Blvd/North Lamar 87 17,876 755 $1,013 $1.34 89.4%

Pflugerville/Tech Ridge/Wells Branch 71 21,946 893 $1,093 $1.22 90.9%

Round Rock/Georgetown 72 17,654 924 $1,115 $1.21 89.2%

Northwest/Arboretum/Domain 102 28,861 852 $1,210 $1.42 93.9%

Cedar Park/Leander/Four Points 80 23,702 965 $1,191 $1.23 89.0%

Southeast/Riverside Dr 68 15,481 857 $1,256 $1.47 92.7%

Outlying Metro 9 1,029 914 $944 $1.03 96.7%

I-35 South 75 18,833 874 $1,125 $1.29 89.5%

San Marcos/Kyle/Buda 81 14,973 902 $1,204 $1.34 87.4%

West/Sunset Valley/Barton Creek 68 18,170 916 $1,319 $1.44 92.7%

TOTALS 951 220,724 873 $1,224 $1.40 91.0%

CORPORATE HEADQUARTERS521 Fifth Avenue

20th FloorNew York, NY 10175

(646) 600-7800 | Fax: (646) 600-7838www.Berkadia.com

© 2018 Berkadia Proprietary Holding LLC Berkadia® is a trademark of Berkadia Proprietary Holding LLC.Axiometrics® is a trademark of Axiometrics Inc.Commercial mortgage loan origination and servicing businesses are conducted exclusively by Berkadia Commercial Mortgage LLC and Berkadia Commercial Mortgage Inc. This website is not intended to solicit commercial mortgage loan brokerage business in Nevada. Investment sales and real estate brokerage businesses are conducted exclusively by Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. For state licensing details for the above entities, visit: www.berkadia.com/legal/licensing.aspx

a Berkshire Hathaway and Jefferies Financial Group company

MARKET AT A GLANCE


a Berkshire Hathaway and Leucadia National company

AUSTINMULTIFAMILY REPORT FIRST QUARTER 2018

AUSTIN EMPLOYERS ACCELERATE TO SUSTAIN HEALTHY APARTMENT DEMAND

After an influx of new inventory came online across the Austin metropolitan area last year, builders scaled back apartment deliveries at the start of 2018. Construction completed on 11,058 units in 2017, a more than five-year high. At the same time, absorption trailed inventory growth to lower occupancy 100 basis points to 90.0% in December. Since then, builders brought 1,469 units online over the last three months. Deliveries were focused in the Research Boulevard/North Lamar submarket, with nearly one out of every three metrowide additions so far this year. With the pace of inventory growth during the first three months of 2018 down from the year prior, leasing activity nearly kept pace with deliveries across Greater Austin to keep occupancy at 90.0% quarter over quarter. With the occupancy rate holding, operators advanced rent on average 0.3% from December 2017 to $1,181 per month in March 2018. In the highly populated Northwest/Arboretum/Domain submarket, average rent increased 2.0% quarter over quarter to $1,165 per month as apartment occupancy elevated 40 basis points to 92.0% as no new inventory came online amid positive leasing activity.

$600

$800

$1,000

$1,200

$1,400

89%

90%

91%

92%

93%

2Q13 4Q13 2Q14 4Q14 2Q15 4Q15 2Q16 4Q16 2Q17 4Q17


Occupancy Rate Effective rent

OCCUPANCYRATE

EFFECTIVERENT

TOTAL INVENTORY

90.0%

$1,181

219,134


Up 0.5% since 1Q17


ECONOMIC TRENDS

BERKADIA


DELIVERIES

NETABSORPTION

1,964

1,469

Units YTD

Units YTD 0

3,000

6,000

9,000

12,000

2013 2014 2015 2016 2017 2018*




EMPLOYMENT**2017 2018

EXISTING SFH SALES***2017 2018

MEDIAN SFH PRICE***2017 2018

10-YEAR TREASURY***2017 2018

3.3%

1.02m

37.0k

$291.2k

2.40%

2.7%

1.06m

36.5k

$304.0k

2.74%

Austin total nonfarm employment expanded 3.6% annually through February 2018, up from 3.3% during the year before. Job creation in the professional and business services sector was a significant economic driver. Employers added a metro-leading 11,300 net professional and business services positions for 6.6% annual growth through February 2018. Simultaneously, the trade, transportation, and utilities sector contributed another 8,500 workers to the workforce, with Amazon.com Inc. adding hundreds of jobs at their new offices at The Domain. Hiring was also robust in the leisure and hospitality industry. Employers added 5,900 workers, for a 4.8% year-over-year increase. Part of the additions came with the opening of the Fairmont Hotel in Downtown Austin. More than 800 workers were hired ahead of the fall opening of the 1,048-room hotel, the largest one in the city. Due in part to the hiring freeze on state agencies, the government sector was the only one to contract in the last year. The public workforce reduced by 2,800 personnel, or 1.5%, year over year.

-60 BPSCHANGE

3.6%CHANGE

-1.4%CHANGE

4.4%CHANGE

30 BPSCHANGE


U.S.ANNUAL RENT


METROANNUAL RENT


FIRST QUARTER 2018

*January; **February; ***March

SUBMARKET BREAKDOWN

BERKADIA


FIRST QUARTER 2018

© 2018 Berkadia Real Estate Advisors LLCBerkadia® is a registered trademark of Berkadia Proprietary Holding LLCDocument sources: Apartment Data Services; Berkadia Research; Federal Reserve Bank of St. Louis; Moody’s

