Real Estate Market Overview

RealReal EstateEstate MarketMarket OverviewOverview Austin-SanAustin-San MarcosMarcos

Jennifer S. Cowley Assistant Research Scientist Mukta Naik Graduate Research Assistant

Texas A&M University

2 Population 5 Employment 7 Job Market 8 Major Industries 9 Business Climate 11 Education 12 Transportation and Infrastructure Issues 13 Public Facilities 14 Urban Growth Patterns Map 1. Growth Areas

15 Housing 19 Multifamily 21 Map 2. Multifamily Building Permits 22 Manufactured Housing Seniors Housing

23 Retail Market 24 Map 3. Retail Building Permits 26 Office Market 27 Map 4. Office Building Permits 29 Industrial Market 30 Map 5. Industrial Building Permits 31 Conclusion RealReal EstateEstate MarketMarket OverviewOverview Austin-SanAustin-San MarcosMarcos Jennifer S. Cowley Assistant Research Scientist Mukta Naik Graduate Research Assistant

US 183

Cedar Park Round Rock

Lago Vista Pflugerville

Interstate 35

Lakeway Austin Manor US 290 Elgin

West Lake Hills

US 290 Sunset Valley

Dripping Springs

Area Cities and Towns Counties Land Area of Austin-San Austin Pflugerville Bastrop Marcos MSA Cedar Park Round Rock Caldwell 4,256 square miles Georgetown San Marcos Hays Lockhart Taylor Travis Population Density (2000) Williamson 294 people per square mile

he Austin Metropolitan Statistical come and good business growth, ac- economy, Austin, the capital of Texas, Area (MSA) is part of the I-35 cording to Forbes magazine. Sales and is known for its parks and green space, Tgrowth corridor in the heart of Marketing Management magazine including greenbelts, lakes and the Texas. The MSA was the third fastest named Austin the second Best Place to ten-mile hike-and-bike trail along growing in the state during the 1990s, do Business in 2001. This ranking is at- Town Lake. Lake Travis and the San according to the U.S. Census Bureau. tributable to extensive business expan- Marcos River provide water recreation Austin is ranked first out of 234 metro- sion and the entrepreneurial nature of activities. politan areas nationwide for jobs, in- the city. Aside from the prospering 1 POPULATION Kelly Air Force Base, San Antonio

Austin MSA Population Year Population 1990 850,619 1991 874,516 1992 901,055 1993 931,671 1994 964,803 1995 1,001,054 1996 1,036,319 1997 1,067,953 1998 1,104,612 1999 1,146,050 2000 1,249,763 Source: U.S. Census Bureau

County Population Growth Growth 1990–2000 County 2000 Population (in percent)

Bastrop 57,733 50.9 Caldwell 32,194 37.6 Hays 97,589 48.7 Travis 812,280 40.9 Williamson 249,967 79.1

Source: U.S. Census Bureau

Area Cities With 10,000 or More Residents Growth 1990–2000 City 2000 Population (in percent)

Austin 656,562 32.8 Round Rock 61,136 93.7 San Marcos 34,733 19.5 Georgetown 28,339 75.8 Cedar Park 26,049 193.9 Taylor 13,575 18.7 Lockhart 11,615 23.7 Pflugerville 16,335 182.8

Source: U.S. Census Bureau

2 Texas Metropolitan Area Population Change, 1990–2000 (in percent)

Laredo 43.6 Amarillo 11.3 McAllen-Edinburg-Mission 38.3 Corpus Christi 10.4 Austin-San Marcos 34.7 Victoria 10.1 Brownsville-Harlingen-San Benito 25.8 Bryan-College Station 10.0 Dallas 22.0 Sherman-Denison 9.2 Brazoria County 21.7 Longview-Marshall 8.0 Houston 20.0 Waco 7.8 Fort Worth-Arlington 19.1 Odessa-Midland 7.5 San Antonio 17.9 Wichita Falls 4.9 El Paso 17.8 Beaumont-Port Arthur 4.2 Texas 17.6 San Angelo 4.1 Temple-Killeen 15.9 Abilene 2.5 Galveston-Texas City 13.8 Lubbock 2.3 Tyler 12.0 Texarkana 2.1

Source: U.S. Census Bureau

Austin MSA Projected Population Texas State Texas Water Year Data Center Development Board

2005 1,334,469 — 2010 1,543,248 1,492,776 2015 1,765,101 — 2020 2,013,283 1,925,526

Sources: Texas State Data Center and Texas Water Development Board

opulation in the Austin MSA in- rate than most of the surrounding and Georgetown. The Texas State Data creased 46.9 percent between counties’ populations from 1990 to Center predicts a 3.3 percent growth P 1990 and 2000, according to the 2000. Williamson County has had the rate per year through 2020. The Texas U.S. Census Bureau. The Travis highest percentage of growth, fueled Water Development Board predicts a County population grew at a slower by growth in Cedar Park, Round Rock growth rate of 2.7 percent per year.

3 Projected Population Growth, 2000–2020 (in percent)

70 60 50 40 30 61.1 20 40.2 10 0

Austin-San Marcos MSA Texas

Source: Texas State Data Center

Household Composition Austin MSA Texas

Median household size, 1990 2.58 2.73 Population younger than 18 (1999, in percent) 26.8 28.5 Population 65 and older (1999, in percent) 7.5 10.1

Source: U.S. Census Bureau

Ethnic Distribution (in percent) Austin MSA Texas Ethnicity 1990 2000 1990 2000

White 67.7 60.7 60.8 52.4 Hispanic 20.6 23.7 25.3 32.0 Black 9.1 7.7 11.7 11.3 Asian 2.2 3.5 0.3 2.7 American Indian 0.3 0.3 1.8 0.3 Other 0.1 0.1 0.1 0.1 Two or more races* — 2.6 — 2.0

* For the 2000 Census, the Census Bureau changed the “race” options, allowing people to report their race as “other” or as two or more races. Source: U.S. Census Bureau

4 he average household size in area was $31,794 for 1999, compared centage of Hispanic, black, Asian and Austin is smaller than the state with the state average of $26,834, ac- American Indians in the MSA has in- Taverage, in part because of the cording to the Bureau of Economic creased. The Hispanic population has large number of educational institu- Analysis. been growing at the fastest rate. tions and young professionals working Like Texas, Austin is becoming more in the MSA. Per capita income for the ethnically diverse. Since 1990, the per-

EMPLOYMENT

Austin MSA Employment 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Source: U.S. Bureau of Labor Statistics

Austin MSA Unemployment Rate (in percent) 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 May May May May May May Sept Sept Sept Sept Sept Sept January-96 January-97 January-98 January-99 January-00 January-01 January-95

Source: U.S. Bureau of Labor Statistics

5 Largest Employers Largest Private Employers

Dell Computer Corporation Dell Computer Corporation Personal computer systemsBergstrom Air Force Base,Personal Austin computer systems 20,800 employees 20,800 University of Texas Motorola, Inc. Education Microprocessors 20,211 employees 10,000 Motorola, Inc. H-E-B Grocery Company Microprocessors Grocery 10,000 employees 7,500 City of Austin Seton Healthcare Network Local government Medical care 10,000 employees 6,715 employees Austin Independent School District IBM Corporation Education Circuit cards, hardware and software 9,417 employees 6,000 employees H-E-B Grocery Company Advanced Micro Devices (AMD), Inc. Grocery Integrated circuit manufacturing 7,500 employees 4,600 employees Seton Healthcare Network Solectron Texas Medical care Electronic component manufacturing 6,715 employees 4,400 employees IBM Corporation Wal-Mart Stores Circuit cards, hardware and software Retail 6,000 employees 3,800 employees IRS/Austin Center Applied Materials, Inc. Income tax return processing Semiconductor-processing equipment 5,800 employees 3,149 employees

Sources: Greater Austin Chamber of Commerce

Employment Growth by Industry Austin-San Marcos MSA Texas

Employment growth, 2000 (in percent) 5.7 3.2 Unemployment rate, 2000 (in percent) 2.0 4.3 New jobs in 2000 36,600 288,900 Employment growth by sector, 2000 (in percent) Services 3.7 4.7 Trade 6.9 3.1 Manufacturing 6.2 0.1 Mining 15.4 2.3 Finance, insurance and real estate 0.3 1.3 Construction 5.9 6.2 Government 2.2 1.7 Transportation, communications and public utilities 5.3 5.1

