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Newmark has arranged the sale and financing of South Congress Commons, a 68-unit value-add multifamily asset located minutes from Downtown Austin, Texas. The asset was acquired by an affiliate of Narrow Road Group, an Austin-based investor, operator and developer of local residential real estate.
Newmark Director Chase Easley was retained by seller Firm Capital to market the sale, which resulted in Newmark’s second successful closing of this asset. Vice Chairman Anthony Tarter of Newmark’s Debt, Equity & Structured Finance group helped arrange the financing on behalf of the buyer.
Located at 126 W. Alpine Road, South Congress Commons is a garden-style property offering an array of amenities to its residents, including a fully fenced dog park, a courtyard space, an outdoor grilling and picnic area, laundry facilities and spacious studio and one-bedroom floor plans. New ownership of the property has the opportunity to revamp both unit interiors and community amenities, positioning it to compete effectively with newer properties in the market.
Situated on 1.98 acres, South Congress Commons is conveniently located just over two miles from Austin’s CBD and enjoys proximity to the city’s South Congress (SoCo) district, one of the county’s most famous corridors lined with vibrant nightlife, retail boutiques and live music venues. The property also benefits from a strong local economic landscape, with an average household income exceeding $111,800 and an average home value of $523,704 within a three-mile radius, according to the U.S. Census Bureau in 2023.
CBRE has announced the sale of West Side Village, a two-story, 51,392-square-foot retail development located along West 6th Street in the Clarksville neighborhood of Austin, Texas, just minutes from downtown. Riverside, an Austin-based real estate investment firm, acquired the property.
CBRE’s Bradley Bailey and Logan Reichle represented the seller, a joint venture between Stonelake Capital Partners and Schlosser Development. Terms of the deal were not disclosed.
Located at 1214 & 1312 West 6th St., the 51,392-square-foot mixed-use building is currently vacant and was constructed in 1951. Sitting on 1.75 acres, the previous owners had plans to build a 100,000-square-foot bespoke office building with ground-floor retail on the site before ultimately selling.
Located just down the street from West Side Village is Riverside’s latest project, Sixth&Blanco, designed by Herzog de Meuron. The five-story mixed-use development will include fine modern retail and restaurant space, a bespoke hotel with pool, bathhouse and spa, and ten luxury homes. Over the last three decades, Riverside has contributed to Austin’s reputation for technology, innovation, and its active urban lifestyle, through a portfolio of standout properties that have set new standards for performance throughout the region.
Partners Real Estate (Partners), one of the largest independent commercial real estate firms in Texas, announced that Stan Nowak has joined the firm as a partner in the company’s Austin office. Nowak comes to Partners from Avison Young, where he previously served as principal of its capital markets group.
Nowak is a veteran commercial real estate professional with nearly 19 years of experience. During his time at Avison Young, he provided industrial and office brokerage services in Southern California as well as in Austin, Texas, spearheading the capital markets group’s industrial expertise in the Central Texas region. Additionally, Nowak has orchestrated successful land brokerage deals spanning hundreds of acres for various development initiatives.
During his career, Nowak has completed over half a billion dollars in sale and lease transactions totaling nearly five million square feet of space. He has consistently been named one of Avison Young’s Top 10 producers and is a holder of an SIOR designation.
The State of Texas is a natural mooring for life sciences companies. It has one of largest clusters of biotech and pharmaceutical professionals in the country, and a network of universities and institutions focused on building strong biochemistry, biophysics and technology-based programs designed to churn out highly skilled talent. Texas has the makings of a mature market, but a void of turn-key manufacturing, lab/R&D real estate is slowing momentum. Together, the state’s three largest metros, Dallas-Fort Worth, Houston and Austin, boast an aggregated population of over 15.5 million but only nine million square feet of inventory, a fraction of other dynamic life sciences markets.
So, what is driving the disconnect? Texas seems to be caught
in the middle of a chicken-or-the-egg riddle. While biotech companies are waiting
for the arrival of new state-of-the-art facilities, developers are standing by
for the arrival of biotech companies. To resolve the standoff, developers can
look to evidence of the impending real estate demand to justify breaking into
this technical market. There are three key trends that will ensure the
continued expansion of the life sciences sector in the state, and each is reason
alone to motivate new development.
