Over the last few years, the Austin metro has experienced exponential growth. In 2022, Austin had the second fastest growing metro economy, according to Kenan Institute of Private Enterprise, along with the third-highest multifamily net-absorption nationally. Following only the New York City and Newark metropolitan areas, the Austin market had 5,174 net move-ins, according to RealPage. Over 75% of the metro’s demand came from two submarkets, East Austin and Round Rock/Georgetown.
East Austin has been one of the fastest growing regions in the metro area. Bordering Downtown Austin, the submarket offers residents close proximity to major employers and entertainment options for a fraction of the cost of living downtown. At the end of the fourth quarter of 2022, the East Austin submarket’s effective rent was $1,750 per month, over $900 less than the Downtown/University submarket’s monthly rent.
Beyond comparable affordability, East Austin is home to Tesla’s newly relocated headquarters, which was said to house 20,000 employees. Yet, the Gigafactory is only getting bigger. On Jan. 10, 2023, Tesla announced that it will be investing $717 million into constructing an additional 1.4 million square feet.
It is no wonder that East Austin had the highest leasing activity in 2022 compared to the other submarkets in the market. Over 2,360 net units were absorbed in the submarket.
Meanwhile, the Round Rock/Georgetown submarket experienced 1,542 net move-ins. The submarket’s demand is underpinned by major employers in the area such as Dell Technologies and H-E-B.
Looking Ahead at the Austin Multifamily Market in 2023
Austin’s popularity and positive multifamily performance is forecasted that it will continue in 2023. Metro Austin is predicted to have another year of great demand and inventory growth according to the Berkadia’s 2023 Forecast.
By the end of 2023, over 20,000 units are projected to be absorbed, the second highest in the nation behind Dallas-Fort Worth. Staying on pace with leasing activity, over 24,000 units are set to come online in 2023, the third highest in the nation. Both projected deliveries and demand for this year are fixed to out-perform record-breaking figures from 2021.
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-Berkadia Research