SUBMARKET NAME# OF



Downtown/SoCo/Barton Springs 59 11,871 878 2,003 2.28 90.5%

UT/Mueller 67 9,639 823 1,465 1.78 93.3%

St Edwards/South Lamar 50 8,865 780 1,190 1.53 90.9%

Northeast 62 11,855 825 928 1.13 89.5%

Research Blvd/North Lamar 87 17,876 755 1,007 1.33 88.9%

Pflugerville/Tech Ridge/Wells Branch 70 21,619 894 1,074 1.20 89.8%

Round Rock/Georgetown 72 17,654 924 1,086 1.18 87.1%

Northwest/Arboretum/Domain 102 28,861 852 1,165 1.37 92.0%

Cedar Park/Leander/Four Points 78 23,227 964 1,128 1.17 88.2%

Southeast/Riverside Dr 70 15,484 857 1,204 1.41 91.3%

Outlying Metro 9 1,029 914 918 1.00 95.3%

I-35 South 73 18,575 874 1,064 1.22 88.6%

San Marcos/Kyle/Buda 79 14,409 903 1,201 1.33 90.4%

West/Sunset Valley/Barton Creek 68 18,170 916 1,237 1.35 90.2%

TOTALS 946 219,134 873 1,181 1.35 90.0%




ALBUQUERQUE, NM

AMBLER, PA

ATLANTA, GA

AUSTIN, TX

BATON ROUGE, LA

BIRMINGHAM, AL

BOCA RATON, FL

BOSTON, MA

CAMAS, WA

CHARLESTON, SC

CHATTANOOGA, TN

CHICAGO, IL

CLEVELAND, OH

COLORADO SPRINGS, CO

DALLAS, TX

DC METRO

DENVER, CO

DETROIT, MI

EL SEGUNDO, CA

FRESNO, CA

HOUSTON, TX

IRVINE, CA

JACKSONVILLE, FL

KANSAS CITY, MO

LAS VEGAS, NV

LEXINGTON, KY

LOS ANGELES, CA

MARBLEHEAD, MA

MEMPHIS, TN

MIAMI, FL

MIDVALE, UT

MURRIETA, CA

NASHVILLE, TN

NEW YORK, NY

NEWPORT NEWS, VA

ORLANDO, FL

PASADENA, CA

PHILADELPHIA, PA

PHOENIX, AZ

PORTLAND, OR

RALEIGH, NC

RICHMOND, VA

SALT LAKE CITY, UT

SAN ANTONIO, TX

SAN DIEGO, CA

SAN FRANCISCO, CA

SEATTLE, WA

SHREWSBURY, NJ

ST. LOUIS, MO

TAMPA, FL

TEMPE, AZ

TUCSON, AZ

WOODLAND HILLS, CA

HYDERABAD - INDIA*

*Back Office Support



MARKET AT A GLANCE



AUSTINMULTIFAMILY REPORT THIRD QUARTER 2017

ROBUST RENTAL DEMAND DRIVES OCCUPANCY UP TO 91.7%

Demand for apartments drove occupancy up in the Austin metropolitan area. Renters newly occupied 2,243 net units during the third quarter. Rental demand exceeded the 1,272 deliveries during the third quarter to push occupancy up 50 basis points since mid-2017. At 91.7% in the third quarter of 2017, the occupancy rate was on par with the five-year average. While occupancy rose from the second quarter to the third quarter, effective rent held $1,195 per month.

The quarterly supply-demand trend mirrored the rental environment all year as Austin in one of the fastest-growing cities in America. The latest leasing activity was part of 6,174 units absorbed year to date. The 5,828 units that came online since the start of 2017 trailed leasing activity to cause average apartment occupancy to elevate 40 basis points since December. At the same time, effective rent advanced 2.3%. Developers worked to meet the demand with 38 communities under construction by the end of the third quarter, which will bring 9,269 units online in the upcoming years.

$800

$1,000

$1,200

$1,400

88%

90%

92%

94%

4Q12 2Q13 4Q13 2Q14 4Q14 2Q15 4Q15 2Q16 4Q16 2Q17



OCCUPANCYRATE

EFFECTIVERENT

91.7%

$1,195


Up 0.7% since 3Q16


ECONOMIC TRENDS

BERKADIA


DELIVERIES

NETABSORPTION

5,828

6,174

Units YTD

Units YTD 0

3,000

6,000

9,000

12,000

2012 2013 2014 2015 2016 2017*








3.3%

1.00m

33.3k

$287.2k

1.63%

3.1%

1.02m

38.9k

$295.9k

2.20%

The leisure and hospitality industry was a significant economic driver in the Austin metropolitan area with the creation of a metro-leading 5,300 positions for a 4.3% increase annually through August 2017. Part of the additions were 800 workers at the Fairmont Austin, ahead of the fall opening of the 1,048-room hotel. Hiring in the education and health services sector nearly matched the leisure and hospitality industry. Education and health services organizations recruited 4,900 personnel, to expand 4.2% year over year. The government sector created an additional 2,600 new jobs since August 2016. Austin total nonfarm employment expanded 1.8%, or by 17,800 net jobs. While metrowide job growth was down from 3.7% during the preceding year, the latest local increase exceeded the national average expansion of 1.4% since August 2016. Contraction in the professional and business services sector contributed to the metrowide slowdown. In one of the largest employment sectors, a metro-leading 2,500 jobs were eliminated for a 1.5% reduction year over year.

