COMMERCIAL REAL ESTATE UPDATE

AUSTIN COMMERCIAL REAL ESTATE | VALUES CONTINUE TO CLIMB

Prices for Commercial Real Estate in Austin are headed to the moon.  We all know this by heart now.  We top every chart: Best Place to Live, Best Place to Raise a Family, Best Place to start a Tech Company.  If we are not #1 on the list we are in the top 10.  Well, the rest of the country (dare I say world) has taken note.

Commercial Real Estate is driven by 2 major factors:

Need: Businesses Start and Grow. They need space which can be office space, manufacturing space, warehouse space, retail space to sell their goods, etc.

Capitol in the Market: Investors and Lenders need to put their money somewhere.  Ideally they want the money to grow or at a minimum be safe.

MORE DRIVING FACTORS

Employment and Technology:

Austin has become a Tech Hub:  Many Tech Firms small and large started here or are quickly opening offices here.  Our employment pool is full of intelligent people.  We have several Universities in the state of Texas pumping out quality minds. So the list of Tech Companies continues to grow:

Google  ~ Amazon  ~  Paypal  ~  Apple  ~  Oracle  ~  Homeaway  ~  Facebook  ~  eBay

Evernote  ~  National Instruments  ~  IBM  ~  Dell

Buyers are coming from across the United States and Internationally as well.  More competition for each product and price points drive up prices.  We are now seeing more financing options.

Financing Options:

• Traditional Banks
• Credit Unions
• Crowdfunding

More Players in the Game:

• 1st Time Investors
• Crowdfunding Groups
• Private Equity Funds
• Real Estate Investment Trusts
• International Investors

More players. means more competition for each property and Prices Go Up.  More money available to borrow at low interest rates, Prices Go Up.

Low Supply:

Austin is a small town compared to Dallas, Houston and San Antonio.  We don’t have the comparable Downtown Office, Hotel, Retail and Mutli-Family.  We are trying to build it fast, but the process with the City of Austin is anything but fast.  Yes, large developers with teams of attorneys get through the process quicker, but nothing like Houston.  We have less supply, Prices Go Up.

Some Buyers can afford to overpay:

• 1031 Buyers
  • Have to reinvest to avoid up to 30% Capitol Gaines Tax
• Cash Buyers
• They Don’t need to make money, simply putting in a safe savings account.

Overpaying isn’t an option for most investors attempting to leverage their money.  But we all hear the siren song of low interest rates and it is hard to resist.  Buyers are putting more cash in the deal to reach their debt service cover ratio to close on property.  People willing to take less, little or no return, Prices Go Up.

Stable & Consistent Growth:

Austin has been performing very well (very, very well).  Across the Metro Area & Property Type an average of 4% growth each year.  Then we have exponential growth in sectors such as Office asking prices with a 11 % growth over the last 3 months and 41% growth over the last 12 months.  Shocking, you can see why money is flowing into our market and Prices Go Up.

Picture Perfect

Low Vacancy, High Rents.  More businesses, low unemployment, slow development process, stable and consistent growth.  Prices Go Up.

Owners and Landlords are High on the Horse right now but what goes up must come down.

TIMING IS EVERYTHING

Now is the time to sell

If you own Commercial Real Estate in the Austin Metro Area it’s time to value your property and put on the market.  While Austin is #1 on all the charts, take advantage of the market to make some money.

DeLea Becker

Commercial Real Estate Owner/Landlord/Broker

Grow Business | Build Wealth