Real Estate Investing in Austin: How Origin Can Boost Your Investments in The Tech and Cultural Heartland
Austin is one of the most dynamic and diverse economies in the US, making it a real estate investors dream.
Austin, a city known for its great music scene, expressive counter-culture, lively arts, and some of the best BBQ in the country, is also known to real estate investors as one of the most important and profitable cities in America. The state capital of Texas is the 11th largest in the country, and its population continues to grow. Already this decade, Austin, which has seen its population grow 20-40% each decade for the last 50 years, has jumped 15% since 2010 alone. But anyone who has ever been to Austin knows that numbers alone can’t tell the whole story. Walking down the vibrant streets, you are greeted with a beating thrum of youthful, entrepreneurial, and creative energy reflected in the gleaming new skyline. This is great news for real estate investors, and it is due to Austin’s economic diversity.
Austin, a long-standing university town, has seen a unique combination of high and low-tech industries pour in over the last decades. The Austin tech scene is booming, and the industries surrounding those industries are rising as well. Corporate headquarters are coming into Austin as well, especially in the STEM fields. R&D labs play an increasingly vital role in the local economy. This appeals to older, established workers who are ready to buy. In addition, a generation of young, talented, and educated Millennials are flocking to Austin for these opportunities, and, in return, they are looking to rent or buy places as they relocate to this growing city. This growth has made Austin perhaps the nation’s hottest real estate market, which is due to a solid infrastructure supporting this economic phenomenon. Austin is in a prime position to be a great market for smart investors for a long time to come.
Why the Austin Real Estate Market Is Strong and Sustainable
Understanding why Austin is one of the world’s best cities to invest in for real estate means understanding the interconnectedness of its economic engines. Here are a few reasons why experts believe that Austin is entering a period of smart, sustainable growth.
The tech sector continues to grow. Awesome tech, which once only debuted at South by Southwest, is now being made in Austin. Over the last decade, Austin has seen a 74% growth in tech sector jobs, leading the nation. At the same time, it has grown in all STEM jobs by 37%. Both of these are outstanding numbers and these industries bring to Austin a huge educated class of workers to fill these positions.
- More companies mean more jobs. Austin’s reputation as a city where people go to find work is transforming into a city where jobs go to find people. Its reputation as an incubator and home to talent means that more and more companies are moving here, bringing more and more jobs. The city is expected to add 70,000 more jobs in the next year.
- Industrial growth encourages further corporate migration. Austin has greatly expanded its industrial, warehouse, and shipping capabilities over the last decade, improving industrial parks in areas like the North Side and Round Rocks. This encourages more multinationals to move in as they realize that the area can handle all their needs.
- Prices means sustainable growth. With all this growth, prices took off in the last few years. MDU asking prices are up 45% year-over-year, and commercial rental prices are up 22%. Residential rental prices are slightly higher than the national average, but, given the nature of jobs being created, they are still low enough that people continue to flock here and have room to grow.
- There are low vacancy rates, even with new building. Austin is expected to add three million square feet in 2015, of which at least 90% is already leased. This indicates that there is still a pressing need for more space – great news for real estate investors.
Together, these factors indicate a city with strong economic fundamentals that is ready to keep growing. Austin is attracting the right kind of jobs that encourage development, and the city is entering a cycle where businesses move to the city. That is the kind of environment where sustainable real estate growth thrives.
Key Austin Neighborhoods for Real Estate Investment
At Origin, we peer into each and every neighborhood to find the right ones to invest in. We look on a granular level to make sure investments make sense. Here are some of the established and growing neighborhoods in Austin:
Central Business District: The Austin Downtown is the commercial heart of the city, and the center of government and business. It is experiencing a huge growth boom, especially in condos and Class A apartment buildings. With great public transit, this is a hub with plenty of growing mini-hubs. It’s one of the most dynamic neighborhoods in the country.
- South Austin: Art. Music. A foodie’s dream. South Austin, home to South by Southwest, is a neighborhood of growing vibrancy, attracting thousands of young workers to its unique rhythm. MDU development/redevelopment is the next big market in this area, as those who came for the BBQ are looking to stay for life.
- Southwest Austin: With easy access to downtown and a burst of new development, Southwest Austin is increasingly attractive to the white collar workers that are transforming the city.
- Northwest Austin: One of the fastest-growing areas in Austin, this vibrant neighborhood is attracting new tech jobs, boutique shopping, great restaurants, and residents looking to move away from the center of town while retaining the funky atmosphere that makes Austin great. This is a fertile and growing ground for MDU development.
- North Austin: With great access to the university, the capital, and many other parts of Austin, North Austin is experiencing another boom as MDUs and new businesses move in.
Austin is known for marching to its own beat. After all, Keep Austin Weird is one of its slogans. Even while undergoing enormous growth, the most exciting part of Austin is that it can remain a unique, idiosyncratic city. Indeed, it is that beating heart, that eclectic and educated atmosphere, that is driving this sustainable growth.
Origin Capital Partners understands what makes Austin tick, and we’re excited to be a part of its sustainable growth. We help our partners understand the city and invest wisely in it. We may not be the weird part, but we’re excited to keep Austin growing.
If you are a real estate investor looking to broaden your portfolio and join other investors in major developments in Austin or other markets, Origin Capital Partners would be excited to work with you. At Origin Capital Partners, we have a powerful connection with the cities we invest in and we understand what makes them tick. We know which areas are booming and which commercial and residential investments will make the most sense moving forward. Our Funds deliver consistent returns, because we know how to make sense of the real estate market. Contact us today to talk about how your investments can grow with the city.