-20 BPSCHANGE

1.8%CHANGE

16.8%CHANGE

3.0%CHANGE

60 BPSCHANGE


U.S.ANNUAL RENT


METROANNUAL RENT


THIRD QUARTER 2017

*August; **September

SUBMARKET BREAKDOWN


THIRD QUARTER 2017

SUBMARKET NAME# OF




UT/Mueller 67 9,635 823 1,497 1.82 91.7%


Northeast 60 11,293 818 931 1.14 90.6%

Research Blvd/North Lamar 84 16,940 750 970 1.29 93.7%






Outlying Metro 9 1,029 914 967 1.06 97.6%

I-35 South 70 17,612 877 1,113 1.27 90.2%



TOTALS 914 211,528 872 1,195 1.37 91.7%

BERKADIA




ALBUQUERQUE, NM

AMBLER, PA

ATLANTA, GA

AUSTIN, TX

BAKERSFIELD, CA

BATON ROUGE, LA

BETHESDA, MD

BIRMINGHAM, AL

BOCA RATON, FL

BOSTON, MA

CAMAS, WA

CHARLESTON, SC

CHATTANOOGA, TN

CHICAGO, IL

CLEARWATER, FL

CLEVELAND, OH


DALLAS, TX

DENVER, CO

DETROIT, MI

EL SEGUNDO, CA

FRESNO, CA

HOUSTON, TX

IRVINE, CA

JACKSONVILLE, FL

KANSAS CITY, MO

LAS VEGAS, NV

LENOX, MA

LOS ANGELES, CA

MARBLEHEAD, MA

MIAMI, FL

MIDVALE, UT

MURRIETA, CA

NASHVILLE, TN

NEW YORK, NY

NEWPORT NEWS, VA

ORLANDO, FL

PASADENA, CA

PHILADELPHIA, PA

PHOENIX, AZ

PORTLAND, OR

RALEIGH, NC

RICHMOND, VA

SACRAMENTO, CA

SALT LAKE CITY, UT

SAN ANTONIO, TX

SAN DIEGO, CA

SAN FRANCISCO, CA

SCOTTSDALE, AZ

SEATTLE, WA

SHREWSBURY, NJ

ST. LOUIS, MO

TACOMA, WA

TAMPA, FL

TEMECULA, CA

TEMPE, AZ

TUCSON, AZ

WOODLAND HILLS, CA

HYDERABAD - INDIA*




MARKET AT A GLANCE



AUSTINMULTIFAMILY REPORT SECOND QUARTER 2017

RENTAL DEMAND OUTPACES APARTMENT DELIVERIES TO START 2017

Apartment developers worked to keep pace with rental demand in the Austin metropolitan area to start 2017. Construction completed on 3,372 units in the first half of the year. The 445-unit Mansions at Travesia was the largest property to have units begin lease-up in that time, while the remaining units are scheduled to come online by year-end. Deliveries fell short of demand as residents newly occupied 3,906 units so far this year. As a result, apartment occupancy advanced 40 basis points from December 2016 to 91.7% in June 2017. With limited apartment inventory, occupancy was a metro-high 97.5% in the outlying metropolitan area. The occupancy rate was also elevated in the San Marcos/Kyle/Buda submarket. Home to Texas State University, the submarket had limited new inventory coming online as occupancy shifted up to 94.9% in June 2017. With healthy occupancy, effective rent in the submarket reached $1,185 per month by the end of the second quarter, up 4.4% from one year prior. Metrowide, effective rent advanced 2.1% from December 2016 to $1,193 per month in June 2017.

$800

$900

$1,000

$1,100

$1,200

$1,300

89%

90%

91%

92%

93%

94%

3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17



OCCUPANCYRATE

EFFECTIVERENT

91.7%

$1,193

Up 50 bps since 2Q16

Up 1.0% since 2Q16


ECONOMIC TRENDS

BERKADIA


DELIVERIES

NETABSORPTION

3,372

3,906

Units YTD

Units YTD 0

3,000

6,000

9,000

12,000

2012 2013 2014 2015 2016 2017*








3.3%

1.00m

34.4k

$278.1k

1.64%

3.7%

1.02m

40.6k

$296.1k

2.19%

Healthy job creation supported steady rental demand in the Austin metropolitan area. Total nonfarm employment expanded 2.8% annually through May 2017. The local growth outpaced the 1.6% national increase at the same time. The education and health services sector was a significant economic driver in Greater Austin with 6,400 personnel recruited since May 2016 for a metro-leading 5.6% annual growth. Boosting the sector was the opening of the $310 million Dell Seton Medical Center in May 2017. Hiring was also robust in the leisure and hospitality industry, with 4,400 jobs created for 3.6% year-over-year growth. The development of hotels supported the sector during the last year, including the 122-room Woodspring Suites Signature, the 108-unit Residence Inn Austin Southwest, and the 79-unit Staybridge Suites. Nearly matching job creation in the leisure and hospitality industry, companies in the professional and business services sector added 4,000 jobs since May 2016 to expand 2.4% annually.

40 BPSCHANGE

2.8%CHANGE

18.0%CHANGE

6.5%CHANGE

60 BPSCHANGE


U.S.ANNUAL RENT


METROANNUAL RENT


SECOND QUARTER 2017

*May; **June

© 2017 Berkadia Real Estate Advisors LLCBerkadia® is a registered trademark of Berkadia Proprietary Holding LLCDocument sources: Axiometrics; Moody’s; Berkadia Research; Apartment Data Services

