There is much speculation about the state of the Austin condo market. With lots of new projects, a national housing crisis, and no precedent for high-rise development in downtown Austin, the common wisdom is that all the new projects will fail.
With the revitalization of downtown, the rapid growth of the city, the strong local economy, and the lack of other downtown housing options, the common wisdom so far has been dead wrong. While some ill-conceived projects will likely never break-ground, those that capture the imagination of Austinites–and that are priced appropriately–will thrive.
Take the 360 project, for example. At 44-stories and 430 individual units, it is one of the most ambitious downtown projects. Today, with the skeleton complete, it is the tallest building in the Austin skyline. Set for completion this year, it is at the point where it needs to have sold 70-80% of units to be viable. Not only is the project now sold out with significant deposits, but there is waiting list with enough buyers for an additional 140 units. While some sales may fall through — the fact of the matter is that demand has been extraordinary for 360. With great views, a great location, and competitive pricing, 360 shows how strong the downtown Austin condo market is for the right project. With this much demand, 360 buyers should expect to see strong appreciation on their units over the next few years.
A report this week from Residential Strategies provides additional details on the state of the downtown Austin condo market. The report, and other sources, provides the following snapshot of several projects’ sales/reservations through the end of first quarter 2008:
* 360: 430 units total; 430 committed. 140 unit waiting list.
* The Shore: 192 units; 189 committed.
* W Austin: 196 units; 140 committed.
* Four Seasons Residences: 166 units total; 60 units committed.
* The Austonian: 188 units; 45 committed.
* SoCo Lofts: 69 units; 41 committed.
* Zilker Place: 74 units; 29 committed.
While different projects have different standards for reservations, the data clearly illustrates a few key market forces. First, near-term projects such as 360 and The Shore are doing great. Second, the most affordable projects are selling well, even if they are outside the downtown core. Finally, the ultra-luxury projects–many of which are still a couple of years out–remain the most at risk. While the Austonian, Four Seasons, and W have broken ground–many of the most expensive units may be the hardest to sell.
All-in-all, the news is good. With clear market data, there is no doubt that thousands of people are willing to live downtown. While some of the projects that have broken ground still have work to do, the projects that do break ground in this environment are likely to be successfully completed. While the local real estate market is far from perfect (though much better than the rest of the country), the state of the downtown Austin condo market remains strong.