Economic incentives The Cancer Prevention & Research Institute of Texas (CPRIT) has been a substantial driver of the industry’s expansion. The $6 billion grant program has helped to recruit 285 researchers and 16 companies to the state since launching in 2007. PanTher Therapeutics is a recent example of how the grant program is supporting growth. The clinical-stage oncology company, which focuses on treating solid tumors, received $14.2 million from CPRIT to expand the development of its clinical therapies. A taxpayer-funded program, CPRIT currently has capacity to deliver significant funding grants like this through 2027.
In addition to CPRIT, the Texas Medical Center Innovation
Institute funds a series of programs to support the growth of early-stage life
sciences companies, providing advisory and essential amenities. Both of these
programs illustrate the state’s ardent investment in expansion of the life
sciences industry. As more companies take advantage of funding opportunities
and state-supported services, it will be imperative that there are quality facilities
in place to meet demand.
Utility infrastructure Like real estate availability, power is a major need for life sciences companies, many of which utilize substantially more power and water than a standard office tenant. Life sciences companies are looking for reassurance that Texas power and water utilities can meet their needs given its checkered reliability history—and many local municipalities are meeting the moment. Cities throughout Texas have committed to accelerating the expansion of substations and bringing in larger water and sewer infrastructure.
CenterPoint Energy is investing and expanding its electrical
infrastructure in the Texas Medical Center area, which has helped to support an
expansion of TMC Innovation Factory Labs, scheduled to open sometime this year.
In addition, Xcel Energy is building new substations throughout Northern Texas,
another hotspot for life sciences activity in the state, to ensure the region’s
power grid can accommodate growth. These are just a few of the ways utility
companies are supporting the industry’s growth.
Business-friendly suburbs Austin, Dallas-Fort Worth and Houston are expectedly in the biotech spotlight. The three cities have established life sciences networks and a ripe pool of professional talent. However, the surrounding suburbs are presenting tremendous opportunity for developers. Markets like The Woodlands, Taylor, and Round Rock have quickly captured demand due to their business-friendly environment and commitment to infrastructure support. There has been a steady migration to these metros, foreshadowing further momentum to come. With ample land for new development in these suburban areas, there is a unique opportunity to create life science campuses that most tenants prefer to settle into, being close to other likeminded companies and talent.
There are many examples of this suburban flight. In partnership with Nurix Therapeutics, Alexandria Equities is developing 12 acres of life sciences real estate in The Woodlands, representing an investment of $200 million, and NexPoint has announced plans to develop a 200-acre “cutting-edge” life science project known as the Texas Research Quarter in Plano, representing a $3.8 billion investment. . Plus, Dallas’s Pegasus Park has reimagined the former corporate campus of jeweler Zale Corp. as a life science hub, adding 135,000 square feet of lab and office space to the development, which includes tenants like UT Southwestern, TAYSHA Gene Therapies, McKesson, Colossal, ReCode, etireaRX and BioNTX Each of these projects will attract new demand from companies that support these global giants and that want to establish a presence in the area.
The expansion of the life sciences industry marks a new era in commercial real estate, with the introduction of light-industrial, technology-enabled properties. The asset class is a new horizon for the industry, and undoubtedly, forward-thinking real estate developers have an opportunity to support the industry’s expansion throughout the state. However, even the most discerning developers can overlook demand cues. Having a partner that is embedded in local market dynamics and that deeply understands the nuanced fundamentals that inform development decisions is essential to drive strategic decisions and capitalize on this tremendous opportunity.
Project Management Advisors, Inc. Senior Project Manager Grayson Mann specializes in tenant improvement and ground-up development for biotech, pharma and the distribution industries.
The Austin multifamily market continues to demonstrate resilience and attractive investment opportunities, despite challenges posed by a variety of factors. Geopolitical pressures, capital markets instability, recession fears, oversupply, softening apartment fundamentals and sector-specific job layoffs have influenced the market dynamics. In response, operators have shifted their focus from true rent growth to retaining residents and enhancing asset management and operations.
According to analysis by Institutional Property Advisors, Austin is experiencing an incoming supply wave, leading to an elevated pace of new unit additions. This surge in supply is expected to have a near-term impact on vacancy rates, raising them from the record lows reached in the first half of 2022. However, Austin’s population growth remains strong, with the metro projected to have the highest year-over-year inventory change since at least 2000. The influx of younger residents, particularly in the 20 to 34 age cohort, who are historically inclined to rent due to Austin’s heightened homeownership costs, will contribute to long-term property performance and validate the ample construction pipeline. Despite the temporary pressure on vacancy rates, Austin is still projected to outperform most other major markets in terms of net absorption in 2023.
Berkadia Senior Managing Director Kelly Witherspoon acknowledges the prevailing challenges in the market.