SUBMARKET BREAKDOWN

BERKADIA


SECOND QUARTER 2017

SUBMARKET NAME# OF




UT/Mueller 66 9,317 819 1,494 1.82 92.6%


Northeast 60 11,293 818 925 1.13 89.6%

Research Blvd/North Lamar 84 16,940 750 971 1.30 94.5%






Outlying Metro 9 1,029 914 949 1.04 97.5%

I-35 South 68 17,051 877 1,099 1.25 91.0%



TOTALS 908 209,285 872 1,193 1.37 91.7%

CORPORATE HEADQUARTERS 521 Fifth Avenue

20th Floor New York, NY 10175

(646) 600-7800 | Fax : (646) 600-7838www.Berkadia.com


ALBUQUERQUE, NM

AMBLER, PA

ATLANTA, GA

AUSTIN, TX

BAKERSFIELD, CA

BATON ROUGE, LA

BIRMINGHAM, AL

BOCA RATON, FL

BOSTON, MA

CAMAS, WA

CAPISTRANO BEACH, CA

CHARLESTON, SC

CHATTANOOGA, TN

CHICAGO, IL

CLEARWATER, FL


DALLAS, TX

DC METRO

DENVER, CO

DETROIT, MI

EL SEGUNDO, CA

FRESNO, CA

HOUSTON, TX

IRVINE, CA

JACKSONVILLE, FL

KANSAS CITY, MO

LAS VEGAS, NV

LEAWOOD, KS

LOS ANGELES, CA

MANCHESTER, MA

MARBLEHEAD, MA

MEMPHIS, TN

MIAMI, FL

MIDVALE, UT

NASHVILLE, TN

NEW YORK, NY

NEWPORT BEACH, CA

NEWPORT NEWS, VA

OKLAHOMA CITY, OK

ONTARIO, CA

ORLANDO, FL

PASADENA, CA

PHILADELPHIA, PA

PHOENIX, AZ

PORTLAND, OR

RALEIGH, NC

RICHMOND, VA

SACRAMENTO, CA

SALT LAKE CITY, UT

SAN ANTONIO, TX

SAN DIEGO, CA

SAN FRANCISCO, CA

SCOTTSDALE, AZ

SEATTLE, WA

SHREWSBURY, NJ

ST. LOUIS, MO

TACOMA, WA

TAMPA, FL

TEMECULA, CA

TEMPE, AZ

THE PLAINS, CA

TROY, MI

TUCSON, AZ

TULSA, OK

WAUKESHA, WA

WOODLAND HILLS, CA

HYDERABAD - INDIA*


MARKET AT A GLANCE



AUSTINMULTIFAMILY REPORT FIRST QUARTER 2017

OCCUPANCYRATE

EFFECTIVERENT

91.1%

$1,174

RENT RISES AMID HEALTHY APARTMENT DEMAND

Robust job creation supported healthy apartment leasing activity in the Austin metropolitan area. Residents newly occupied 1,272 units metrowide year to date. Demand was elevated in the San Marcos/Kyle/Buda submarket, where occupancy was a near metro-high of 95.5% at the end of the first quarter of 2017. Greater Austin occupancy was 91.1% in March 2017, down 30 basis points from three months earlier as builders brought 2,195 units online during the same time. Seven communities began lease-up in the first quarter, three of which were in the Pflugerville/Tech Ridge/Wells Branch submarket. The three properties added 892 new units to the area. Metrowide apartment inventory will continue to expand at an elevated clip, as construction was underway on 39 communities in the first quarter of 2017 that will add 9,863 units by the end of next year. Developers showed belief in the multifamily market as permitting issuance nearly doubled annually with, 12,864 annualized units requested in March 2017. With healthy leasing activity alongside an influx of new supply, operators advanced effective rent 0.6% quarter over quarter to $1,174 per month in March 2017.

$1,000

$1,100

$1,200

$1,300

88%

90%

92%

94%

Aug. 15 Oct. 15 Dec. 15 Feb. 16 Apr. 16 Jun. 16 Aug. 16 Oct. 16 Dec. 16 Feb. 17




Up 1.0% since 1Q16


ECONOMIC TRENDS

BERKADIA


DELIVERIES

NETABSORPTION

Units YTD

Units YTD






FIRST QUARTER 2017

*January; **March

2,195

1,2720

3,000

6,000

9,000

12,000

2012 2013 2014 2015 2016 2017*



3.3% 10 BPSCHANGE

3.4%

0.98m 3.5%CHANGE

1.02m

36.6k 3.6%CHANGE

37.9k

$276.0k 7.0%CHANGE

$295.3k

1.89% 60 BPSCHANGE

2.48%

Austin employment expanded 3.5%, or by 34,000 new jobs, annually through January 2017. The rise in local headcounts outpaced the 1.6% national increase at the same time. The leisure and hospitality industry was a significant driver of the local economy as businesses recruited 5,600 personnel. Supporting the rising headcounts was tourism and travel, which brought in approximately $9.1 billion in gross product for the metro in 2016. The Fairmont Austin also supported the industry, hiring ahead for the 900 positions needed for its mid-2017 opening. Nearly matching the leisure and hospitality industry, companies in the professional and business services sector added a net 5,500 new jobs. Also in the white-collar segment, the education and health services organizations expanded 4.3% with a net 5,000 new positions. With steady job growth, the unemployment rate was 3.4% in January 2017. While 90 basis points lower than the five-year average, Austin jobless claims raised 10 basis points in the most recent year as more long-term unemployed restarted job searches.

U.S. SHARE OF WALLET

U.S.ANNUAL RENT


METRO SHARE OF WALLET

METROANNUAL RENT


© 2017 Berkadia Real Estate Advisors LLCBerkadia® is a registered trademark of Berkadia Proprietary Holding LLCDocument sources: Axiometrics; Moody’s; Berkadia Research