Sources: Texas Workforce Commission

6 Texas Metropolitan Area Employment Change, 1990–2000 (in percent)

Austin-San Marcos 58.8 El Paso 15.4 Laredo 40.3 Waco 14.3 McAllen-Edinburg-Mission 35.8 Lubbock 14.0 Dallas 30.4 Sherman-Denison 12.5 Brownsville-Harlingen-San Benito 30.1 Longview-Marshall 12.2 Bryan-College Station 29.2 Abilene 11.4 Killeen-Temple 28.7 San Angelo 10.7 San Antonio 28.6 Corpus Christi 10.3 Fort Worth-Arlington 23.7 Galveston-Texas City 8.2 Texas 23.3 Wichita Falls 7.8 Tyler 22.9 Odessa-Midland 6.5 Victoria 22.4 Texarkana 4.5 Houston 22.1 Beaumont-Port Arthur 3.5 Amarillo 18.6 Brazoria County 2.3

Source: U.S. Bureau of Labor Statistics, February 2001

uring the last decade, Austin cording to the Texas Workforce Com- 721,882 for the year 2000. The MSA had the fastest employment mission (TWC). While the TWC esti- accounted for more than 12 percent of Dgrowth rate in the state, aver- mates total nonagricultural employ- new Texas jobs during 2000. Econo- aging 5.3 percent per year. Austin had ment in Austin MSA at 672,100 for mist Angelos Angelou predicts the the strongest growth rate in the state in 2000, the U.S. Bureau of Labor Statis- number of jobs in Austin will increase 2000, with 36,600 jobs created, ac- tics puts civilian employment at by 32,000 in 2001.

JOB MARKET

ntel is expected to open a chip XL Vision opened in Austin employ- additional 200 employees and Retro design plant downtown that will ing 200 at its medical diagnostics facil- Studios, Inc., a computer gaming firm Iemploy 2,000 people. National ity. Quidnunc Group opened in Austin and Crossroad Systems, Inc., a de- Computer Systems, Inc. opened a test employing 200. FreeMe.com opened signer and builder of storage routers, production and processing center with and employs 100. each hired 100. 150 employees and has the potential Charles Schwab is expanding its call ARM added 35 employees during to hire 150 more. Applied Science Fic- center, creating 600 more jobs. 2000 at its microprocessor design cen- tion and Lucent Technologies each Providian Financial Services is also ex- ter in Austin. brought 100 jobs to Austin. AT&T panding its call center and creating Lucent Technologies expanded its Wireless Service hired 125 people to 500 jobs. Prodigy Communications is division headquarters, adding 1,000 work in the company’s new 30,000- moving from New York to Austin and employees, according to the Texas De- square-foot call center. The Electric will provide approximately 200 jobs. partment of Economic Development. Reliability Council opened in August Applied Materials is expanding its National Instruments expanded, add- 2000, employing 130 at two centers in semiconductor center, adding 670 em- ing 330 employees. Tyco, a printed Austin. ployees. National Instruments hired an circuit board manufacturer, added 325

7 employees. Qwest Communications laying off 26 more. Rx.com laid off 20 ployees, representing 54 percent of its added 300 employees to its telecom- in April 2000. Vtel Corp, a videocon- workforce. Dell Computer cut 1,700 munications data center. PointOne ferencing company, laid off 75 em- jobs at its plants in Austin and Round Communications expanded, adding ployees in fall 2000. St. David's Health Rock. All State Corporation merged 175 employees. Sun Microsystems Care facility closed its medicenters in with Columbia Universal Life resulting added 100 employees in 2000. July, laying off 30 people. in the layoff of 80 employees. Sitestuff StorageProvider added 100 employees During January 2001, Motorola laid laid off 18 employees from its commer- to its data storage facility. off 100. Vignette, a software company, cial real estate buying service. In San Marcos, Wide Lite, a light fix- cut 15 percent of its workforce, laying Connect South closed in February ture company, expanded and added off 150 employees. Multek, a circuit 2001, laying off 230 employees. 225 employees. In Round Rock, Her- board manufacturer, cut 600 jobs. Drkoop.com closed its Austin branch, ring-Young Source One Technology’s Ibooks.com laid off 83 employees. laying off 45 in January 2001. All.com expansion added 15 employees. Other layoffs included Computer Sci- closed, laying off 70 employees. Living.com, an e-commerce pro- ences Corporation, 36; Liason Tech- In June 2001, Solectron laid off 600 vider of furniture, home furnishings nology, 15; Yclip, 33; Handtech.com, employees. Earlier in the year, 580 and accessories, laid off 50 employees 17; and Funds Xpress, 30. full-time and 480 temporary workers in 2000. Other e-commerce firms are In February 2001, Concero, an were laid off. 3M cut 100 jobs and Tril- laying off Austin employees as well. Internet services company, laid off 92 ogy cut 340 jobs in April 2001. CarOrder.com laid off 100 in spring employees. Janus Capital Corporation 2000 then closed in February 2001, laid off 219. Netpliance laid off 76 em-

MAJOR INDUSTRIES

he services sector dominates the boosted by local firms such as Applied accounted for almost 32 percent of re- Austin MSA, making up 28 per- Materials, Inc., the world’s largest ceipts. Feed crops, including corn, hay T cent of jobs. This sector added manufacturer of equipment for the and sorghum, accounted for 39.1 per- 15,300 jobs during 2000. Trade ac- industry. Ninety percent of the firm’s cent of agricultural receipts and cotton counts for 23 percent of the economy, products are made in Austin. totaled 21.6 percent. government 23 percent and manufac- Employment in the services sector According to the Texas Agricultural turing 13 percent. Trade, manufactur- grew by 8.2 percent in 2000. Mining, Extension Service, Bastrop County aging and government gained 9,800, which had no employment growth in ricultural receipts from 1997 through 5,000 and 3,000 jobs, respectively. 1999, gained 200 jobs in 2000, in- 2000 were dominated by beef cattle, Austin has industry clusters revolv- creasing employment by 15.4 percent. 49 percent, and hay, 33 percent. Travis ing around semiconductors and elec- The construction sector employed 5.9 County agriculture is dominated by tronics; computers, peripherals and percent more people. This growth has beef, representing 64 percent of all ag- software; multimedia; and biomedical been fueled by construction in all sec- ricultural receipts. industries. The concentration of these tors. In Hays County, beef cattle makes industries in one city facilitates buyer- Austin is home to several state and up only 15 percent of farm receipts, supplier relationships and makes firms federal government agencies, includ- while agriculturally related recreation more competitive. ing the Department of Health and the such as hunting accounts for 31 per- The Austin area is renowned for Department of Public Safety. The Inter- cent. Caldwell County is dominated by high-tech firms like Dell, IBM and nal Revenue Service is a major area poultry, with 56 percent of agricultural Solectron. Many smaller entrepreneur- employer that hires additional workers receipts, and beef, with 34 percent. ial software companies are located in to process forms during tax season. Williamson County produces primarily the city as well. The Texas Comptroller The University of Texas is another ma- beef and corn, representing 34 and 20 of Public Accounts reports that Austin jor employer. percent of agricultural receipts, respec- has 16 percent of the state’s high-tech Of the counties in the MSA, tively. employment. Williamson County receives the most The semiconductor industry is a sig- cash receipts from agriculture. Be- nificant employer in the community, tween 1994 and 1999, beef cattle

8 Total Agriculture Receipts, 2001 (projected)

County Total Receipts

Bastrop $56,899,000 Caldwell 46,212,000 Hays 30,573,000 Travis 50,273,000 Williamson 59,064,000

Source: Texas Agricultural Extension Service

BUSINESS CLIMATE

Tax Rates, 2000 Tax Rate per Tax Rate per Taxing Entity $100 Valuation Taxing Entity $100 Valuation

City of Austin $0.47 City of San Marcos $0.46 Austin ISD 1.55 San Marcos ISD 1.49 Austin Community College 0.05 Hays County 0.36 Travis County 0.47 Total $2.31 Total $2.54

