The Changing Skyline

I recently took a 4 hour bus tour of most lofts around Austin. Starting with the release of the Brazos Lofts on 5th back in 1997, I found it fascinating that our ‘’little’’ city of Austin could support lofts in general (and these lofts on Brazos are single story, street level compared to the 40 story plus, skyline-changing buildings today). It is only fascinating because if you’ve lived in Austin longer than 15 years, you know people in other cities of Texas (along with visitors from other parts of the country) always referred to Austin as the ‘’college town’’ or ‘’hippie town’’, and these images don’t match the new Austin of today.

Many jumped on the new lofts quickly, like a roommate I had in 1997. Others were doubtful in 1997 that loft living would be supported over the long term. Today, the discussion centers around not “if” people will live in these building downtown, but “how many” will there be. I have talked with seasoned developers from Austin, who believe someone is going to lose on these high rise lofts, and I have worked with Buyers who believe otherwise. The concern originates from the number of Buyers vs. the number of units available. The optimism stems from factors of:

1. Austin is a youthful city which will keep the college crowd/new graduates for new ideas and all types of business needs (the younger, college educated 20-somethings have less to lose and will work for a start up or new department – risk takers)
2. Austin is geographically positioned well for the future markets, with good rail and highway hubs
3. Austin has a reputation for being open to all races/cultures/spiritual beliefs
4. Austin was partnered with the Tech industry long before the Dot.com era.

There are roughly going to be around 2343 units made available by the start of 2009 (something could be added or subtracted & of course, these units could encounter set backs on completion). If you break down this list;

1. 785 units in the South
2. 1241 units in the Central/Business District
3. 317 units in the East

Comparing these numbers to the Zip Code Boundaries from the Austin City Connection website here is what you have;
The 78704 (South mentioned above) zip code should grow in population by about 1,000 to 3,000 by 2010
The 78701 (Central/Business District) zip code should grow in population by about 500 to 1,000 by 2010
The 78702 (East) zip code should grow in population by about 500 to 1,000 by 2010

Nobody can predict what will REALLY happen with regards to loft appreciation & loft sales over the next 5 years – no surprise in that statement. The shear number of projects does cause concern over the security in one’s investment for a loft because of the differences associated with living in a loft compared to a house (raising a family, place of employment, simple desire to have pets of heavier weight). History has shown Austin can have 8-10 year runs of appreciation (we have begun one around 2004), and our markets can recede anywhere from 3-6 years (’87 to ’91, ’01 to ’04) for example. Statistically, Condo/Townhome/Lofts are all considered to be the first to dip and the last to fully appreciate when compared to a single family house.

With 2343 units slated by 2009, and low end forecasting from the City of Austin for population growth equaling 2,000 by 2010 – what do you think?