jennifer s. cowley - texas a&m university · 2015-08-11 · integrated circuit manufacturing...

Jennifer S. CowleyAssistant Research Scientist

Mukta NaikGraduate Research Assistant

Texas A&M University

July 2001

© 2001, Real Estate Center. All rights reserved.

Real Estate Market Overview

Austin-San MarcosReal Estate Market Overview

Austin-San Marcos


Austin-San Marcos

Population

Employment

Job Market

Major Industries

Business Climate

Education

Transportation and Infrastructure Issues

Public Facilities

Urban Growth PatternsMap 1. Growth Areas

Housing

Multifamily

Map 2. Multifamily Building Permits

Manufactured HousingSeniors Housing

Retail Market

Map 3. Retail Building Permits

Office Market

Map 4. Office Building Permits

Industrial Market

Map 5. Industrial Building Permits

Conclusion

Contents

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Austin-San Marcos

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Round Rock

Austin

Cedar Park

Lago Vista

ElginManor

Pflugerville

Sunset Valley

West Lake Hills

Dripping Springs

Lakeway

Interstate 35

US 290

US 290

US 183

Jennifer S. CowleyAssistant Research Scientist

Mukta NaikGraduate Research Assistant


Austin-San MarcosReal Estate Market Overview

Austin-San Marcos

CountiesBastrop

CaldwellHaysTravis

Williamson

Area Cities and Towns

The Austin Metropolitan StatisticalArea (MSA) is part of the I-35growth corridor in the heart of

Texas. The MSA was the third fastestgrowing in the state during the 1990s,according to the U.S. Census Bureau.Austin is ranked first out of 234 metro-politan areas nationwide for jobs, in-

come and good business growth, ac-cording to Forbes magazine. Sales andMarketing Management magazinenamed Austin the second Best Place todo Business in 2001. This ranking is at-tributable to extensive business expan-sion and the entrepreneurial nature ofthe city. Aside from the prospering

economy, Austin, the capital of Texas,is known for its parks and green space,including greenbelts, lakes and theten-mile hike-and-bike trail alongTown Lake. Lake Travis and the SanMarcos River provide water recreationactivities.

AustinCedar Park

GeorgetownLockhart

Land Area of Austin-SanMarcos MSA

4,256 square miles

Population Density (2000)294 people per square mile

PflugervilleRound RockSan Marcos

Taylor

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Kelly Air Force Base, San AntonioPOPULATION

Austin MSA Population

Year Population

1990 850,6191991 874,5161992 901,0551993 931,6711994 964,8031995 1,001,0541996 1,036,3191997 1,067,9531998 1,104,6121999 1,146,0502000 1,249,763

Source: U.S. Census Bureau

County Population Growth

Growth 1990–2000County 2000 Population (in percent)

Bastrop 57,733 50.9Caldwell 32,194 37.6Hays 97,589 48.7Travis 812,280 40.9Williamson 249,967 79.1

Area Cities With 10,000 or More Residents

Growth 1990–2000City 2000 Population (in percent)

Austin 656,562 32.8Round Rock 61,136 93.7San Marcos 34,733 19.5Georgetown 28,339 75.8Cedar Park 26,049 193.9Taylor 13,575 18.7Lockhart 11,615 23.7Pflugerville 16,335 182.8



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Texas Metropolitan Area Population Change, 1990–2000 (in percent)

Laredo 43.6 Amarillo 11.3

McAllen-Edinburg-Mission 38.3 Corpus Christi 10.4

Austin-San Marcos 34.7 Victoria 10.1

Brownsville-Harlingen-San Benito 25.8 Bryan-College Station 10.0

Dallas 22.0 Sherman-Denison 9.2

Brazoria County 21.7 Longview-Marshall 8.0

Houston 20.0 Waco 7.8

Fort Worth-Arlington 19.1 Odessa-Midland 7.5

San Antonio 17.9 Wichita Falls 4.9

El Paso 17.8 Beaumont-Port Arthur 4.2

Texas 17.6 San Angelo 4.1

Temple-Killeen 15.9 Abilene 2.5

Galveston-Texas City 13.8 Lubbock 2.3

Tyler 12.0 Texarkana 2.1


Austin MSAProjected Population

Texas State Texas WaterYear Data Center Development Board

2005 1,334,469 —2010 1,543,248 1,492,7762015 1,765,101 —2020 2,013,283 1,925,526

Sources: Texas State Data Center and Texas Water Development Board

Population in the Austin MSA in-creased 46.9 percent between1990 and 2000, according to the