Sources: Travis and Hays County Appraisal Districts

Austin MSA Retail Sales

Year Total Gross Sales Sales per Capita

1990 $6,654,598,169 $7,823 1991 7,147,466,441 8,173 1992 8,021,320,368 8,902 1993 8,832,142,670 9,480 1994 9,961,681,011 10,325 1995 10,910,789,589 10,898 1996 11,940,243,864 11,521 1997 13,336,331,406 12,487 1998 14,367,712,948 13,007 1999 15,704,287,983 13,703 2000* 12,902,555,445 State Average 1999 $12,332

*Through third quarter 2000 Source: Texas Comptroller’s Office

9 Exports to Selected Destinations –Austin-San Marcos MSA (in thousands) Market 1997 1998 1999 Percent of Trade

Canada $607,683 $720,543 $853,004 17.3 Mexico 111,992 154,760 285,349 5.8 Caribbean & Central America 17,224 27,068 24,778 0.5 South America 34,766 61,692 43,711 0.9 Europe 599,424 818,167 718,022 14.6 Asia 1,909,776 1,936,480 2,949,206 59.8 Africa 6,690 7,385 6,795 0.1 Near East 41,059 56,863 24,467 0.5 Australia 26,194 19,425 26,047 0.5 Total all Countries $3,354,809 $3,802,387 $4,931,432 100.0

Source: Office of Trade and Economic Analysis, International Trade Administration

Austin-San Marcos MSA Top Exports, 1999 (in thousands)

Product Export Value Percent

Electric and electronic equipment $3,038,364 61.6 Industrial machinery and computers 1,463,522 29.7 Scientific and measuring instruments 208,775 4.2 Nonmanufactured commodities 45,852 0.9 Chemical products 40,626 0.8 Transportation equipment 35,454 0.7

Source: Office of Trade and Economic Analysis, International Trade Administration

he hotel-motel tax rate in the ucts. Exports to China were up the which accounts for $1.4 billion in Austin area is 13 percent; the most from 1993 to 1999, rising 4,918 trade. T sales tax rate in the area is 8.25 percent from $2.2 million to $11.2 mil- Central Texas has nine foreign trade percent. lion. Austin has a free trade zone and zones (FTZ) totaling 1,390 acres. The Exports from the Austin MSA were exported $4.9 billion in products dur- majority of this land is adjacent to I-35 up 187 percent between 1993 and ing 1999, up from $3.8 billion in 1998, between Georgetown and San Marcos 1999. Since the North American Free according to the International Trade and has direct rail access. Merchan- Trade Agreement (NAFTA) was put in Administration. dise held in an FTZ is considered inter- place in January 1994, exports to Austin exports $2.9 billion in prod- national commerce and is not subject Canada and Mexico have increased ucts to Asia and $1.13 billion to to U.S. customs requirements. significantly. Since 1993, exports to NAFTA countries. Electric and elec- Venture capital is abundant in Aus- Canada have increased 188 percent tronic equipment, the largest export in- tin and has helped spur growth, espe- while exports to Mexico are up 749 dustry, accounts for $3.03 billion in cially in high-tech industries. A percent. Canada is the country to exports. The next largest sector is in- Pricewaterhouse Cooper survey found which Austin exports the most prod- dustrial machinery and computers, that 108 Austin companies received

10 $794 million in venture capital in especially southwest of the city, pre- Tourism brings $1.4 billion to Austin 1999. Through the third quarter of venting development in the Barton every year, according to the Austin 2000, 102 deals were made, totaling Springs Watershed, which funnels wa- Convention and Visitors Bureau. A ho- $1.24 billion. ter to the Edward’s Aquifer. A study tel study conducted by PKF Consulting Environmental consciousness is ro- performed by the engineering firm Bury found that 22 percent of people stayed bust in Austin. The development pro- & Pittman, Inc. found Austin’s devel- in Austin for leisure, compared to 18 cess is not easy. Strict guidelines ac- opment fees to be 20 to 120 percent percent in Houston and 12 percent in commodate environmental interests, higher than in other Texas cities. Dallas.

EDUCATION

Educational Level, Persons Age 25 and Older (in percent) Level of Education Austin MSA Texas

High school graduate 20.9 25.6 Some college, no degree 24.1 21.1 Associate’s degree 5.4 5.2 Bachelor’s degree 21.3 13.9 Graduate or professional degree 10.9 6.5

Source: U.S. Census Bureau

Local College and University Enrollment Fall 2005 2010 School 2000 (estimated) (estimated)

University of Texas 49,996 50,000 50,000 Austin Community College (ACC) 25,856 28,890 32,540 Southwest Texas State University 22,462 25,135 27,072 St. Edward’s University 3,824 N/A N/A Southwestern University 1,309 N/A N/A Concordia University 850 N/A N/A Huston-Tillotson College 602 N/A N/A

Sources: Educational institutions and the Texas Higher Education Coordinating Board, January 2001

everal private colleges and uni- Tillotson College and Southwestern pleted a new $52 million dorm and an versities are in the Austin MSA, University in Georgetown. Applied Computational and Engineer- Sincluding St. Edward’s Univer- The University of Texas, the nation’s ing Sciences Building costing approxi- sity, Concordia University, Huston- largest state university, has just com- mately $30 million. The $48.6 million

11 Sara M. and Charles E. Seay Psychol- foot general services building. The col- 2000. The university is also working ogy, Child Development and Family lege is proposing future construction of on several environmental projects on Relationships Building is expected to a health facility at the Eastview Cam- their property. One of these, the Texas open in fall 2001. The Connally Dis- pus and a high-tech facility at the River Center, is expected to begin con- pute Resolution Center, an addition to Northridge Campus. Both of these struction in 2001 at a cost of $14 to the UT law school, is scheduled to projects must be approved by voters $16 million. This project is in conjunc- open in 2001. UT Austin started under- and are expected to cost between $10 tion with the Texas Parks and Wildlife graduate degree programs in Jewish and $12 million. ACC also operates Department. The University added an studies and religious studies in fall seven centers outside of the taxing dis- undergraduate program in manufactur- 2000. The Harry Ransom Humanities trict, providing night courses in San ing engineering. Research Center will undergo a $13.7 Marcos, Bastrop, Round Rock, St. Edward’s University started a million renovation. Georgetown, Fredericksburg, master of liberal arts program in fall Austin Community College (ACC) Westwood and Hays County, all of 2000 and a master of science in orga- has six campus locations and the which are within the college’s eight- nization and leadership ethics in Highland Business Center within its county service area. spring 2001. The school broke ground taxing district, totaling 502,834 assign- Southwest Texas State University on a new dormitory facility and a new able square feet. ACC is planning the broke ground on a $43 million art- classroom building during 2000. construction of a new 45,000-square- technology-physics building in August

TRANSPORTATION AND INFRASTRUCTURE ISSUES

Austin Airline Boardings 1998 1999 2000

Austin Airline Boardings Robert Mueller Airport and Austin-Bergstrom International Airport 3,037,566 3,292,399 3,737,168 Airport Cargo Statistics (in pounds) Austin-Bergstrom International 239,780,675 276,263,260 357,327,469

Source: Austin-Bergstrom International Airport

n May 1999, Austin-Bergstrom In- with Robert Mueller’s 7,269-foot run- State Highway 130 will run from ternational Airport opened and way. Overseas flights can now leave Georgetown to Seguin, east of Austin, IRobert Mueller Municipal Airport directly from Austin as the runways and should help alleviate congestion was closed. The new airport was built can accommodate all types of aircraft. on I-35. at a cost of $690 million. Austin- A $300,000 statue memorializing Bar- Travis County has approved a $28 Bergstrom International is served by bara Jordan is expected to be com- million bond measure to contribute to ten passenger carriers, including Air pleted in 2002 and will be displayed at four state highway projects, including Canada, which began service in June the airport. improvement of U.S. 290. The City of 2000. Vanguard Airlines began service Austin is served by I-35, U.S. High- Austin is constructing a new pedes- to Kansas City in January 2001. Carri- ways 290 and 183 and Texas High- trian-bicycle bridge over Town Lake. ers offer nonstop flights to 36 destina- ways Loop 1 and Loop 360. Commute The bridge will connect Lamar Boule- tions. times in Austin average 15 to 20 min- vard and Riverside Drive. Construction The new airport’s runways are utes, according to the Greater Austin started in May 2000 and was expected 12,250 and 9,000 feet long, compared Chamber of Commerce. Proposed to be completed in May 2001.