“The general tenor this year is hanging on to what you have,” he said. “I do believe true rent-growth is a secondary focus for most operators right now, rather, focused on retaining residents with a stronger eye on asset management and operations.”
Kelly Witherspoon
Witherspoon expresses gratitude for Berkadia’s holistic culture and growth, emphasizing the firm’s commitment to exceptional service and integrity.
“In Central Texas and Austin, we’ve created an amazing culture and will continue to provide our clients exceptional service with integrity, honesty and grit,” he said.
Berkadia’s expertise spans various property types, serving both institutional and private firms. From lease-up developments to older vintage value-add assets and land, Berkadia’s comprehensive capabilities make them a formidable player in the Austin market.
The company recently concluded a successful campaign for a larger, well-located 1990s vintage community in Austin that had never undergone a programmatic renovation.
“It had been owned for over 25 years, incredibly rare in Austin, and we had tremendous activity,” shared Witherspoon. “We had over 50 tours, over 30 offers and 500 confidentiality agreements executed.”
This exceptional response highlights the high demand for value-add opportunities in the market. Investors are keen to acquire properties with potential for rent premiums post-renovation, particularly in well-preserved assets from the 2000s to 2010s.
While there is still a thinner competitive pack at the top of the market, there are significant opportunities for investment.
“There were many campaigns in 2022 that didn’t materialize into transactions, which is incredibly rare for Austin,” Witherspoon explained. “In 2023, we’ve had very few of them, mainly due to sellers understanding the market is different.”
Although there is a bid-to-ask spread, indicating a difference in price expectations between buyers and sellers, the market still attracts numerous interested buyers. Austin’s multifamily market continues to be an appealing destination for investors seeking long-term growth and stability.
“It continues to be a competitive environment in Austin,” said Institutional Property Advisors Senior Managing Director of Investments Kent Myers. “We’ve had increased levels of transaction level activity and are starting to see institutional interest back in the market.”
Kent Myers
Myers highlights the substantial number of units currently under construction, leading to a considerable supply wave. Nevertheless, the market’s resilience is underpinned by Austin’s robust job growth and the current decline in permitting activity currently a -27% decrease year over year.
As the market continues to evolve, lower-cost areas are poised to receive increased demand. Austin’s strong net in-migration has benefitted outer cities that connect the market to San Antonio, resulting in an intertwined metropolitan area. San Marcos, for instance, boasts a vacancy rate lower than the overall metro and the lowest mean effective rent, showcasing the appeal of well-connected and cost-efficient locales. Additionally, urban areas with limited development pipelines, such as Northwest Austin, are well-positioned for growth. The upcoming Phase 2 of Apple’s campus in September is expected to create high-paying jobs, which will benefit Class A and B rentals in the area.
“Given the job growth in Austin and in-migration that we’re continuing to see, the market’s been extremely resilient,” Myers stressed. Even with the heightened level of supply previously referenced, we expect Austin to end the year with rent growth numbers slightly below 3%.
While challenges persist, the Austin multifamily market remains resilient and opportunities for investment abound. Firms including Berkadia and Institutional Property Advisors recognize the shifting dynamics of the market and are adapting their strategies to retain residents and optimize asset management. As Austin continues to experience robust population growth and net in-migration, the multifamily sector is poised for long-term success. The combination of ample construction, favorable demographic trends and the appeal of lower-cost areas indicates a promising outlook for the market.
CBRE announced that a four-person retail leasing team has joined CBRE in Austin, Texas, to expand the firm’s presence in the region.
The team is led by Will Majors, who is joining CBRE as an SVP. His team includes Vice President Carson Hawley, Senior Associate Adelaide Ehrlich, and Associate Davis Franklin. They have all joined CBRE from SRS Real Estate Partners and will focus on representing both landlords and tenants in the leasing of retail property throughout Central Texas.
Majors, who previously led the Austin and San Antonio offices for SRS, brings with him 20 years of experience in the retail real estate industry and has been involved in many notable projects in the Austin market. He has been recognized as a “Heavy Hitter” by the Austin Business Journal for the last 10 years and his clients include some of the largest retailers in the U.S.
Hawley brings with him 10 years of brokerage experience, having represented dozens of tenants, landlords and land buyers across Central Texas. He is known for his strong analytical, negotiating and project management skills, having delivered exceptional results for both local and national clients.
Ehrlich and Franklin have both recently begun their real estate careers in 2019 and 2023, respectively. They will support the team on tenant and landlord representation efforts.