U.S. Census Bureau. The TravisCounty population grew at a slower

rate than most of the surroundingcounties’ populations from 1990 to2000. Williamson County has had thehighest percentage of growth, fueledby growth in Cedar Park, Round Rock

and Georgetown. The Texas State DataCenter predicts a 3.3 percent growthrate per year through 2020. The TexasWater Development Board predicts agrowth rate of 2.7 percent per year.

4

Household Composition

Austin MSA Texas

Median household size, 1990 2.58 2.73

Population younger than 18(1999, in percent) 26.8 28.5

Population 65 and older(1999, in percent) 7.5 10.1


Ethnic Distribution(in percent)

Austin MSA TexasEthnicity 1990 2000 1990 2000

White 67.7 60.7 60.8 52.4Hispanic 20.6 23.7 25.3 32.0Black 9.1 7.7 11.7 11.3Asian 2.2 3.5 0.3 2.7American Indian 0.3 0.3 1.8 0.3Other 0.1 0.1 0.1 0.1Two or more races* — 2.6 — 2.0

* For the 2000 Census, the Census Bureau changed the “race” options, allowing people toreport their race as “other” or as two or more races.


Projected Population Growth, 2000–2020(in percent)

Source: Texas State Data Center

61.140.2

0

10

20

30

40

50

60

70

Austin-San Marcos MSA Texas

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Source: U.S. Bureau of Labor Statistics

EMPLOYMENT

Austin MSA Employment

The average household size inAustin is smaller than the stateaverage, in part because of the

large number of educational institu-tions and young professionals workingin the MSA. Per capita income for the

area was $31,794 for 1999, comparedwith the state average of $26,834, ac-cording to the Bureau of EconomicAnalysis.

Like Texas, Austin is becoming moreethnically diverse. Since 1990, the per-

centage of Hispanic, black, Asian andAmerican Indians in the MSA has in-creased. The Hispanic population hasbeen growing at the fastest rate.

Austin MSA Unemployment Rate(in percent)

Source: U.S. Bureau of Labor Statistics

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Jan

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May

Sep

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Jan

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May

Sep

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Jan

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May

Sep

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Jan

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y-98

May

Sep

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y-99

May

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May

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Bergstrom Air Force Base, Austin

Largest Employers Largest Private Employers

Dell Computer CorporationPersonal computer systems20,800 employees

University of TexasEducation20,211 employees

Motorola, Inc.Microprocessors10,000 employees

City of AustinLocal government10,000 employees

Austin Independent School DistrictEducation9,417 employees

H-E-B Grocery CompanyGrocery7,500 employees

Seton Healthcare NetworkMedical care6,715 employees

IBM CorporationCircuit cards, hardware and software6,000 employees

IRS/Austin CenterIncome tax return processing5,800 employees

Dell Computer CorporationPersonal computer systems20,800

Motorola, Inc.Microprocessors10,000

H-E-B Grocery CompanyGrocery7,500

Seton Healthcare NetworkMedical care6,715 employees

IBM CorporationCircuit cards, hardware and software6,000 employees

Advanced Micro Devices (AMD), Inc.Integrated circuit manufacturing4,600 employees

Solectron TexasElectronic component manufacturing4,400 employees

Wal-Mart StoresRetail3,800 employees

Applied Materials, Inc.Semiconductor-processing equipment3,149 employees

Employment Growth by Industry Austin-San Marcos MSA Texas

Employment growth, 2000 (in percent) 5.7 3.2Unemployment rate, 2000 (in percent) 2.0 4.3New jobs in 2000 36,600 288,900Employment growth by sector, 2000 (in percent)