12 The City of Round Rock is designing senger service to Austin. Capital Construction of a fourth plant is not ex- an interchange at U.S. 79. AW Grimes Metro, Austin’s public transportation, pected until 2017. Water supplies are Boulevard will have a railroad under- is funded by a one-cent sales tax. Toll adequate to meet the city’s needs pass. Construction will be completed road and light rail studies have been through 2050, according to the State in summer 2001 on several streets in- performed. In November 2000, Austin Water Plan. The Edwards Aquifer pro- cluding Forest Creek, Double Creek voters decided against a proposed light vides water to 45,000 people in the and South Mays. Streets completed in rail line. area. spring 2001 included Lakeview Cove Austin’s five-year utility plan pre- At present, San Marcos gets its water and Park Valley Drive. dicts that electricity consumption will from the Edwards Aquifer and Canyon The City of San Marcos plans to ex- rise by 20 percent. To meet future Lake. The City of San Marcos, in an ef- tend Wonder World Drive and will needs, a 100-megawatt peak plant is fort to conserve the Edwards Aquifer, is add a railroad overpass late in 2001. scheduled to open in 2002, costing developing surface water resources. Holland Street is currently being re- $40 million; a 230-megawatt peak The first phase of the 50-year surface constructed and should be completed plant is slated to open in 2003 at a cost water treatment program, a plant to in September 2001. Bishop Street was of $99.6 million, and a second 100- treat six million gallons of water per straightened in spring 2001. megawatt peak plant is set to open in day, will be completed by 2010. The The City of Georgetown is extending 2005. city is also seeking rights to water from Holly Street north from 3rd Street to South of San Marcos, in Hays the San Marcos River. College Street. Construction was ex- County, a 1,100-megawatt power The City of Georgetown opened the pected to be completed in April 2001. plant should open in 2001. The $350 Southside Water Treatment Plant in Construction is underway on 7th and 8th million property will employ 27 after July 2000. The plant on South Austin streets. These streets are being ex- providing construction jobs for 500. A Avenue is the third plant for the city tended from the railroad tracks by 500-megawatt plant will be completed and is capable of treating as much as Southwestern University to the IOOF during summer 2001 in Bastrop three million gallons of water per day. Cemetery. County. Rail service is provided by George- The City of Austin receives all of its town Railroad and the Longhorn Rail- water from the Colorado River. The way Company. Amtrak provides pas- water is treated at one of three plants.

PUBLIC FACILITIES

ustin is building a new $37 more than 60 percent of the center’s Construction on the $89 million million, 115,000-square-foot events represent repeat business. Long Center for Performing Arts will A city hall and office complex In October 2000, the Austin Police begin in June 2002 with completion downtown on Second Street. Carter- Department opened a temporary Cen- set for fall 2004. Burgess, Inc., has been hired to de- tral East Area Command substation. In Round Rock, several public velop the plan for the City Hall and The facility is located on Wilshire Bou- projects are under way. Construction is Public Plaza. The development will in- levard in the former FAA building at expected to start in summer 2001 on a clude a retail project and three levels the old Robert Mueller Airport. Con- building maintenance and storage fa- of underground parking. Construction struction on a new Central East substa- cility. A new municipal office building is scheduled to begin in early 2002 tion and forensic science center on will break ground in 2001. A public and continue for 18 months. The un- Springdale Road is expected to begin works annex building is planned. City derground parking garage was to break during 2001 with completion in spring hall completed a remodeling project in ground in April 2001. 2003. In January 2000, the $2.2 mil- February 2001. During 2000, the Dell The Austin Convention Center is lion Oak Hill fire station opened on Diamond stadium opened for the currently undergoing an expansion Highway 71. Round Rock Express, an AA baseball that will more than double its size to The City of Austin plans to build a team. 881,400 square feet. The $110 million community events center and parking In San Marcos, the central station for expansion is being funded through an facility on Town Lake. The $40 million the fire department is under renova- increase in the hotel-motel occupancy project is expected to be completed in tion. Hunter Road fire station is ex- tax passed in May 1998. Currently, May 2002. pected to be completed in November

13 2001. Construction on a new animal 500 acres, including Zilker Park, Colo- The Austin area has 15 public school shelter is slated to begin in spring rado River Park and Slaughter Creek. districts and more than 60 private 2001. Downtown is undergoing a Austin also has several museums, schools serving students from kinder- streetscape project that will be com- sculpture gardens and recreational fa- garten through 12th grade. Local vot- pleted in March 2002. cilities. The Dougherty School of Art ers approved a 1996 school bond In Georgetown, construction was has an 1,800-square-foot art gallery. package of $369 million to renovate completed in early 2001 on a new Austin has many public buildings, and build 11 new schools by 2001 and downtown parking lot at Main and 6th including the state capitol building, to develop learning environments streets. the tallest in the country, and historic geared to preparing students for the in- The Austin MSA has a number of buildings like the Texas Governor’s creasing technological challenges of metropolitan parks ranging from 200 to Mansion and the General Land Office. the 21st century.

URBAN GROWTH PATTERNS

Retail I 35 Multifamily Office Multifamily US 183 Office Multifamily Retail Industrial SH 1

Office US 290 SH 360

Office

Mixed US 183 Use

SH 1 US 290 Multifamily Retail Retail Map 1. Growth Areas Office US 71 Austin, Texas Census Place I 35 Industrial Water Area Highway Interstate Highway Source: Real Estate Center at Texas A&M University

ap 1 shows Austin’s major fice development has been occurring lent in the north and in the southwest, growth corridors. The major- primarily in the northwest and south- according to the City of Austin’s plan- M ity of Austin MSA growth is west, with the largest developments ning department. taking place northwest of downtown occurring along MoPac (Loop 1) and Austin has developed a smart- and north along I-35 in Round Rock Parmer Lane. growth plan to encourage infill and and Georgetown. Southwest Austin is Apartment growth has flourished more concentrated developments and also growing. Retail development has along the southern portion of MoPac. to redirect the city’s growth away from been strong in northwest Austin. Of- Residential expansion is most preva- the environmentally sensitive west.

14 HOUSING

Housing Affordability – First Quarter 2001

Percent of Households THAI for That Can Afford First-time Median-priced Home THAI* Homebuyers

Austin 57 1.20 0.88 San Marcos 61 1.36 0.90

*The THAI is the ratio of median household income to the income required to buy the median-priced home using currently available mortgage financing. Standard financing is a 30-year loan covering 80 percent of the cost of the home. A THAI of 1.00 indicates that the median household income is just enough to qualify for a loan sufficient to purchase the median-priced home. Source: Real Estate Center at Texas A&M University

Austin MSA Single-family Permits

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000

Source: U.S. Census Bureau

15 Average Sales Price of Single-family Home, Austin Area $250,000

$200,000

$150,000

$100,000

$50,000

$0 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Source: Real Estate Center at Texas A&M University

Single-family Home Sales Volume, Austin MLS

2,500

2,000

1,500

1,000

500

0 May July April June March August January October February November December September

1998 1999 2000

Source: Real Estate Center at Texas A&M University

16 Price Distribution of MLS Homes Sold in Austin, 2000 (in percent) Price Range 1997 1998 1999 2000

$59,999 or less 6.9 5.7 4.1 2.6 60,000–79,999 12.7 11.3 8.3 4.2 80,000–99,999 21.4 20.0 18.5 11.4 100,000–119,999 14.2 14.7 14.8 15.0 120,000–139,999 10.5 11.3 12.8 13.2 140,000–159,999 7.5 8.1 8.7 10.4 160,000–179,999 6.4 6.6 6.5 8.0 180,000–199,999 4.4 4.5 4.9 6.1 200,000–249,999 6.9 7.3 8.0 10.1 250,000–299,999 3.5 3.8 5.1 6.3 300,000 and more 5.6 6.8 8.3 12.7

