Austin touted as buyer's market for
commercial real estate
Is now a good time to buy real estate in
Austin?
A new report says yes, if you're looking
to buy office, retail and multifamily properties under $5 million.
Austin also ranked high in the top 10
spots for buying retail properties over $5 million.
The study, "Top 10 Markets to Watch,"
was recently released by
Sperry Van Ness Commercial Real Estate Advisors, based in
Irvine, Calif.
The commercial real estate company's
research team reviewed a representative sample of commercial
property transactions from markets nationwide, examining factors
such as price per square foot and capitalization rates (income
expressed as a percentage of purchase price). Projected employment
and disposable income growth were also factors taken into
consideration.
For retail, Austin placed No. 4 for
buying properties both under and over $5 million. Austin ranked
behind Raleigh, St. Louis and Detroit for properties above $5
million.
"Austin has been battered in the tech
collapse, but it would be a mistake to see this market as
permanently handicapped," the Sperry Van Ness report states. "With
projected income growth faster than nine percent per year, stores
should see sharply improved revenue through 2007."
Specifically, the study projects a 27.26
percent increase in disposable income through 2007. It also points
to a 7.6 vacancy rate in the local retail market.
A separate retail market study by
Austin-based
NAI Commercial Industrial Properties Co. shows the local retail
market had a 6.11 percent vacancy rate as of the end of 2004. It
also found retail rates for retail centers over 100,000 square feet
rose by 5.45 percent, increasing from $1.66 to $1.75 per square
foot, plus taxes, insurance and maintenance expenses.
Austin nabbed the No. 3 spot in the top
10 markets to watch for buyers of properties to watch, and No. 10
for multifamily, for investors of properties under $5 million.
It is just as interesting to see where
Austin didn't rank.
For example, the only product type under
$5 million Austin wasn't a place for buyers to watch was in the
industrial sector.
Austin also wasn't found among any of
the top 10 markets to watch for sellers.
"I'm glad that they're recognizing
Austin as a good place to be buying now, rather than selling," says
Fred Higgins, an industrial specialist with NAI CIP. "It implies
Austin is on an uptrend rather than a downtrend, and there's plenty
of room to grow."
While grateful for the recognition,
Higgins also says there's a shortage of properties under $5 million
to buy in Austin, and "I think it's just as good a place to have $30
million in property as a larger city."
Higgins says a number of people from
larger cities tend to think of Austin as a smaller market than, say,
Dallas or Houston. But, when his clients are looking to invest just
a few million dollars, properties are scarce.
"A lot of times when we're trying to
find a little $3 million to $4 million property, I can find them in
Houston, not here," Higgins says.
He also says that when compared with
Houston and Dallas, comparable Austin properties are selling for
more per square foot, and with lower cap rates.
Austin Business
Journal
From
the March 28, 2005 print edition
Mary Alice Kaspar can be reached in (makaspar@bizjournals.com)
| (512) 494-2519.
http://www.bizjournals.com/industries/real_estate/commercial/2005/03/28/austin_story7.html
|