SUBMARKET BREAKDOWN

BERKADIA


FIRST QUARTER 2017

SUBMARKET NAME# OF



Downtown/ SoCo/ Barton Springs 57 11,133 889 1,961 220.60 88.4%

UT/ Mueller 66 9,317 819 1,486 181.40 92.3%

St Edwards/ South Lamar 48 8,501 782 1,163 148.70 92.4%

Northeast 59 11,116 815 880 108.00 91.4%

Research Blvd/ North Lamar 84 16,940 750 974 129.90 93.6%

Pflugerville/ Tech Ridge/ Wells Branch 67 20,838 893 1,071 119.90 87.6%

Round Rock/ Georgetown 68 16,081 920 1,071 116.40 91.3%

Northwest/ Arboretum/ Domain 101 28,276 853 1,186 139.00 91.4%

Cedar Park/ Leander/ Four Points 70 21,359 967 1,132 117.10 90.1%

Southeast/ Riverside Dr 67 14,987 858 1,184 138.00 93.5%

Outlying Metro 9 1,029 914 917 100.30 97.1%

I-35 South 67 16,857 877 1,074 122.50 90.1%

San Marcos/ Kyle/ Buda 74 13,688 904 1,173 129.80 95.5%

West/ Sunset Valley/ Barton Creek 65 17,674 912 1,247 136.70 88.4%

TOTALS 902 207,796 872 1,174 134.60 91.1%

CORPORATE HEADQUARTERS 521 Fifth Avenue

20th Floor New York, NY 10175

(646) 600-7800 | Fax : (646) 600-7838www.Berkadia.com


ALBUQUERQUE, NM

AMBLER, PA

ATLANTA, GA

AUSTIN, TX

BAKERSFIELD, CA

BATON ROUGE, LA

BIRMINGHAM, AL

BOCA RATON, FL

BOSTON, MA

CAMAS, WA

CHARLESTON, SC

CHATTANOOGA, TN

CHEVY CHASE, MD

CHICAGO, IL

CLEARWATER, FL

CLEVELAND, OH


DALLAS, TX

DENVER, CO

DETROIT, MI

EL SEGUNDO, CA

FRESNO, CA

HOUSTON, TX

IRVINE, CA

JACKSONVILLE, FL

KANSAS CITY, MO

LAS VEGAS, NV

LENOX, MA

LOS ANGELES, CA

MARBLEHEAD, MA

MIAMI, FL

MIDVALE, UT

MURRIETA, CA

NASHVILLE, TN

NEW YORK, NY

NEWPORT NEWS, VA

ORLANDO, FL

PASADENA, CA

PHILADELPHIA, PA

PHOENIX, AZ

PORTLAND, OR

RALEIGH, NC

RICHMOND, VA

SACRAMENTO, CA

SALT LAKE CITY, UT

SAN ANTONIO, TX

SAN DIEGO, CA

SAN FRANCISCO, CA

SCOTTSDALE, AZ

SEATTLE, WA

SHREWSBURY, NJ

ST. LOUIS, MO

TACOMA, WA

TAMPA, FL

TEMECULA, CA

TEMPE, AZ

TUCSON, AZ

WOODLAND HILLS, CA

HYDERABAD - INDIA*


MARKET AT A GLANCE



DALLAS-FORT WORTHMULTIFAMILY REPORT THIRD QUARTER 2016

EFFECTIVE RENT APPRECIATES 6.7% ANNUALLY AS JOB GROWTH CONTINUES

Vibrant job growth kept apartment demand elevated in the Dallas-Fort Worth metro area in the first three quarters of 2016. Renters occupied 13,409 additional apartments, on pace to absorb a total of approximately 17,880 apartments by year-end. In 2015, 19,783 apartments were absorbed. More than 20% of year-to-date leasing activity occurred in Plano, Richardson, and Frisco. Significant apartment demand was also present in the Uptown/Oaklawn/Highland Park area. Multifamily builders were also active since the beginning of this year, completing 11,488 apartment units metrowide. Lease up of apartments at approximately 80 apartment communities under construction is expected through the end of the third quarter of 2017. When these apartment communities are completed, more than 22,800 units will be added to local multifamily inventory. Operators recorded 93.4% occupancy at the end of the third quarter of this year, the same as one year prior. During the same period, effective rent appreciated 6.7% to 1,031 per month.

$900

$950

$1,000

$1,050

$1,100

90%

91%

92%

93%

94%

Feb. 15 Apr. 15 Jun. 15 Aug. 15 Oct. 15 Dec. 15 Feb. 16 Apr. 16 Jun. 16 Aug. 16



OCCUPANCYRATE

EFFECTIVERENT

93.4%

$1,031

Unchanged since 3Q15

Up 6.7% since 3Q15


ECONOMIC TRENDS

BERKADIA

DALLAS-FORT WORTHMULTIFAMILY REPORT

DELIVERIES

NETABSORPTION

11,488

13,409

Units YTD

Units YTD 0

5,000

10,000

15,000

20,000

25,000

2011 2012 2013 2014 2015 2016*








4.0%

3.41m

116.8k

$205.9k

2.17%

3.8%

3.54m

130.5k

$224.3k

1.63%

Employment in the Dallas-Fort Worth area expanded at a 3.5% annual rate since August of 2015. Companies in the Metroplex added 120,800 workers to payrolls during that time. In the trade, transportation, and utilities sector, businesses hired 32,500 workers, a 4.5% annual gain. Distribution-center employment surged with 2,000 newly created jobs among Amazon’s fulfillment centers in Dallas, Haslet, and Coppell and the first of 500 jobs filled at the new Ulta Beauty logistics center in Dallas. In the financial activities industry, 17,800 workers were recruited, a 6.4% increase. The industry was supported by the hiring of 1,000 workers at State Farm and 250 newly created jobs at Thomson Reuters in Carrollton. Sustained expansion in the financial activities industry is expected as Liberty Mutual hires the first of 2,400 new recruits in 2017. Also in 2017, Toyota Motor Corporation’s North American headquarters in Plano is expected to be completed, with approximately 3,000 employees transferring from other states and another 1,000 workers hired locally.

-20 BPSCHANGE

3.5%CHANGE

11.7%CHANGE

8.9%CHANGE

-50 BPSCHANGE

U.S.ANNUAL RENT


METROANNUAL RENT


THIRD QUARTER 2016

*August; **September

© 2016 Berkadia Real Estate Advisors LLCBerkadia® is a registered trademark of Berkadia Proprietary Holding LLCDocument sources: Axiometrics; Moody’s; Berkadia Research