Source: Real Estate Center at Texas A&M University

he number of homes reported Waterford on Lake Travis has 134 lots. In Hutto, 3,500 new homes are be- sold through the Austin Multiple Seven Oaks is a 104-lot subdivision ing built or are in the platting stages. T Listing Service (MLS) fell from being planned near the Village of Bee This is a large number of homes for a 18,112 in 1999 to 17,520 in 2000. The Cave, located west of Austin where farming community with a current average price of homes reported sold Texas 71, FM 620 and Bee Caves Road population of approximately 1,500. through the MLS was $194,200 in converge. Two major residential de- North of Hutto, in Jonah, a 323-acre, 2000. New and existing home prices velopments are already under devel- 44-lot subdivision, Heritage on the San in Austin are on an upward trend with opment in the area. Spring Creek is a Gabriel, is expected to be one of price distributions showing the largest 1,272-lot subdivision on 1,044 acres. Williamson County’s most expensive percentage increases in homes costing The second planned subdivision is a subdivisions. more than $250,000. About 30 percent 980-acre development with larger lots, Plans are also being made for devel- of single-family homes sold for more ranging from .5 to 6.8 acres. Berdoll opment of the C-7 Ranch near George- than $200,000 in the Austin MSA in Farms is a new subdivision coming up town and the Avery Ranch between 2000. near Emma Long Metropolitan Park. At Leander, Round Rock and Cedar Park. Austin had a 2.4-month inventory of present, 378 lots have been permitted Golf courses are expected to be among unsold existing homes in 2000, while on 81 acres. amenities offered. Avery Ranch will be San Marcos had an inventory of 6.7 South of Austin, developers are a planned unit development with months. The total number of homes working to construct Briarcreek, a 4,000 to 5,000 homes. In 2000, per- sold in Austin in 2000 was 17,520, 172-acre subdivision with 1,193 lots mits have been issued for 1,339 lots to while 332 homes sold in San Marcos near I-35. In southwest Austin, the be developed in Avery Ranch. last year. 230-lot Travis County West subdivi- Leander is another growing commu- During 2000, 13,045 new homes sion is being planned. nity. Population and Survey Analysts were permitted in the Austin MSA In northeast Austin, the Circle C predicts 28,962 housing and apart- compared with 11,704 in 1999. The Ranch subdivision near Hwy 183 will ment starts over the next ten years. This average value of a new home in 2000 have 139 lots on 20 acres. Closer to growth is expected to be especially was $127,500. During first quarter downtown in north Austin, Barker strong south of FM 1431 and near 2001, 1,856 new homes were permit- Ranch is a new subdivision near Steiner Ranch off FM 620. An 1,100- ted. MoPac; it has 173 lots on 95 acres. acre residential community has been The City of Austin is revising a plan Hillcrest is another subdivision on announced. Permits have been issued outlining future development of the Manchaca Rd; it will have 196 lots. for development of 455 lots on 646.5 719-acre former Robert Mueller Air- Round Rock has recently issued per- acres. port, located near downtown. The plan mits for a number of subdivisions such In Pflugerville, 1,800 homes are for a mixed-use and residential devel- as Forest Creek, Chandler Creek and planned in Falcon Pointe. Lots will be opment was completed in May 2000. Sonoma, totaling more than 100 acres available by the end of 2001. Home In West Austin, subdivisions are be- of single-family residential develop- prices will average $150,000. ing developed around Lake Travis. ment.

17 New Subdivisions in Austin

Name Location No. of Lots Acres

Briarcreek Blake-Manor Rd. at Taylor Lane 1,193 172.4 Avery Ranch Far West W. Parmer Lane 868 191 Avery South Parmer Lane 471 156.93 Steiner Ranch (Phases 1, 2) N. Quinlan Park Rd. 455 646.54 Berdoll Farms (Phases I, II) Pearce Lane 378 81.52 Travis Country West Southwest Pkwy. at Sunset Ridge 230 47.67 Gaston/Sheldon Subdivision Dessau Rd. at Greg Lane 229 34.95 Hillcrest (Sections 3, 4) Manchaca Rd. 196 31.72 Village at Western Oaks La Cresada Dr. at Beckett Rd. 178 69.41 (Sections 15, 24A, 23A) Barker Ranch at Shady Hollow Brodie Ln. at Frate-Barker Rd. 173 95.59 Circle C Ranch Hibiscus Dr. 139 20.9 Waterford on Lake Travis Lohman Ford Rd. at Ivean Pearson Rd. 134 207.75 Hielsher Walebridge Lane 132 46.63 Laurelwood Estates Manchaca Rd. at Dittmar Rd. W 132 20.59 Austin Estates FM 973 Rd. 122 41.33 Springfield Colton-Bluff Springs Rd. 107 26.38 Seven Oaks (Sections 2, 5) FM 2244 Rd. 104 139.42 Colonial Trails Colonial Park Blvd at Shelby Lane 103 16.57 Stablewood at Slaughter Creek W FM 1626 Rd. 93 26.82 Sarah’s Creek South Wells Branch Pkwy. at FM 1825 Rd. 92 10.43 Saddlewood Estates Old Manchaca Rd. at Marchitah’s Way 91 14.42 Settler’s Meadow 400 Olympic Drive 90 18.9 Speyside Boyce Lane at Harris Branch Pkwy. 87 18.59 Pioneer Crossing E Dessau Rd. at Peyton Fallas Dr. 85 16.53 Hillcrest Manchaca Rd. 82 12.55 Scofield Farms W. Howard Lane at Metric Blvd. 72 11.95 Gaines Ranch Travis Country Cir. 62 82.93 Deer Haven Deer Lane 58 12.15 Regents Southwest Pkwy. at Foster Ranch Rd. 55 54.8 WindingTrails N FM 973 Rd. at Trailsdie Estates Blvd. 54 127.72 Brodie Springs Brodie Lane at Squirrel Hwy. 52 21.55 Vista Ridge PUD Valburn Dr. 51 51.07 Grandview Hills Davis Mountain Pass 49 10.54 Senna Hills Senna Hill Dr. at Acacia Bud Dr. 49 21.3 Grand View Hills Cloud Mountain Crossing at Castle Peak Trail 40 9.5 Canyon Rim West Rim Dr. 40 10.06

Source: City of Austin

18 MULTIFAMILY

Austin MSA Multifamily Building Permits

18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000

Source: U.S. Census Bureau

Austin Apartment Occupancy Rate, December 2000 Texas Metro Austin Average

Average rent per square foot $0.95 $0.75 Average rent for units built since 1990 $1.05 $0.96 Average occupancy (in percent) 97.6 95.7 Average occupancy for units built since 1990 (in percent) 97.3 95.4

Source: Apartment MarketData Research

19 Planned Apartments, Austin January 2001

Projects with Approved Site Plans Number of Units

Forest Hills 192 Lost Canyon 29 Mansions at Canyon Creek 332 Plaza Lofts 53 Spicewood Condominiums 22 Spring Valley 230 Spyglass Condominiums 34 St. Elmo Condominiums 45 Stoneleigh at Gracy Farms 168 The Retreat at Anderson Mill 137

Under Construction Plaza Lofts 53 Southwest Trails 160

Completed AMLI at Monterrey Oaks 390 Archstone One at Canyon Creek 444 Mission Hills 346 Mountain Ranch 406 Townhomes of Wellwood 84