Services 3.7 4.7 Trade 6.9 3.1 Manufacturing 6.2 0.1 Mining 15.4 2.3 Finance, insurance and real estate 0.3 1.3 Construction 5.9 6.2 Government 2.2 1.7 Transportation, communications and public utilities 5.3 5.1

Sources: Greater Austin Chamber of Commerce

Sources: Texas Workforce Commission

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JOB MARKET

Intel is expected to open a chipdesign plant downtown that willemploy 2,000 people. National

Computer Systems, Inc. opened a testproduction and processing center with150 employees and has the potentialto hire 150 more. Applied Science Fic-tion and Lucent Technologies eachbrought 100 jobs to Austin. AT&TWireless Service hired 125 people towork in the company’s new 30,000-square-foot call center. The ElectricReliability Council opened in August2000, employing 130 at two centers inAustin.

XL Vision opened in Austin employ-ing 200 at its medical diagnostics facil-ity. Quidnunc Group opened in Austinemploying 200. FreeMe.com openedand employs 100.

Charles Schwab is expanding its callcenter, creating 600 more jobs.Providian Financial Services is also ex-panding its call center and creating500 jobs. Prodigy Communications ismoving from New York to Austin andwill provide approximately 200 jobs.

Applied Materials is expanding itssemiconductor center, adding 670 em-ployees. National Instruments hired an

Texas Metropolitan Area Employment Change, 1990–2000(in percent)

Austin-San Marcos 58.8 El Paso 15.4Laredo 40.3 Waco 14.3McAllen-Edinburg-Mission 35.8 Lubbock 14.0Dallas 30.4 Sherman-Denison 12.5Brownsville-Harlingen-San Benito 30.1 Longview-Marshall 12.2Bryan-College Station 29.2 Abilene 11.4Killeen-Temple 28.7 San Angelo 10.7San Antonio 28.6 Corpus Christi 10.3Fort Worth-Arlington 23.7 Galveston-Texas City 8.2Texas 23.3 Wichita Falls 7.8Tyler 22.9 Odessa-Midland 6.5Victoria 22.4 Texarkana 4.5Houston 22.1 Beaumont-Port Arthur 3.5Amarillo 18.6 Brazoria County 2.3

Source: U.S. Bureau of Labor Statistics, February 2001

During the last decade, Austinhad the fastest employmentgrowth rate in the state, aver-

aging 5.3 percent per year. Austin hadthe strongest growth rate in the state in2000, with 36,600 jobs created, ac-

cording to the Texas Workforce Com-mission (TWC). While the TWC esti-mates total nonagricultural employ-ment in Austin MSA at 672,100 for2000, the U.S. Bureau of Labor Statis-tics puts civilian employment at

721,882 for the year 2000. The MSAaccounted for more than 12 percent ofnew Texas jobs during 2000. Econo-mist Angelos Angelou predicts thenumber of jobs in Austin will increaseby 32,000 in 2001.

additional 200 employees and RetroStudios, Inc., a computer gaming firmand Crossroad Systems, Inc., a de-signer and builder of storage routers,each hired 100.

ARM added 35 employees during2000 at its microprocessor design cen-ter in Austin.

Lucent Technologies expanded itsdivision headquarters, adding 1,000employees, according to the Texas De-partment of Economic Development.National Instruments expanded, add-ing 330 employees. Tyco, a printedcircuit board manufacturer, added 325

8

MAJOR INDUSTRIES

The services sector dominates theAustin MSA, making up 28 per-cent of jobs. This sector added

15,300 jobs during 2000. Trade ac-counts for 23 percent of the economy,government 23 percent and manufac-turing 13 percent. Trade, manufactur-ing and government gained 9,800,5,000 and 3,000 jobs, respectively.

Austin has industry clusters revolv-ing around semiconductors and elec-tronics; computers, peripherals andsoftware; multimedia; and biomedicalindustries. The concentration of theseindustries in one city facilitates buyer-supplier relationships and makes firmsmore competitive.

The Austin area is renowned forhigh-tech firms like Dell, IBM andSolectron. Many smaller entrepreneur-ial software companies are located inthe city as well. The Texas Comptrollerof Public Accounts reports that Austinhas 16 percent of the state’s high-techemployment.

