1/9/2020 1 January 9, 2020 Vaike O’Grady, Austin Regional Director [email protected]Our Goal: Becoming Your Trusted Advisor Data Briefings / Consults Advisory Services Our goal is to become our client’s trusted advisor across multiple fronts. We are here to help you: Build your business to perform through the cycle. Increase returns on investments and improve project performance. Stay ahead of changing dynamics and trends in local markets and nationally. Make new investments “eyes wide open” as it relates opportunities and challenges Copyright Metrostudy 2020 2
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January 9, 2020Vaike O’Grady, Austin Regional Director
Our goal is to become our client’s trusted advisor across multiple fronts. We are here to help you:
Build your business to perform through the cycle.
Increase returns on investments and improve project performance.
Stay ahead of changing dynamics and trends in local markets and nationally.
Make new investments “eyes wide open” as it relates opportunities and challenges
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PwC
Urban Land Institute 2020 Emerging Trends Report
#1 Austin
#2 Triangle Region, NC#3 Nashville
#7 Orlando
#4 Charlotte
#5 Boston
#6 Dallas/Fort Worth
#8 Atlanta#9 Los Angeles
#10 Seattle“Austin is number one, rising from sixth place a year ago to first in overall real estate prospects and from fourth to first place in local expectation of investor demand in 2020. In identifying Austin as a top-tier 18-hour city several years ago, our analysis considered many salient features: its slogan (“Keep Austin Weird”), deep pool of talent, unique and popular lifestyle, and ambitious commitment to business and real estate expansion.”
Homebuilding Prospects
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Austin Employment GrowthDallas Fed
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0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
2526272829303132333435363738394041424344
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Austin is Fastest Growing in Texas
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Austin Economic IndicatorsDallas Fed
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Redfin User Searches
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Office MarketAustin MSA
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Office MarketAustin MSA
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15 Largest Office HoldersAustin MSA
1. Google – 1.46 Million SF
2. 3M – 1.45 Million SF .45 Million
3. Dell – 1.43 Million SF
4. Apple – 1.42 Million SF
5. IBM – 1.38 Million SF
6. Indeed – 1.12 Million SF
7. Texas state govt. – 1.16 Million SF
8. Facebook – 924,374 SF
9. General Motors Co. – 923,253 SF
10. IRS – 853,789 SF
11.National Instruments– 752,000 SF
12.Oracle –689,747 SF
13.City of Austin – 561,684 SF
14.Visa – 532,907 SF
15.Expedia/Vrbo – 538,235
Source: Aquila/ABJ August 2019
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Austin Median Household Income
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10000
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Source: U.S. Census Bureau, Moody’s Analytics, Zonda
Current: $78,802Projected: $83,658
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Suburbs are becoming cool again
Emerging Trends in Real Estate 2020
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The expectation that Millennials would begin to move to the suburbs has become a reality. This generation however, is putting their own spin on the suburbs they are choosing.
Suburbs that are in favor offer many of the same amenities that drew the generation to the urban core
Many of these suburbs are also gentrifying to meet the needs of the new residents
“You can’t be a suburb of nowhere” –Suburbs in markets with strong urban cores are seeing the most growth
/ ULI
Round Rock Austin’s First Hipsturb?
• #2 Best Place to Live in America, 2019 —Money Magazine
• 10th fastest-growing city in the U.S. —Wallet Hub
• Ranked 5 for Best Place to Buy a House —Niche
• Ranked 3rd in Top Growth Cities of 2019 —UHaul
• One of America’s Coolest Suburbs —Apartment Therapy
2 Cedar Park/Leander West 438 2 Cedar Park/Leander West 368
3 Hutto 433 3 Kyle/Buda 348
4 Liberty Hill 390 4 Liberty Hill 327
5 Kyle/Buda 387 5 Cedar Park/Leander East 303
6 Southern Travis County 376 6 Manor 288
7 Manor 357 7 Hutto 285
8 Cedar Park/Leander East 352 8 Round Rock East 271
9 Del Valle 279 9 Georgetown East 212
10 Georgetown East 258 10 Del Valle 170
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3Q19 Annual Starts by Base PriceAustin MSA
$1-$200
$201-$24922%
$250-$29928%
$300-$34916%
$350-$39910%
$400-$49912%
$500-$6997%
$700 Over
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Austin MSA by Age Group
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19%
13%
17%16%
13%
11%
7%
3%1%
0%
5%
10%
15%
20%
25%
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150000
200000
250000
300000
350000
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Under 15 15 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65 to 74 75 to 84 85+
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AUSTIN IS WELL DIVERSIFIEDBY GENERATION
In 2019…
The youngest Millennial turned 25
The youngest Boomer turned 55
WHERE’S THE GROWTH?
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Austin is #2 on Meyers “Baby Chaser Index”
“The secret sauce for this homebuyer connects back to key drivers for the active adult market: 1) the ability to move down in size but not quality, and 2) pay for the new home with proceeds from the sale of a previous home with some cash left over. What differentiates the Boomer buyer from their parents’ retirement process is that the Boomer is moving to, not away, from the kids.” -- Tim Sullivan
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Top Builders as of 3Q19
Rank Builder3Q19 Annual
Starts3Q19 Annual
Closings
1 DR Horton/Express/Emerald 2453 2462
2 Lennar/Village 1356 1341
3 Pulte/Centex/Del Webb 1251 1093
4 KB Home 992 1056
5 Milestone Community Builders/M Signature 826 718
Del ValleGeorgetown EastRound Rock EastDripping Springs
Georgetown WestJarrell
Round Rock WestSan Marcos
Lake Travis North
Annual Starts Annual Deliveries
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Major Lot Deliveries in MPCs -- TTM
Master Planned Community 4Q18 1Q19 2Q19 3Q19 Total Lot Deliveries
Grove 423 80 503
Easton Park 245 245
Kissing Tree 92 145 237
Colony, The 141 89 230
6 Creeks 110 100 210
Blanco Vista 171 171
River's Bend at Pecan Park 171 171
ShadowGlen 125 125
Bryson 56 65 121
Sweetwater 120 120
Goodnight Ranch 90 90
Rough Hollow 41 48 89
Rancho Sienna 60 60
Blackhawk 59 59
Paloma Lake 39 39
Grand Total 359 688 807 616 2470
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3Q19 FUTURE LOTS UNDER CONSTRUCTION
ExcavationPavedStreets in
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1,258
1,698 1,2161,177
973
Top Submarkets for Lots under Construction 3Q19
Submarket Total UnderwayGeorgetown West 1698Del Valle 1258Georgetown East 1216Liberty Hill 1177Cedar Park/Leander West 973Cedar Park/Leander East 897Hutto 769Pflugerville 664Kyle/Buda 637Dripping Springs 558San Marcos 519Lake Travis North 384Jarrell 367Round Rock West 302Manor 300
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Austin Market Forecast
What to Watch for in 2020:
• Army Futures Command gaining share in the economy
• Apple campus construction (and The Domain) driving real estate values in the north
• More office investment in the east driving activity in Manor, Elgin, Bastrop
• “Project Charm” in Pflugerville, plus NorthPointe multi-use breaks ground
• Austin’s Land Use code gets an update…
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Austin Market Forecast
• Capital investment and growing diversity provide Austin with resiliency
• Austin continues to be “the darling” of the real estate community
• Public sentiment may be shifting away from NIMBY and toward attainability
• Demographics support need for more diverse housing
• Expect a smooth transition into early 2020; the momentum is on our side
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January 9, 2020Vaike O’Grady, Austin Regional Director