SUBMARKET BREAKDOWN

BERKADIA

DALLAS-FORT WORTHMULTIFAMILY REPORT

THIRD QUARTER 2016

SUBMARKET NAME# OF



Downtown Dallas / West End / Deep Ellum 49 10,336 957 1,445 1.51 89.2%

Uptown / Oaklawn / Highland Park 140 29,999 930 1,630 1.75 90.7%

East Central Dallas / Lower Greenville Ave 50 5,532 859 1,254 1.46 95.3%

White Rock Lake / Tenison Park 69 14,994 802 807 1.01 94.0%

North Central Dallas / Upper Greenville Ave 99 26,702 795 1,046 1.32 90.8%

Skillman St / I-635 95 26,068 789 826 1.05 92.4%

Far East Dallas 19 3,280 932 1,034 1.11 96.6%

Garland 92 15,672 858 897 1.05 95.8%

North Dallas / Addison 112 30,671 894 1,103 1.23 94.7%

Far North Dallas / Collin County 78 24,522 794 999 1.26 95.7%

East Plano / Richardson 84 22,742 937 1,213 1.30 92.9%

West Plano / Frisco 157 49,782 931 1,245 1.34 90.2%

Allen / McKinney 68 17,253 931 1,159 1.25 91.0%

East Irving 57 7,539 802 765 0.95 96.3%

West Irving 81 18,299 810 885 1.09 95.1%

Las Colinas / Valley Ranch / Coppell 76 27,653 909 1,225 1.35 93.8%

Northwest Dallas / Bachman Lake 61 11,451 788 805 1.02 95.7%

Carrollton / Farmers Branch 114 27,724 899 1,093 1.22 93.7%

Lewisville / Flower Mound 72 21,229 881 1,089 1.24 93.5%

Denton 62 12,274 869 1,053 1.21 95.9%

Southeast Dallas / Mesquite 102 22,047 845 812 0.96 94.3%

Oak Cliff South 63 13,085 897 752 0.84 92.5%

Duncanville / DeSoto / Cedar Hill / Lancaster 90 19,870 859 831 0.97 94.2%

Far South Dallas / Waxahachie 24 3,007 919 971 1.06 96.8%

Trinity Groves / Oak Cliff North 38 6,472 849 1,036 1.22 90.7%

Grand Prairie 52 11,820 849 921 1.09 92.8%

Downtown Ft Worth / TCU 55 10,056 879 1,255 1.43 91.4%

East Ft Worth / Woodhaven / I-30E 68 12,536 831 737 0.89 91.0%

North Arlington 95 21,278 813 885 1.09 93.8%

South Arlington 137 27,803 847 882 1.04 94.7%

Haltom City / Richland Hills / Fossil Creek 70 16,959 903 957 1.06 95.9%

Hurst / Euless / Bedford 129 29,956 845 947 1.12 95.5%

Grapevine / Roanoke / Keller 62 15,879 938 1,206 1.29 95.6%

Northwest Ft Worth / Saginaw / Eagle Mtn 28 4,728 941 842 0.90 95.2%

South Ft Worth 62 11,034 876 796 0.91 93.4%

Southwest Ft Worth / Benbrook 45 12,376 843 909 1.08 95.0%

Far Southwest Ft Worth 23 2,764 882 847 0.96 92.4%

Western Hills / Ridgmar / Ridglea 76 13,054 855 754 0.88 93.2%

TOTALS 2,854 658,446 869 1,031 1.19 93.4%

AUSTINSECOND QUARTER 2016

VACANCY & RENT PERMITS & DELIVERIES EMPLOYMENT GROWTH

VACANCY & RENT COMPARISON

For a full list of Austin submarkets, visit apartmentupdate.com/report/2229

During the last 12 months employment in the Austin metro increased 3.7%, adding 35,600 employees to the workforce, and growingwell above the national rate of 1.7% during the same time. The professional and business services sector combined with trade,transportation and utilities segment created a combined 16,400 positions in the last 12 months.

The median price for existing single family homes was $282,300 in June, surging 9% from one year prior. Single family buyers acrossthe metro contributed to a sales velocity increase of 5.6% year over year, equating to 46,270 annualized transactions and registering aneight-year high.

Since the beginning of the year, renters across the metro occupied 2,830 apartments, primarily in the Far South and the Southeastsubmarkets where one in every three units absorbed was located. Absorption levels were slightly higher than one year ago, increasing3.6% year over year.

Year to date builders completed construction on 3,250 apartment units. The bulk of the additions occurred in the Southeast and FarSouth submarkets with 590 units and 570 units, respectively. The largest individual community to come online this year consists of 442units in the Near South Central submarket.

Developers requested permits for approximately 3,410 multifamily units year to date. By mid-2016, 39 projects were in the planningstages of development with the vast majority adjacent to or situated near the city center region, such as the Near North Centralsubmarket where a permit was issued for a 350-unit apartment community.

During the last 12 months, average vacancy across the metro decreased 20 basis points to 4.9%. Fluctuations in average vacancyremained minimal across the region, reflecting stability in the metro market as housing demand keeps pace with recently deliveredinventory.

Average asking rent in the metro apartment market was $1,604 per month in the second quarter of 2016, an increase of 4.7% from oneyear prior. The Hwy 183/Cedar Park/Leander submarket saw the largest annual gain with 7.9%, while the Central submarket was hometo the highest monthly rents in the metro, checking in at $1,976.

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AUSTIN OFFICE | 512.327.5888 ©2016 Berkadia Real Estate Advisors LLC

a Berkshire Hathaway and Leucadia National company For sources & disclaimer: apartmentupdate.com/sources

http://www.apartmentupdate.com/report/2229

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AUSTINFIRST QUARTER 2016




Austin employers created 39,600 jobs to increase headcounts 4.2% since the end of the first quarter of 2015. Hiring was robust in themetro's largest employment sector, leisure and hospitality, with 9,400 personnel added for 7.9% growth. The trade, transportation andutilities industry was also an economic driver, expanding 5.2% with 9,000 hires in the last 12 months.

The unemployment rate lowered to 3.1% in March, down 20 basis points from one year prior. Local jobless claims were significantlylower than the 5% national rate by the end of the first quarter.

The median single-family home price advanced 7.6% year over year to $275,400, while sales velocity soared to 50,640 annualizedtransactions through March from 42,000 annualized purchases during one year prior.

In correlation with strong net in-migration, rental demand heightened with 1,800 newly occupied apartments in the first quarter,surpassing the 1,250 apartments absorbed during the same time last year.

Apartment inventory expanded with 1,800 new units coming online in the last three months, with approximately one out of every fiveadditions in the Southeast submarket. Overall, construction completed on 8,400 apartments since the first quarter of 2015.

Developers pulled back multifamily permitting activity to start the year. Issuance totaled 2,230 units in the first three months of 2016,down from 2,970 multifamily units requested during the same time last year. One of the larger projects in the pipeline is the 650-unitRiverbend community in the Travis County East submarket,

Pent-up demand caused a surge of leasing activity of new inventory to start the year, as vacancy held steady at 4.8% in the first quarter.Despite the rate remaining unchanged quarter to quarter, metro vacancy was down 60 basis points from one year prior. The sharpestannual drop in vacancy occurred in the San Marcos submarket, which plummeted 190 basis points to 2.9% as healthy demand persistedamid no new inventory deliveries.

The average asking rent advanced a modest 0.3% since December 2015 to $1,169 per month. Overall, average asking rent increased4.9% year over year while effective rents rose 5.1%, trimming concessions to 0.3% of asking rents. Central submarket average rentremained highest in the metro, advancing 1.5% to $2,025 per month.







