Redefining Skylines: Evolving Multifamily Scene in Greater Austin

BY EMILY BLAIR, CAE, EXECUTIVE VICE PRESIDENT

When the Austin Apartment Association was founded in 1964, the City of Austin’s population was just over 200,000, rent was less than $100 per month, and the city was amid a transformation from a small town to an urbanized city. The city, synonymous with live music, tech giants, culture, and a beautiful environment, has seen a dramatic transformation over the decades.

Right along with this growth, the Austin Apartment Association formed, and the multifamily landscape changed as Austin underwent this remarkable metamorphosis as a laid-back college town to a busy metropolis. From mid-century to contemporary, two-lane farm to market roads to Mopac plus an express lane, from a quaint retail downtown to a commercial and business services and sizable downtown population.

So, let us rewind the clock 60 years, back to 1964, and embark on a journey through Austin’s multifamily past, present, and future.

By the Decades

By 1966 the Austin Apartment Association had set itself up as a nonprofit 501c6 corporation formed to associate apartment owners, builders, managers, and other interested individuals in the City of Austin.

The Austin housing scene was largely characterized by charming single-story bungalows lining leafy streets. In the 60’s and 70’s the association membership was predominantly small and medium sized apartment complexes and much residential rental housing. Just over half of the apartment owners were affiliated with the Association. Over time, AAA grew its share of the market.

AAA surpasses the 200-members mark in 1974.

The education sector during this time drove a sizable part of the Austin economy and has now evolved into the information and technology sectors driving the economy. This influx of young professionals from UT, IBM and Texas Instruments fueled the demand for housing, including multifamily housing.

The apartment industry then progressed from smaller communities to larger garden-style complexes with amenities such as swimming pools and fitness facilities as well as on-site staff. Also transforming was the professionalism of the industry, with a more corporate environment, rather than small mom-and-pop operations.

In the 1970’s, as the city expanded, there were changes in the character of neighborhoods which influenced changes in zoning and land use policies that were solidified in the early 80’s. As one could imagine, these changes had an influence on the overall landscape of multifamily housing development.

Along with a technology boom, Austin’s “original tower boom also took place in the 1980s, with at least 12 different buildings over 15 stories tall completed downtown over the course of the decade.”

These sleek, high-rise structures offered stunning views and upscale amenities, attracting young professionals and retirees seeking a stylish downtown lifestyle.

The latter part of the 1980s saw an economic downturn that affected various industries, including real estate, and sparked concerns about affordability. The savings and loan crisis and a later real estate market correction had implications for property values and investment strategies.

The 1990s saw a continued expansion of the technology industry in Austin. The city solidified its reputation as a major technology hub, attracting companies and professionals in the tech sector. Again, heavily influencing the demand and the overall multifamily and CRE industry.

Urbanization trends during that time influenced the development of multifamily housing, with a focus on creating living spaces in proximity to downtown and other key areas. This again fueled the multifamily market with the rise of luxury apartment complexes boasting co-working spaces, rooftop terraces, and smart home features. These “vertical villages” catered to a new generation of tech-savvy millennials and Gen-Zers, seeking vibrant communities and convenient amenities within walking distance of work and entertainment.

The population of Downtown Austin has surged from 4,222 in 1990 and 7,635 in 2010 to 13,648 in 2020, according to the report, released by the Downtown Austin Alliance.

Downtown towers continue to grow, and the skyline is ever-changing. In 2022 alone 12 buildings were added downtown Austin, with 27 more under construction, and 30 more being planned.

Alongside urbanization, the 1990s saw continued suburban expansion in Austin. Suburban areas experienced residential and commercial development, and multifamily housing projects were not limited to the urban core. The suburbanization trend affected the type of housing options available and the overall layout of the metropolitan area.

Growth in infrastructure has been a result of and furthering growth in the outlying areas of the Austin metro. Recently reported by the city Demographer, the share of the Metro population that lives in Austin is diminishing. “In 1980 Austin’s share of the metro was 59% of the total population, now it is 42% as of 2020 according to census data.”

The real estate market experienced a significant boom in the early 2000s, marked by rising home prices, increased construction activity, and easy access to mortgage credit. Although Austin’s population growth rate has slowed, the period from 1990-2000 was still the fastest growing period for Austin.

However, this period culminated in the housing market collapse and the global financial crisis of 2008. The multifamily industry was not immune to the impacts of the housing bubble and subsequent bust, however Austin fared better than most.

Right about that time, the “second downtown” also known as The Domain, was being developed and opening doors. Like The Domain, in the 2010’s, other Austin area mixed use developments were on the rise, with combinations of residential, commercial, and recreational spaces all together to create more walkable neighborhoods.

Present Day

Obviously, population growth and housing growth has been the leading story in Austin since the 1930’s. In fact, Austin’s population has been doubling every 20 to 25 years since that time. No surprise, so has the Austin Apartment Association. Now, the City of Austin proper has grown to nearly one million in population (Census reported population figures are 975,000 as of July 2022), and over 2.2 million in the Austin Metro, which makes Austin the 10th largest US city, and the fastest growing metro for 12 years running.

Since the 1980s a larger share of the population resides in rental housing. Approximately 25% of the U.S. population is housed in an estimated 26 million occupied rental housing units nationwide in 1981 (32% and appx. 38.7 million in 2012, 36% or 44.2 million households in 2019).

Now, the renter share of the population is still growing, and the Austin metro lags in homeownership relative to other metros of similar size. Home prices are 3.6 times greater than they were in 1990, and more than doubled in the last 10 years. Of course, the increases in home prices impact increases in rental home prices. By comparison, rental prices have seen a 39% increase in the past 10 years.

No surprise, Austin was named the top metro for apartment demand in 2022, as the share of housing that is owner-occupied is also something that has continued to evolve over the decades.

Meanwhile, the city is grapples with issues of increased traffic congestion and infrastructure strain. Major projects such as Project Connect are on the horizon and beginning, albeit challenged, underfunded, and politically wrought.

Despite these challenges, the future of Austin’s multifamily scene remains bright.

Ever-present seems to be a strong economy and diverse economic conditions in Austin. This in turn, creates an appeal for Austin and in turn, and need for housing to keep up with demand.

An Austin that Won’t Sit Still

Looking to the future, while our industry will continue to shape the landscape of our greater metro and continue to be a leading industry in the economy; we can also know that the Austin Apartment Association will shape the professionals who are meeting the needs of residents each and every day.

1 (Source: https://austin.towers.net/looking-back-at-the-ads-ofdowntown-austins-1980s-tower-boom/)