The semiconductor industry is a sig-nificant employer in the community,

boosted by local firms such as AppliedMaterials, Inc., the world’s largestmanufacturer of equipment for theindustry. Ninety percent of the firm’sproducts are made in Austin.

Employment in the services sectorgrew by 8.2 percent in 2000. Mining,which had no employment growth in1999, gained 200 jobs in 2000, in-creasing employment by 15.4 percent.The construction sector employed 5.9percent more people. This growth hasbeen fueled by construction in all sec-tors.

Austin is home to several state andfederal government agencies, includ-ing the Department of Health and theDepartment of Public Safety. The Inter-nal Revenue Service is a major areaemployer that hires additional workersto process forms during tax season.The University of Texas is another ma-jor employer.

Of the counties in the MSA,Williamson County receives the mostcash receipts from agriculture. Be-tween 1994 and 1999, beef cattle

accounted for almost 32 percent of re-ceipts. Feed crops, including corn, hayand sorghum, accounted for 39.1 per-cent of agricultural receipts and cottontotaled 21.6 percent.

According to the Texas AgriculturalExtension Service, Bastrop County ag-ricultural receipts from 1997 through2000 were dominated by beef cattle,49 percent, and hay, 33 percent. TravisCounty agriculture is dominated bybeef, representing 64 percent of all ag-ricultural receipts.

In Hays County, beef cattle makesup only 15 percent of farm receipts,while agriculturally related recreationsuch as hunting accounts for 31 per-cent. Caldwell County is dominated bypoultry, with 56 percent of agriculturalreceipts, and beef, with 34 percent.Williamson County produces primarilybeef and corn, representing 34 and 20percent of agricultural receipts, respec-tively.

employees. Qwest Communicationsadded 300 employees to its telecom-munications data center. PointOneCommunications expanded, adding175 employees. Sun Microsystemsadded 100 employees in 2000.StorageProvider added 100 employeesto its data storage facility.

In San Marcos, Wide Lite, a light fix-ture company, expanded and added225 employees. In Round Rock, Her-ring-Young Source One Technology’sexpansion added 15 employees.

Living.com, an e-commerce pro-vider of furniture, home furnishingsand accessories, laid off 50 employeesin 2000. Other e-commerce firms arelaying off Austin employees as well.CarOrder.com laid off 100 in spring2000 then closed in February 2001,

laying off 26 more. Rx.com laid off 20in April 2000. Vtel Corp, a videocon-ferencing company, laid off 75 em-ployees in fall 2000. St. David's HealthCare facility closed its medicenters inJuly, laying off 30 people.

During January 2001, Motorola laidoff 100. Vignette, a software company,cut 15 percent of its workforce, layingoff 150 employees. Multek, a circuitboard manufacturer, cut 600 jobs.Ibooks.com laid off 83 employees.Other layoffs included Computer Sci-ences Corporation, 36; Liason Tech-nology, 15; Yclip, 33; Handtech.com,17; and Funds Xpress, 30.

In February 2001, Concero, anInternet services company, laid off 92employees. Janus Capital Corporationlaid off 219. Netpliance laid off 76 em-

ployees, representing 54 percent of itsworkforce. Dell Computer cut 1,700jobs at its plants in Austin and RoundRock. All State Corporation mergedwith Columbia Universal Life resultingin the layoff of 80 employees. Sitestufflaid off 18 employees from its commer-cial real estate buying service.

Connect South closed in February2001, laying off 230 employees.Drkoop.com closed its Austin branch,laying off 45 in January 2001. All.comclosed, laying off 70 employees.

In June 2001, Solectron laid off 600employees. Earlier in the year, 580full-time and 480 temporary workerswere laid off. 3M cut 100 jobs and Tril-ogy cut 340 jobs in April 2001.

