The new Multi-family Trend Report for Austin reveals that developers may be feeling uncertain about building new communities, the Austin Business Journal reports.
Developers are wary of two things: the rewrite of Austin land development code called CodeNEXT and the fact that some Austin City Council members are looking at expanding the Capitol View Corridors, especially in east Austin.
East Austin has just recently become a hotbed of development. The largest apartment project under construction in the city currently, being built around the Plaza Saltillo MetroRail station, is in East Austin. An expansion of the Capitol View Corridor would prevent high rises from being built, decreasing the size of projects, increasing the cost, and possibly making them way less feasible.
In addition, financing for projects is scarce across the country. Building costs are also increasing nationally, which is even worse in Austin because costs here for new construction is much higher than other places.
Those higher costs are due to higher land prices, delays in approvals by the city for new projects, and “onerous” regulatory rules in the Austin city limits.
There was an increase in permit applications recently, perhaps due to developers wanting to get their projects approved before any more regulations are passed.
There are 69 projects with 16,351 units total that are in the permitting stage. There are 19,000 units in the Austin area under construction and 6,500 are set to be finished by the end of 2017.
After years of older apartments, (called Class C properties), being more popular due to renters preferring cheaper rent to amenities, they have been seeing their occupancy rates fall.
The most apartments are being built in Cedar Park and Leander, followed by the Highland Mall redevelopment.
Surprisingly, Bastrop has the highest occupancy rate, despite having lower rents than anywhere else in the area.
Downtown Austin has the highest rents.
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