AUSTINTHIRD QUARTER 2015




Austin employment increased 3.4% with 31,300 new jobs in the last four quarters, significantly outpacing the U.S. gain. Everyemployment sector expanded since September of 2014. Companies in the professional and business services sector led hiring, creating8,600 positions to grow 5.4%. The job-listing service company Indeed contributed 300 jobs to the sector in that time.

Unemployment was a tight 3% by the end of the third quarter, down 90 basis points from one year prior. The decline matched the90-basis-point drop in the preceding 12 months.

The median existing single-family home price reached $260,000 in September, up 6.7% year over year. Simultaneously, home salesaccelerated 13.7% with 48,400 annualized transactions. The rise moved sales on par with the previous peak in March of 2006.

Rental demand was healthy with 2,080 newly occupied apartments in the third quarter. Leasing activity was elevated from the1,230-quarterly average during the prior five years. Renters sought apartments in the North Travis submarket, where nearly one out ofevery five apartments absorbed during the third quarter in the area.

Construction completed on 1,990 apartments in the third quarter, bringing year-to-date additions to 6,600 units. While deliveries werespread throughout the metro, 930 apartments came online in each of the Near South Central and the Far Northwest submarkets sinceDecember.

Developers accelerated multifamily permitting activity with 8,750 annualized units requested in September, 20.7% more submissionsthan one year prior. The rise put issuance 4.4% higher than the five-year average.

Vacancy tightened 10 basis points to 4.7% in the third quarter. Even with the most recent dip, the rate was up 20 basis points from oneyear ago following a sharp rise in vacancy to close to 2014 and at the start of this year. Vacancy was lowest in the Travis County Eastsubmarket at 3.4% in the third quarter, down 50 basis points from the previous 12 months.

The average asking rent reached $1,146 per month in September, up 1.4% since June. The latest increase was part of a 4% annual risein asking rents, with concessions ticking up to an average of two days of free rent. Asking rents remained highest in the Centralsubmarket, elevating 1.1% year over year to $2,063 per month by the end of the third quarter.







AUSTIN |FIRST QUARTER 2015 http://www.berkadiarea.com/ VACANCY & RENT PERMITS & DELIVERIES EMPLOYMENT GROWTH


Austin businesses created 27,500 jobs to expand employment 3% during the prior 12 months, fueling rental demand in the metro. Austin

outpaced the 2.3% national increase during the same time as every local employment sector posted gains. With 6,100 new positions for 5.5% growth since March of 2014, the leisure and hospitality industry was an economic driver for Austin. Hiring was also robust in the trade, transportation and utilities segment as headcounts grew by 5,500 positions, or 3.3%.

The unemployment rate was 3.5% by the end of the first quarter, 110 basis points lower than one year ago. Austin unemployment was 200 basis points less than the 5.5% U.S. average in March.

The median existing single-family home price advanced 6.9% year over year to $248,300 in March. Values increased annually since 2010. Buyers were not deterred by rising prices, as sales accelerated 7.5% from one year ago with 48,800 annualized transactions in March of 2015.

Rental demand heightened with 2,780 newly occupied apartments in the first quarter, up from 1,190 units absorbed in the preceding three months. A combined 8,760 units were absorbed in the last year.

Construction completed on 2,390 multifamily units in the last three months, 15.5% more deliveries than the preceding quarter. While additions were spread throughout the metro, significant inventory was added in the Near South Central and the Highway 183/Cedar Park/Leander submarkets, with 880 combined new units.

Amid healthy rental demand, developers accelerated multifamily permitting activity in the first quarter. In the last three months, permits for 2,940 multifamily units were filed, more than four times the 720 submissions during the same time in 2014.

Vacancy lowered 20 basis points to 4.8% in the first quarter. The decrease was part of a 30-basis-point decline in the last year. Vacancy was tightest in the Near North Central submarket at 3.9% following an 80-basis-point annual drop.

At $1,101 per month in March, average asking rent was up 1.3% since December. Rents increased 4.8% year over year. The Central submarket asking rents topped the metro at $2,025 per month following a 1.2% rise from one year ago. While asking rents advanced across all submarkets year over year, operators held concessions at two days off per month.


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12

POPULATION

1,954,800 2.5%

EMPLOYMENT

916,300 4.0%

MEDIAN HOME PRICE

$239,400 5.1%

MEDIAN HOUSEHOLD INCOME

$61,600 1.6%

2014 REVIEWAustin businesses hired 35,200 workers to lift payrolls a sizable 4% as every employment sector expanded in 2014. Local employment growth nearly doubled the 2.1% national rise at the same time. The professional and business services industry was a top economic driver in Austin with 10,600 new positions created in the last 12 months. As one of the largest employment sectors, the trade, transportation and utilities segment contributed an additional 9,500 jobs. Overall hiring was slightly down from the 36,100 positions created for a 4.3% increase in the preceding year.

The increase in deliveries combined with healthy job gains supported accelerated leasing activity as renters occupied 9,150 additional apartments since January of 2014, up from 5,060 units absorbed in the preceding year.

Construction completed on 9,340 apartments in 2014, up 76.4% from deliveries in the preceding year.

With elevated deliveries and numerous projects under construction this year, developers pulled back multifamily permitting activity. In December, 10,650 annualized units were filed, down 10.6% from submissions one year ago.

At 4.5%, vacancy decreased 20 basis points in 2014, the lowest year-end level since 2006. With limited new supply and continued rental demand, vacancy decreased the most in Travis County, lowering 250 basis points to 3.4% in the Travis County East submarket and 190 basis points to 3.9% in the Travis County West submarket.

Operators advanced rent 3.9% in the prior four quarters to $1,085 per month in December. The rise was down from the 4.5% increase in the preceding year. With a significant drop in vacancy, Travis County East rents reached $1,113 per month, up a metro-leading 9.8%.