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BUSINESS CLIMATE

Tax Rates, 2000

Tax Rate per Tax Rate perTaxing Entity $100 Valuation Taxing Entity $100 Valuation

City of Austin $0.47 City of San Marcos $0.46Austin ISD 1.55 San Marcos ISD 1.49Austin Community College 0.05 Hays County 0.36Travis County 0.47 Total $2.31Total $2.54

Sources: Travis and Hays County Appraisal Districts

Austin MSA Retail Sales

Year Total Gross Sales Sales per Capita

1990 $6,654,598,169 $7,823

1991 7,147,466,441 8,173

1992 8,021,320,368 8,902

1993 8,832,142,670 9,480

1994 9,961,681,011 10,325

1995 10,910,789,589 10,898

1996 11,940,243,864 11,521

1997 13,336,331,406 12,487

1998 14,367,712,948 13,007

1999 15,704,287,983 13,703

2000* 12,902,555,445State Average 1999 $12,332

*Through third quarter 2000Source: Texas Comptroller’s Office

Total Agriculture Receipts, 2001 (projected)

County Total Receipts

Bastrop $56,899,000Caldwell 46,212,000Hays 30,573,000Travis 50,273,000Williamson 59,064,000

Source: Texas Agricultural Extension Service

10

Exports to Selected Destinations –Austin-San Marcos MSA (in thousands)

Market 1997 1998 1999 Percent of Trade

Canada $607,683 $720,543 $853,004 17.3Mexico 111,992 154,760 285,349 5.8Caribbean & Central America 17,224 27,068 24,778 0.5South America 34,766 61,692 43,711 0.9Europe 599,424 818,167 718,022 14.6Asia 1,909,776 1,936,480 2,949,206 59.8Africa 6,690 7,385 6,795 0.1Near East 41,059 56,863 24,467 0.5Australia 26,194 19,425 26,047 0.5Total all Countries $3,354,809 $3,802,387 $4,931,432 100.0

Source: Office of Trade and Economic Analysis, International Trade Administration

Austin-San Marcos MSA Top Exports, 1999 (in thousands)

Product Export Value Percent

Electric and electronic equipment $3,038,364 61.6

Industrial machinery and computers 1,463,522 29.7

Scientific and measuring instruments 208,775 4.2

Nonmanufactured commodities 45,852 0.9

Chemical products 40,626 0.8

Transportation equipment 35,454 0.7

Source: Office of Trade and Economic Analysis, International Trade Administration

The hotel-motel tax rate in theAustin area is 13 percent; thesales tax rate in the area is 8.25

percent.Exports from the Austin MSA were

up 187 percent between 1993 and1999. Since the North American FreeTrade Agreement (NAFTA) was put inplace in January 1994, exports toCanada and Mexico have increasedsignificantly. Since 1993, exports toCanada have increased 188 percentwhile exports to Mexico are up 749percent. Canada is the country towhich Austin exports the most prod-

ucts. Exports to China were up themost from 1993 to 1999, rising 4,918percent from $2.2 million to $11.2 mil-lion. Austin has a free trade zone andexported $4.9 billion in products dur-ing 1999, up from $3.8 billion in 1998,according to the International TradeAdministration.

Austin exports $2.9 billion in prod-ucts to Asia and $1.13 billion toNAFTA countries. Electric and elec-tronic equipment, the largest export in-dustry, accounts for $3.03 billion inexports. The next largest sector is in-dustrial machinery and computers,

which accounts for $1.4 billion intrade.

Central Texas has nine foreign tradezones (FTZ) totaling 1,390 acres. Themajority of this land is adjacent to I-35between Georgetown and San Marcosand has direct rail access. Merchan-dise held in an FTZ is considered inter-national commerce and is not subjectto U.S. customs requirements.

Venture capital is abundant in Aus-tin and has helped spur growth, espe-cially in high-tech industries. APricewaterhouse Cooper survey foundthat 108 Austin companies received

11

$794 million in venture capital in1999. Through the third quarter of2000, 102 deals were made, totaling$1.24 billion.

Environmental consciousness is ro-bust in Austin. The development pro-cess is not easy. Strict guidelines ac-commodate environmental interests,

especially southwest of the city, pre-venting development in the BartonSprings Watershed, which funnels wa-ter to the Edward’s Aquifer. A studyperformed by the engineering firm Bury& Pittman, Inc. found Austin’s devel-opment fees to be 20 to 120 percenthigher than in other Texas cities.