Source: City of Austin Department of Planning

ustin has one of the tightest construction start dates in 2001. Map 2 North Lamar will be completed in fall apartment markets in the state, shows the locations of multifamily per- 2001; it includes 15,000 square feet of A averaging more than 97 permits issued in 2000. retail space on the ground floor and a cent occupancy. High occupancy rates During November and December pool and health spa on the second and increasing rents have led to more 2000, the City of Austin received site floor. 54 Rainey Place has 76 units and apartment construction. A total of plans for eight new multifamily will also be completed in 2001. The 8,064 building permits were issued in projects. A cluster is emerging in south condominiums are priced from 2000 compared with 7,849 in 1999. In Austin on Slaughter Lane. Swanson’s $250,000 to $2 million. the first quarter of 2001, 1,381 new Cross will have 348 units. A develop- Plaza Lofts is located at Guadalupe multifamily building permits were is- ment by Fairfield will have 875 units at and West Fifth Streets. The 55-unit sued, according to the U.S. Census Bu- Slaughter Creek east of I-35. Fort project has units priced from $200,000 reau. Branch Landing will have 250 units in to $3 million and will be completed in A total of 6,268 units were com- east Austin on Ed Bluestein Boulevard. fall 2001. The Residences at the Four pleted in 2000, continuing to reflect a In Northwest Austin, Montandon Oaks Seasons has 112 planned units. The shortage of inventory as occupancy will have 146 units at FM 2222 and FM project is located at San Jacinto and rates remain high and rental rates in- 620. Escalon at Canyon Creek with Cesar Chavez and has units priced crease. Six new projects were com- 568 units will be in the same area. from $400,000 to $1.5 million. The pleted in fourth quarter 2000, totaling A 243-unit apartment complex, project is expected to be completed in 2,255 units. At the end of fourth quar- West Avenue Lofts, was completed in May 2002. ter 2000, 13,435 apartments were un- fall 2000. The $21 million project is The Triangle project, a development der construction in 47 projects, ac- along Shoal Creek. The Nokonah is a located between West Guadalupe, 45th cording to Austin Investor Interests. 99-unit condominium project with Street and Lamar Boulevard, is under Forthcoming development includes units priced from $200,000 to $3 mil- new ownership. The project, originally more than 13,000 units with expected lion. The project at Ninth Street and marketed as a retail development, will

20 consist of 600 apartment units, Spraddle Creek Apartments and units, are being constructed near Lake 180,000 square feet of retail-office Alexan at Rattan Heights are two de- Travis. Southwest Trails is under con- space and a four-acre park. velopments that opened in 2000. struction on Fletcher Lane. The Ter- Spring Valley Townhomes, a 230- Jefferson Center with 652 units is also race, another apartment project under unit complex, received federal housing approved for construction on Parmer way at Cedar Park, will have 251 units. tax credits from the Texas Department Lane. Seven projects totaling 3,700 In southwest Austin, Lantana Apart- of Housing and Community Affairs to units are planned over the next several ments, a 403-unit complex, is under build affordable housing. The project years in Round Rock, the majority of construction at Rialto Boulevard and is on East William Cannon Drive. which will be east of Dell Computer, Terravista Drive. The project should be Parmer Lane in north Austin is see- along Louis Henna Boulevard. completed in fall 2002. ing apartment growth as is the City of In northwest Austin, Jefferson Can- Round Rock. On Parmer Lane, yon and Jefferson Lakes, totaling 549

I 35 US 183 SH 1

US 290 SH 360

US 183 SH 1 US 290 Map 2. Multifamily Building Permits, 2000 Austin, Texas Census Place Water Area US 71 Highway I 35 Interstate Highway Multifamily Source: Austin Building Permit Office

21 MANUFACTURED HOUSING

Austin MSA Manufactured Home Sales Proportion of New Manufactured Single-family Homes Homes Sold (in percent)

1997 2,628 23.7 1998 2,402 18.2 1999 2,419 17.1 2000* 2,843 24.92

*Through third quarter 2000 Source: Texas Manufactured Housing Association

he majority of manufactured River Ridge, a 490-pad project in south square feet, excluding the cost of land, home subdivisions are outside Austin on Slaughter Lane. according to the Manufactured Hous- T the city in places like Buda and Manufactured homes are increasing Institute. The median income of Pflugerville. One of the area’s largest ingly popular because of their improv- manufactured home owners is developers of manufactured homes is ing image and affordability. For an av- $24,500. Sun Communities, Inc., which is de- erage price of $37,500, an individual veloping several projects, including can purchase a home averaging 1,380

SENIORS HOUSING

he Texas State Data Center esti- The Summit assisted-living commu- apartments and a 20-bed Alzheimer’s mates that 10 percent of the nity on Mesa Drive opened in August unit to its existing facility. T Austin MSA’s population is age 2000. The community has 122 units. An article in the Austin Business 60 and older and that this group will Sun City Texas in Georgetown is the Journal reports there are approximately grow to 17 percent of the population largest residential development geared 30 apartment-style facilities for seniors by 2030. Austin’s high quality of life toward seniors in the area and has the in the Austin area. The federal govern- and strong amenity base are attractive potential for 9,500 homes. The devel- ment announced in October 2000 to retirees and to senior housing development sold 233 homes during 2000, $3.8 million in funds to provide afford- opers. according to Sun City. able local housing for seniors. The first According to the Texas Department Bethany Estates, a $32 million hous- housing complex of the smart housing of Human Services, Austin has 45 as- ing community for seniors, has con- initiatives will be built on Oak Springs sisted-living facilities with 1,636 beds. tinuing-care facilities and planned to Road and will have 55 one-bedroom The American Seniors Housing Asso- open in spring 2001. The Summit at apartments and an on-site manager’s ciation reports that Austin has a 61 per- Westlake Hills is adding 150 indepen- apartment. cent occupancy rate for assisted-living dent living units, 50 assisted-living facilities.

22 RETAIL MARKET

Retail Property Statistics Austin Area Market 1998 1999 2000

Total space (in square feet) 13,958,132 14,563,469 15,678,458 Occupancy (in percent) 93.49 94.83 95.77 Base rental rate 50,000–100,000 square feet $1.21 $1.25 $1.36 Base rental rate more than 100,000 square feet $1.40 $1.44 $1.57

Source: NAI/Commercial Industrial Properties Co. The Source

Retail Property Statistics, Submarkets Square Feet Absorbed Six Months Ending Percent of Total Square December 31, Occupancy Submarket Total Market Feet* 2000 (in percent)

Arboretum 9.9 1,567,866 14,595 95.67 Central 3.7 593,563 (590) 97.83 Cedar Park 1.4 223,928 (1,579) 91.76 East 6.4 1,022,514 18,625 94.86 Far North 6.3 1,000,263 13,657 97.58 Far Northwest 14.1 2,231,203 19,313 98.06 North 14.8 2,350,394 63,727 95.38 Northeast 0.4 68,550 (900) 98.69 Northwest 0.3 50,000 (1,200) 92.60 Pflugerville 2 318,932 88,068 95.00 Round Rock 10.3 1,642,854 (3512) 93.41 South Central 12.7 2,009,713 24,863 95.09 Southeast 2 317,606 27,980 98.88 Southwest 11 1,744,869 63,404 96.11 West 4.6 736,203 36,932 93.88 Total 100 15,678,458 363,383 95.77

* Tracked centers larger than 50,000 square feet excluding regional malls and owner-occupied, freestanding buildings. Source: NAI/Commercial Industrial Properties Co. The Source

23 Hotel Occupancy and Rental Rates 1998 1999 2000

Central business district Occupancy rate (in percent) 72.6 72.5 80.1 Average daily rental rate $119.65 $129.44 $134.97 North Austin Occupancy rate (in percent) 69.0 66.3 70.8 Average daily rental rate $70.29 $72.26 $73.73 Northwest Austin Occupancy rate (in percent) 75.2 73.4 76.9 Average daily rental rate $85.23 $85.09 $96.67 South Austin/Airport Occupancy rate (in percent) 73.0 73.6 79.5 Average daily rental rate $79.24 $78.54 $80.65 Austin Totals Occupancy rate (in percent) 71.4 70.2 75.8 Average daily rental rate $87.36 $91.60 $95.90 Texas Totals Occupancy rate (in percent) 66.6 63.7 67.2 Average daily rental rate $82.43 $85.11 $86.75