AUSTIN

* Estimate * Estimate

$25,000

$50,000

$75,000

$100,000

05 06 07 08 09 10 11 12 13 14*

AVERAGE PRICE PER UNIT

TRANSACTIONS — SALES VOLUME (BILLIONS)

$0.0

$0.5

$1.0

$1.5

$2.0

0

50

100

150

05 06 07 08 09 10 11 12 13 14*

SALES VELOCITY

QUICK FACTS


VACANCY AVERAGE RENT INCREASE AVERAGE RENTSUBMARKETS 2014 2013 2014 2013 2014 2013

Central 5.8% 4.8% 3.4% 3.4% $2,070 $2,002Far North Central 3.8% 4.1% 6.4% 6.0% $788 $741Far Northwest 4.1% 4.5% 6.4% 5.3% $1,116 $1,049Far South 4.1% 4.5% 7.2% 3.0% $1,153 $1,076Hwy 183/Cedar Park/Leander 4.5% 4.5% 6.7% 4.1% $1,030 $965North Travis 4.0% 4.8% 7.2% 5.0% $993 $926Northwest 5.7% 5.3% 4.6% 6.5% $1,164 $1,113Round Rock/Georgetown 4.1% 4.7% 3.8% 3.2% $1,005 $968San Marcos 6.8% 3.8% 2.9% 2.3% $956 $929Southeast 4.5% 5.1% 6.8% 4.7% $953 $893

TOTALS 4.5% 4.7% 3.9% 4.5% $1,085 $1,044


13Data and images pertaining to employment, income, permits, population, rents, single-family housing and vacancy are year-end figures. Absorption, construction and apartment sales figures are full-year totals. Numbers for 2014 are estimated values, while 2015 and 2016 figures are forecast projections. The sales information represents transactions of apartment properties with a sales price of $1 million or more. Apartment market data criteria and methodologies vary by market.

0

5,000

10,000

15,000

09 10 11 12 13 14* 15** 16**

PERMITS DELIVERIES

* Estimate; ** Forecast

VACANCY RENT GROWTH


-5%

0%

5%

10%

09 10 11 12 13 14* 15** 16**

FORECAST 2015Hiring will accelerate this year with 39,400 positions created for a 4.3% increase in Austin total employment, driving robust apartment absorption. Over the two-year forecast period, more than 20,000 additional units are expected to be leased. The professional and business services segment, one of the largest local employment sectors, will be boosted with the 1,000 new workers added by Interactions Corp. this year. The scheduled completion of the first phase of Apple’s Americas Operations Center by the fourth quarter will also lift payrolls. Healthy job creation is expected to continue next year as Austin headcounts grow 4.2% with 40,100 hires.

Out-of-state institutional investors are targeting new, Class A apartment product in well-located areas of the metro that are selling at cap rates as low as the mid-4% range, maintaining velocity in this segment. Meanwhile, initial yields for suburban Class A assets are hovering in in the mid- to high-5% range. At the top end of the spectrum, larger investors are targeting properties in lease-up phases where buyers may be able to acquire the newest, best-in-class assets. Alternately, more aggressive speculators are seeking older properties with repositioning potentials. In this category, investors are spending up to $15,000 per unit on renovations, allowing the operators to raise rents more than $100 per month.

Steady job gains combined with an abundance of new supply should support record-high leasing activity this year with 10,400 newly occupied apartments. The new product will continue to attract renters as the Highway 183/Cedar Park/Leander and Central submarkets will likely lead leasing activity this year. As deliveries dip next year, so should leasing activity with 9,780 units.

The robust construction pipeline will result in another historic year of supply growth for the metro. Inventory will expand by 10,670 units in the next 12 months, 14.2% more than additions in 2014. Nearly four out of every 10 new units will be in the Highway 183/Cedar Park/Leander or Central submarkets. Deliveries will remain elevated next year with 9,780 new apartments.

Multifamily permitting will increase this year as developers request 12,340 units. Next year, submissions will recede an estimated 2.7% with 12,010 multifamily units requested.

Even with an influx of new apartment product, healthy rental demand will allow local apartment owners to fill units quickly. Marketwide vacancy will decrease 10 basis points over the next four quarters to 4.4% in December. The rate will improve an additional 20 basis points by the end of 2016, falling to 4.2%.

Operators will advance average asking rent to $1,134 per month by December. Rents will increase again by 4.5% next year to $1,185 per month.

VACANCY & RENT

ABSORPTIONEMPLOYMENT GROWTH

PERMITS & DELIVERIES

JOB CHANGE

-5.0%

-2.5%

0.0%

2.5%

5.0%

09 10 11 12 13 14* 15** 16**

METRO — U.S.

* Estimate; ** Forecast * Estimate; ** Forecast

0

3,000

6,000

9,000

12,000

09 10 11 12 13 14* 15** 16**

GAINED I LOST


2006 40,800

2007 25,200

2008 5,600

2009 (18,200)

2010 24,600

2011 26,000

2012 37,600

2013 36,100

2014* 35,200

2015** 39,400

2016** 40,100

Conventional Average Market Rents $1,085 $1,134 $1,185

AUSTIN2014 SALES SUMMARY

SALES VELOCITY

AVERAGE PRICE PER UNIT

2013 ANNUALSALES VOLUME

$1.5 B

2014 ANNUALSALES VOLUME

$2.2 B

SALES VOLUME% CHANGE

42.2%

TRANSACTIONCOUNT

2013106

2014121

AVERAGE CAP RATE

SALES COMPARABLES

MARKET HIGHLIGHTS

Multifamily investment activity accelerated in the Austin metropolitan area during 2014. Buyers purchased 108 properties lastyear, 3.9% more than 2013. Investors moved to acquire 1970-vintage product within the city of Austin as 31 properties sold,up from 23 transactions in the preceding year. The sale of large, recent builds doubled year over year, contributing to a 42.2%increase in dollar volume metrowide, with $2.2 billion in multifamily investments during 2014.

The average price per unit advanced 18.3% to $96,434 in 2014. Values increased annually since hitting a trough in 2010 at$50,695. Among Class A sales, prices were highest in Pflugerville at $114,032 per unit.

Cap rates decreased 60 basis points to 5.6% last year. First-year yields were tightest within the city at 5.5%, while reaching5.9% in the suburbs.


AUSTIN OFFICE | 512.327.5888




apartment development rises in the suburbs · austin total nonfarm employment advanced 3.3%, or by...

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