Tourism brings $1.4 billion to Austinevery year, according to the AustinConvention and Visitors Bureau. A ho-tel study conducted by PKF Consultingfound that 22 percent of people stayedin Austin for leisure, compared to 18percent in Houston and 12 percent inDallas.

EDUCATION

Local College and University Enrollment

Fall 2005 2010School 2000 (estimated) (estimated)

University of Texas 49,996 50,000 50,000Austin Community College (ACC) 25,856 28,890 32,540Southwest Texas State University 22,462 25,135 27,072St. Edward’s University 3,824 N/A N/ASouthwestern University 1,309 N/A N/AConcordia University 850 N/A N/AHuston-Tillotson College 602 N/A N/A

Sources: Educational institutions and the Texas Higher Education Coordinating Board, January 2001

Educational Level, Persons Age 25 and Older(in percent)

Level of Education Austin MSA Texas

High school graduate 20.9 25.6Some college, no degree 24.1 21.1Associate’s degree 5.4 5.2Bachelor’s degree 21.3 13.9Graduate or professional degree 10.9 6.5


Several private colleges and uni-versities are in the Austin MSA,including St. Edward’s Univer-

sity, Concordia University, Huston-

Tillotson College and SouthwesternUniversity in Georgetown.

The University of Texas, the nation’slargest state university, has just com-

pleted a new $52 million dorm and anApplied Computational and Engineer-ing Sciences Building costing approxi-mately $30 million. The $48.6 million

12

TRANSPORTATION AND INFRASTRUCTURE ISSUES

In May 1999, Austin-Bergstrom In-ternational Airport opened andRobert Mueller Municipal Airport

was closed. The new airport was builtat a cost of $690 million. Austin-Bergstrom International is served byten passenger carriers, including AirCanada, which began service in June2000. Vanguard Airlines began serviceto Kansas City in January 2001. Carri-ers offer nonstop flights to 36 destina-tions.

The new airport’s runways are12,250 and 9,000 feet long, compared

with Robert Mueller’s 7,269-foot run-way. Overseas flights can now leavedirectly from Austin as the runwayscan accommodate all types of aircraft.A $300,000 statue memorializing Bar-bara Jordan is expected to be com-pleted in 2002 and will be displayed atthe airport.

Austin is served by I-35, U.S. High-ways 290 and 183 and Texas High-ways Loop 1 and Loop 360. Commutetimes in Austin average 15 to 20 min-utes, according to the Greater AustinChamber of Commerce. Proposed

State Highway 130 will run fromGeorgetown to Seguin, east of Austin,and should help alleviate congestionon I-35.

Travis County has approved a $28million bond measure to contribute tofour state highway projects, includingimprovement of U.S. 290. The City ofAustin is constructing a new pedes-trian-bicycle bridge over Town Lake.The bridge will connect Lamar Boule-vard and Riverside Drive. Constructionstarted in May 2000 and was expectedto be completed in May 2001.

Sara M. and Charles E. Seay Psychol-ogy, Child Development and FamilyRelationships Building is expected toopen in fall 2001. The Connally Dis-pute Resolution Center, an addition tothe UT law school, is scheduled toopen in 2001. UT Austin started under-graduate degree programs in Jewishstudies and religious studies in fall2000. The Harry Ransom HumanitiesResearch Center will undergo a $13.7million renovation.

Austin Community College (ACC)has six campus locations and theHighland Business Center within itstaxing district, totaling 502,834 assign-able square feet. ACC is planning theconstruction of a new 45,000-square-

foot general services building. The col-lege is proposing future construction ofa health facility at the Eastview Cam-pus and a high-tech facility at theNorthridge Campus. Both of theseprojects must be approved by votersand are expected to cost between $10and $12 million. ACC also operatesseven centers outside of the taxing dis-trict, providing night courses in SanMarcos, Bastrop, Round Rock,Georgetown, Fredericksburg,Westwood and Hays County, all ofwhich are within the college’s eight-county service area.