Source: PKF Consulting

ustin’s retail market ended residential building boom of the late opening of Austin-Bergstrom Interna- 2000 on a high note with an 1990s. Sixth Street Market and Tri- tional Airport. Five hotels were com- A overall occupancy of nearly angle projects are two large mixed-use pleted in South Austin during 1999. 95.8 percent, according to NAI/Com- developments planned in the near fu- Two more were completed in 2000 mercial Industrial Properties Com- ture. and another will be completed in pany. The high occupancy rates kept During the first three quarters of 2001. These new hotels will add 1,175 rental rates high. The average rental 2000, $36.8 million in construction new rooms to the submarket. A lack of rate for centers of more than 50,000 started on 559,751 square feet of com- nearby retail businesses and stiff com- square feet rose by 9 percent during mercial space. New commercial space petition in the area may prevent the 2000. cost an average of $51 per square foot airport submarket from reaching high Austin’s retail market grew by more to construct during third quarter 2000, occupancy levels. than one million square feet in 2000. according to the City of Austin. Map 3 In southwest Austin, a 126-room ho- Much of this space resulted from the shows the locations of retail building tel is planned between I-35 and South opening of La Frontera at I-35 and FM permits for Austin in 2000. Congress. Surrounding development 1325 in Round Rock and the Stassney will include four restaurants, apart- Heights Shopping Center at I-35 and Hotels-Motels ments and a commercial building. Stassney Lane. La Frontera is a master- Austin’s hotel occupancy is nearly 5 Barton Creek Resort is adding 138 planned development that includes percent higher than that of other major rooms and 11,000 square feet of ball- 800,000 square feet of retail space; it is Texas cities according to a study con- room and meeting space at a cost of the largest nonmall retail center in the ducted by PKF Consulting. New con- $47 million. In Round Rock, a 96-room Austin area and has eight restaurants. struction may change this. An 800- Residence Inn opened. A 300-room The development also has two mid- room hotel is scheduled to open by Marriott will be constructed in Round rise office buildings and a hotel. June 2002 near the convention center Rock as part of the La Frontera devel- Grocery-anchored neighborhood downtown. A new five-story hotel will opment. strip centers also contributed to the in- go up on Riverside Drive and another A Springhill Suites by Marriott is crease in retail space. There were also new hotel is planned on I-35. planned for I-35 and Parmer in Austin. a number of freestanding “box” devel- The PKF Consulting study found that An 800-room, 26-story city-owned opments in the retail market. The retail hotel construction in Austin has shifted convention center hotel is planned. market is slated to continue growing from northwest to south Austin, prima- The $225 million hotel broke ground because of the demand created by the rily to meet the demand created by the in late 2000.

24 Permits have been issued for two ad- In north Austin two 15,000-square- Greenlawn Crossing is a planned ditional hotels: a $25 million hotel in foot Walgreens stores are proposed on shopping center in Round Rock. H-E-B north Austin and a five-story hotel on Parmer Lane and Braker Lane, and an will anchor the 112,500-square-foot Riverside Drive in southeast Austin. Albertsons is proposed along I-35. center at Louis Henna and Greenlawn Also on Braker Lane, Discount Tire Boulevards. Retail Developments built a new store. Haverty’s is building In Georgetown, at San Gabriel Vil- The Texas Restaurant Association a $3.5 million store on Pecan Park lage, a Chili’s, Applebee’s and Luby’s projects that Austin will have the Boulevard. Cafeteria have already opened. The state’s fastest growing restaurant mar- H-E-B built a store and strip center 52-acre commercial development also ket during 2001. Sales are expected to just east of downtown Pflugerville and has a Holiday Inn Express and a 180- surpass $26.4 billion, with a growth also is planning to open a store in unit apartment complex called The rate of 13 percent, nearly 7 percent Buda, on I-35. An H-E-B is under con- Water’s Edge. Texas Heritage Bank, a higher than that of 2000. struction at Brodie and William Can- local independent bank, opened a A new Wendy’s at 41st Street, a new non in southwest Austin. branch in Georgetown and has plans Chick Fil-A on U.S. 290, Krispy Kreme A 75,000-square-foot storage facility for future area expansion. Donuts at Research Boulevard and a has been built on I-35 at Slaughter In the Cedar Park area, Homestead, new fast food restaurant on Slaughter Lane in south Austin. Sunset Valley the most recent retail development, is Lane are scheduled to open in 2001. Village was built in 1999 at Brodie completely leased to companies like Jack in the Box constructed a restau- Lane and U.S. 290 West. The 245,000- Barnes & Noble, Pier 1 Imports and rant on Ben White Boulevard. square-foot retail center includes Paul’s Home Fashions. There is also a Texas Land & Cattle Company is Barnes & Noble, CompUSA, Linens N’ new Lowe’s in the area. completing a restaurant on South I-35. Things, Michael’s, Petco, Kinko’s and Home Depot's Expo Design Center Higher-end restaurant clusters are pre- Old Navy. is planned for South Austin at Brodie dicted for southwest Austin, especially Retail development has been strong Lane. Kohl's is building three stores in with improved transportation routes to in Williamson County. The most no- Austin that will open in October. places like Oak Hill. ticeable retail development has taken In Buda, at I-35 and Loop 4, a new Downtown, Kaya Blue on Sixth place in Cedar Park at FM 620 and shopping center anchored by H-E-B is opened in August 2000, while ASTI Highway 183 and along the I-35 corri- planned. Trattoria & Wine Bar opened in Hyde dor, both in Round Rock at FM 1325 Park and two new Antonio’s Tex-Mex and in San Gabriel Village in restaurants were added to Austin’s list Georgetown. of dining places.

I 35

US 183 SH 1 US 290 SH 360

SH 1 US 290 US 183 Map 3. Retail Building Permits, 2000 Austin, Texas Census Place I 35 US 71 Water Area Highway Interstate Highway Retail Source: Austin Building Permit Office

25 OFFICE MARKET

Austin Office Market Absorption (in square feet)

2,500,000

2,000,000

1,500,000

1,000,000

500,000

0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Source: Colliers Oxford Commercial Research Services

Austin Office Market Fourth Quarter 1997 1998 1999 2000

Central business district Average rent per square foot $18.17 $21.25 $22.66 $30.05 Occupancy (in percent) 90.9 94.7 95.5 97.0 Suburban Average rent per square foot $17.09 $20.85 $22.04 $25.44 Occupancy (in percent) 97.1 92.8 91.8 95.8 City-Wide Average rent per square foot $17.65 $20.95 $22.15 $26.32 Occupancy (in percent) 94.7 93.4 92.9 95.3

Source: Colliers Oxford Commercial

26 Office Submarkets, End of Year 2000 Overall Weighted Inventory Vacancy Rate Average Submarket (square feet) (in percent) Rental Rate

Central business district 7,061,339 3.0 $32.66 North 2,632,956 7.0 22.42 Northeast 1,938,166 2.0 20.33 Northwest 10,180,428 2.0 28.45 South 1,464,669 6.0 20.84 Southeast 233,985 1.0 21.45 Southwest 4,644,128 1.0 27.67 Citywide Total 28,155,671 3.0 $27.83

Source: NAI/Commercial Industrial Properties Co. The Source

I 35

US 183 SH 1 US 290 SH 360 US 183 SH 1 Map 4. Office Building Permits, 2000 US 290 Austin, Texas Census Place US 71 Water Area I 35 Highway Interstate Highway Office Source: Austin Building Permit Office

olliers Oxford Commercial, Inc., contains more than one-third of the of- mitted. Map 4 shows the location of estimates that 1.1 million fice market, with 2.2 million square office building permits issued in 2000. Csquare feet of office space came feet absorbed during 2000. At the end of 2000, more than 3.4 on the Austin market in 2000. Austin’s According to the City of Austin the million square feet had been absorbed office market now consists of more average construction cost per square overall in Austin, the highest annual than 28 million square feet. The major- foot of office space was $39 in the absorption in 20 years. Class A build- ity of the new space is located in the third quarter of 2000. During the first ing space in downtown has a 97.5 per- northwest and southwest submarkets, three quarters of 2000, $267 million in cent occupancy rate with average rents meaning that the northwest submarket office projects totaling 6.4 million of $30.10 for the first quarter of 2000, now has more space than the central square feet of office space were per- according to Colliers Oxford. business district. The northwest sector

