 "Photo: Jordan Gomez")
Students currently living or looking to live off campus in the near future will likely bear the brunt of a particularly tight apartment market in Austin, with a record high occupancy rate accompanying a spike in average rental prices across the city.
Austin now has the distinction of possessing the strongest apartment market in the state, outpacing other major cities in Texas by several percentage points, according to a report by the Apartment Realty Advisors. By the end of 2006, the occupancy rate in Austin reached nearly 94 percent, compared to roughly 89-percent occupancy in both San Antonio and Dallas/Fort Worth and 88 percent in Houston.
High occupancy rates mean higher rent prices.
"We're seeing rent increases across the city," said Pat Jones, sales director for Apartment Realty Advisors. "In the last 12 months, we've seen a 7-percent increase in prices per square foot."
On average, rental prices per square foot jumped from 85 cents in 2005 to 91 cents in 2006. Certain segments of the student market, however, exceed those figures by a wide margin.
Since the Austin City Council approved the University Neighborhood Overlay program in 2004, developers have been free to replace old buildings in the area with new mid-rise apartments, ranging from two to four stories high. Jones said those new properties, many of which are "packed with amenities" - such as heated pools and plasma screen televisions - have been met with consistently high demand, causing a steady increase in rent prices. Apartments in West Campus, for example, now sell at about $2 per square foot, more than twice the city average.
"It's the highest rent in the city," Jones said. "But you get to walk across the street to UT."
Other areas with high student populations, such as Riverside, have been less affected by rising costs but still will surpass the average. Apartments on Riverside, which generally sell by the bed as opposed to by the entire unit, now sell at $1.20 per square foot.
In general, the present trend in the local apartment market can be attributed to slow growth in the wake of 2004's technology burst, Jones said. By the end of the year, occupancy rates across the city are expected to reach 95 percent.
"Right now the economy in Austin is booming," Jones said. "The market is tightening, but the growth is healthy. Developers will add more units to match the supply with the demand."
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