Southwest Texas State Universitybroke ground on a $43 million art-technology-physics building in August

2000. The university is also workingon several environmental projects ontheir property. One of these, the TexasRiver Center, is expected to begin con-struction in 2001 at a cost of $14 to$16 million. This project is in conjunc-tion with the Texas Parks and WildlifeDepartment. The University added anundergraduate program in manufactur-ing engineering.

St. Edward’s University started amaster of liberal arts program in fall2000 and a master of science in orga-nization and leadership ethics inspring 2001. The school broke groundon a new dormitory facility and a newclassroom building during 2000.

Austin Airline Boardings

1998 1999 2000

Austin Airline Boardings

Robert Mueller Airport andAustin-Bergstrom International Airport 3,037,566 3,292,399 3,737,168

Airport Cargo Statistics (in pounds)

Austin-Bergstrom International 239,780,675 276,263,260 357,327,469

Source: Austin-Bergstrom International Airport

13

PUBLIC FACILITIES

The City of Round Rock is designingan interchange at U.S. 79. AW GrimesBoulevard will have a railroad under-pass. Construction will be completedin summer 2001 on several streets in-cluding Forest Creek, Double Creekand South Mays. Streets completed inspring 2001 included Lakeview Coveand Park Valley Drive.

The City of San Marcos plans to ex-tend Wonder World Drive and willadd a railroad overpass late in 2001.Holland Street is currently being re-constructed and should be completedin September 2001. Bishop Street wasstraightened in spring 2001.

The City of Georgetown is extendingHolly Street north from 3rd Street toCollege Street. Construction was ex-pected to be completed in April 2001.Construction is underway on 7th and 8th

streets. These streets are being ex-tended from the railroad tracks bySouthwestern University to the IOOFCemetery.

Rail service is provided by George-town Railroad and the Longhorn Rail-way Company. Amtrak provides pas-

senger service to Austin. CapitalMetro, Austin’s public transportation,is funded by a one-cent sales tax. Tollroad and light rail studies have beenperformed. In November 2000, Austinvoters decided against a proposed lightrail line.

Austin’s five-year utility plan pre-dicts that electricity consumption willrise by 20 percent. To meet futureneeds, a 100-megawatt peak plant isscheduled to open in 2002, costing$40 million; a 230-megawatt peakplant is slated to open in 2003 at a costof $99.6 million, and a second 100-megawatt peak plant is set to open in2005.

South of San Marcos, in HaysCounty, a 1,100-megawatt powerplant should open in 2001. The $350million property will employ 27 afterproviding construction jobs for 500. A500-megawatt plant will be completedduring summer 2001 in BastropCounty.

The City of Austin receives all of itswater from the Colorado River. Thewater is treated at one of three plants.

Construction of a fourth plant is not ex-pected until 2017. Water supplies areadequate to meet the city’s needsthrough 2050, according to the StateWater Plan. The Edwards Aquifer pro-vides water to 45,000 people in thearea.

At present, San Marcos gets its waterfrom the Edwards Aquifer and CanyonLake. The City of San Marcos, in an ef-fort to conserve the Edwards Aquifer, isdeveloping surface water resources.The first phase of the 50-year surfacewater treatment program, a plant totreat six million gallons of water perday, will be completed by 2010. Thecity is also seeking rights to water fromthe San Marcos River.

The City of Georgetown opened theSouthside Water Treatment Plant inJuly 2000. The plant on South AustinAvenue is the third plant for the cityand is capable of treating as much asthree million gallons of water per day.

A ustin is building a new $37million, 115,000-square-footcity hall and office complex

downtown on Second Street. Carter-Burgess, Inc., has been hired to de-velop the plan for the City Hall andPublic Plaza. The development will in-clude a retail project and three levelsof underground parking. Constructionis scheduled to begin in early 2002and continue for 18 months. The un-derground parking garage was to breakground in April 2001.

The Austin Convention Center iscurrently undergoing an expansionthat will more than double its size to881,400 square feet. The $110 millionexpansion is being funded through anincrease in the hotel-motel occupancytax passed in May 1998. Currently,

more than 60 percent of the center’sevents represent repeat business.