27 Occupancy rates are down 0.9 per- other single-story, 45,000-square-foot project. The second tower is under cent. NAI/CIP predicts about 950,000 office building is planned on Research construction. An Austin development square feet of new construction by Boulevard. firm, Sage Land Co. plans to build mid-2001, with 87 percent currently Lend Lease Real Estate Investments Hartland Plaza, which will contain preleased. About 3.5 million square and Lincoln Property Co. have joined 125,000-square-foot of office space feet is expected to be available by to build a speculative office building near MoPac Expressway and Fifth year-end 2001. on Loop 360 near Bee Caves Road. Street. Partnerware, Inc., tripled its In the north, Parmer@Mopac is a The 160,000-square-foot building will space when it moved into 17,000 new type of office building with complement Las Cimas I, which was square feet at Wells Fargo Tower, for- 58,000 square feet of space being pro- also purchased by the partnership. The merly First State Bank. College Hire, moted to smaller technology tenants partnership may build a third phase at Inc., also moved downtown near Sixth who may only need 5,000 to 15,000 the site. Street. square feet. The building has two sto- In Round Rock, construction has be- Hutto Exchange, an office and retail ries and provides wider, shallower bay gun on 200,000 square feet of office project, will consist of eight one-story depths, along with a lower parking ra- space on 17 acres in the La Frontera buildings totaling 68,830 square feet. tio of one parking space to every 200 project. It will be located on a ten-acre tract square feet of office space, and is In downtown Austin, a new office eight miles east of I-35 on Highway 79 equipped with optic infrastructure and building is under construction on West just east of Round Rock. The City of high-capacity electrical systems. Sixth Street. The 23-story, 440,000- Hutto’s town hall will move into one of Parmer Business Park has 151,407 square-foot project will cost $88 mil- the buildings. square feet of a potential 260,000- lion to build. Computer Sciences Cor- square-foot office building under con- poration is also under construction Medical Office struction at Riata Vista Circle. A two- downtown. The company will locate A 48,000-square-foot medical office story, 9,600-square-foot office building on city-owned land. The project in- building is planned near Round Rock is planned for Airport Boulevard. cludes three six-story buildings on Hospital. Park West Corporate Center Barshop & Oles Co. is planning a three city blocks. The city plans to is planned in Round Rock near McNeil 42-acre, mixed-use development on build a 100,000-square-foot city hall. Road. The project will consist of two Parmer Lane near Dell Computer’s Charles Schwab and Company 14,000-square-foot buildings, but con- new buildings. Plans have been sub- opened a new office building on Oak struction is not expected to begin until mitted for a two-story office project Knoll Drive near Research Boulevard. the project is 60 percent preleased. and a hotel, with restaurant and retail Currently, 400 work at the facility. Wyoming Springs Medical Center, a pads also included. There are plans to build additional of- 63,000-square-foot medical building, DaimlerChrysler Financial Services fices to accommodate 3,500 employ- in Round Rock was initiated by 27 in conjunction with Hillwood Devel- ees. doctors in an effort to combat rising opment Corp. will build a 130,000- Congress Holdings Group plans a rental costs. The $8.2 million facility square-foot operations center large four-story office building on Congress will include a laboratory and at least enough to house 1,000 workers. The Avenue that will have 26,800 square 14 physician offices. company currently has 600 employees feet. Plans have also been made for In Lakeway, Towers of Lakeway is a in the area. The facility will be built at construction of a 27-story, 495,000- planned medical project. The first Circle T Ranch. Move-in is expected in square-foot, $99 million office and building will have 25,600 square feet fall 2001. retail project at Fourth Street and and include a therapy pool. The McShane Corporation plans to build Congress. project is located on Lohman’s Cross- the Riata Gateway, a 150,000-square- Lowe Enterprises Investment Man- ing Road. foot, three-story office building, on Re- agement, Inc., has acquired Stone- Permits have been issued for a search Boulevard. A new 149,983- bridge Plaza, a 193,000-square-foot 14,000-square-foot outpatient facility square-foot office building is being office building at North MoPac Ex- in south Austin and a 5,300-square- planned near the Riata Gateway. An- pressway. It is the first of a twin-tower foot dental office on Medical Parkway.

28 INDUSTRIAL MARKET

Average Industrial Rental Rates

Annual Monthly

R&D $10.20 – $15.00 $.85 – $1.25 Flex $7.80 – $10.80 $.65 – $.90 Bulk Warehouse $4.44 – $8.40 $.47 – $.70 Office Warehouse $5.64 – $8.40 $.47 – $.70 Manufacturing Warehouse $6 – $9 $.50 – $.75

Source: NAI-Commercial Industrial Properties Company’s The Source

Office/Bulk/Manufacturing/Warehouse by Submarket Existing Current Vacancy Square Feet (In percent) Under Construction

Round Rock 1,376,891 1.0 336,880 North 7,221,219 2.0 434,220 Northeast 2,229,952 1.0 489,424 East 1,371,258 6.0 0 Southeast 2,771,152 8.0 371,000 South 1,917,823 13.0 0 Total 16,888,295 4.0 1,631,524

Source: NAI-Commercial Industrial Properties Company’s The Source

Flex/R&D by Submarket Existing Current Vacancy Square Feet (In percent) Under Construction

Round Rock 522,240 8 140,986 North 5,553,934 7 202,488 Northeast 2,051,647 2 0 East 0 0 0 Southeast 3,070,328 13 467,200 South 67,858 0 140,000 Total 11,266,007 8 1,545,230

Source: NAI-Commercial Industrial Properties Company’s The Source

29 he Austin industrial market has During the first three quarters of offers a good transportation infrastruc- grown to more than 28 million 2000, industrial construction started ture and economical real estate. The T square feet and has low vacancy on 378,658 square feet of industrial Business Center@TechRidge broke rates. Forty-five percent of the city’s in- space valued at $7.95 million. The av- ground for a 218,000-square-foot dustrial space is in the north sub- erage construction price per square warehouse in June 2000. Two office market. The southeast submarket is the foot in Austin was $21 during the third buildings are planned for the park. city’s second largest, capturing 21 per- quarter of 2000, according to the City When complete, TechRidge will in- cent of the market, and benefiting from of Austin. Map 5 shows the locations clude 1.1 million square feet of distri- proximity to the airport. NAI-Commer- of industrial building permits issued in bution space. Dell Computers has cial Industrial Properties Company’s 2000. completed two buildings just east of The Source reported a total absorption In Northeast Austin, Hill Partners, TechRidge, which is located at Parmer of nearly 2.5 million square feet in the Inc., is building a nine-building, Lane and I-35. industrial market during 2000, the larg- 750,000-square-foot industrial-office Near the Austin airport, MetCenter is est in Austin’s history. Fifty percent of park at McNeil-Merrilltown Road and expanding. A 345,000-square-foot this was warehouse space, and 41 per- Howard Lane, behind Abbott Labora- building is under construction. PSINet cent was Flex/R&D space. tories. Pro Line Warehouse and Distri- will occupy the building with a data Austin-Round Rock as a whole has a bution has preleased 98,000 square center. 96 percent occupancy rate for offices, feet in the park. The majority of new Redi-Packaging, a corrugated box bulk, manufacturing and warehousing warehouse space in Austin serves the manufacturer, is taking over the facili- spaces and 92 percent for Flex/R&D manufacturing industry. Dell Com- ties of a failed shrimp farm in Buda just space, according to NAI-Commercial puter Corporation owns five million south of Austin. The company will op- Industrial Properties. Bulk warehouse square feet and has 750,000 square erate in the 115,000-square-foot facil- space is renting for $4.44 to $6.96 per feet of warehouse space under con- ity as well as a new 45,000-square-foot square foot, manufacturing space for struction. building under construction. $6 to $9 and flex space for $7.80 to Many Internet firms choose to locate $10.8, according to NAI’s The Source. their facilities in the Austin area, which

I 35

US 183

SH 1

US 290 SH 360

US 183 SH 1 Map 5. Industrial Building Permits, 2000 US 290 Austin, Texas Census Place US 71 Water Area I 35 Highway Interstate Highway Industrial Source: Austin Building Permit Office

30 CONCLUSION

he Austin-San Marcos MSA, The MSA continues to be environ- Increasing population, job growth along the I-35 corridor, contin- mentally conscious. Development re- and a good business climate have T ues to expand. Much of the strictions are in place to protect the raised rents and occupancy levels growth in the MSA is taking place out- Edward’s Aquifer as a water source. throughout the area. Growth is ex- side and on the outskirts of Austin. The Recreational activities abound, includ- pected to continue at a relatively stable area is dominated by high-tech indus- ing hike-and-bike trails, swimming in rate. The overall outlook for Austin and tries, helping to bring higher salaries the San Marcos River and boating on surrounding areas appears positive. and lower unemployment to the area. Town Lake. While dot coms have been laying off employees, the employment market has remained strong.

701-50-1483