In October 2000, the Austin PoliceDepartment opened a temporary Cen-tral East Area Command substation.The facility is located on Wilshire Bou-levard in the former FAA building atthe old Robert Mueller Airport. Con-struction on a new Central East substa-tion and forensic science center onSpringdale Road is expected to beginduring 2001 with completion in spring2003. In January 2000, the $2.2 mil-lion Oak Hill fire station opened onHighway 71.

The City of Austin plans to build acommunity events center and parkingfacility on Town Lake. The $40 millionproject is expected to be completed inMay 2002.

Construction on the $89 millionLong Center for Performing Arts willbegin in June 2002 with completionset for fall 2004.

In Round Rock, several publicprojects are under way. Construction isexpected to start in summer 2001 on abuilding maintenance and storage fa-cility. A new municipal office buildingwill break ground in 2001. A publicworks annex building is planned. Cityhall completed a remodeling project inFebruary 2001. During 2000, the DellDiamond stadium opened for theRound Rock Express, an AA baseballteam.

In San Marcos, the central station forthe fire department is under renova-tion. Hunter Road fire station is ex-pected to be completed in November

14

2001. Construction on a new animalshelter is slated to begin in spring2001. Downtown is undergoing astreetscape project that will be com-pleted in March 2002.

In Georgetown, construction wascompleted in early 2001 on a newdowntown parking lot at Main and 6th

streets.The Austin MSA has a number of

metropolitan parks ranging from 200 to

500 acres, including Zilker Park, Colo-rado River Park and Slaughter Creek.Austin also has several museums,sculpture gardens and recreational fa-cilities. The Dougherty School of Arthas an 1,800-square-foot art gallery.

Austin has many public buildings,including the state capitol building,the tallest in the country, and historicbuildings like the Texas Governor’sMansion and the General Land Office.

The Austin area has 15 public schooldistricts and more than 60 privateschools serving students from kinder-garten through 12th grade. Local vot-ers approved a 1996 school bondpackage of $369 million to renovateand build 11 new schools by 2001 andto develop learning environmentsgeared to preparing students for the in-creasing technological challenges ofthe 21st century.

Map 1. Growth Areas

Source: Real Estate Center at Texas A&M University

Austin, TexasCensus PlaceWater AreaHighwayInterstate Highway

US 71

US 183

US 183

SH 360

I 35

I 35

US 290

SH 1

SH 1

US 290

Retail

Retail

MixedUse

Retail

Office

Office

Office

Office

Office

Industrial

Industrial

RetailMultifamily

Multifamily

Multifamily

Multifamily

URBAN GROWTH PATTERNS

Map 1 shows Austin’s majorgrowth corridors. The major-ity of Austin MSA growth is

taking place northwest of downtownand north along I-35 in Round Rockand Georgetown. Southwest Austin isalso growing. Retail development hasbeen strong in northwest Austin. Of-

fice development has been occurringprimarily in the northwest and south-west, with the largest developmentsoccurring along MoPac (Loop 1) andParmer Lane.

Apartment growth has flourishedalong the southern portion of MoPac.Residential expansion is most preva-

lent in the north and in the southwest,according to the City of Austin’s plan-ning department.

Austin has developed a smart-growth plan to encourage infill andmore concentrated developments andto redirect the city’s growth away fromthe environmentally sensitive west.

15

HOUSING

Housing Affordability – First Quarter 2001

Percent ofHouseholds THAI for

That Can Afford First-timeMedian-priced Home THAI* Homebuyers

Austin 57 1.20 0.88San Marcos 61 1.36 0.90

*The THAI is the ratio of median household income to the income required to buy the median-priced home using currently available mortgage fi-nancing. Standard financing is a 30-year loan covering 80 percent of the cost of the home. A THAI of 1.00 indicates that the median household in-come is just enough to qualify for a loan sufficient to purchase the median-priced home.


Austin MSA Single-family Permits


0

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12,000

14,000

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1982

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2000

16

Average Sales Price of Single-family Home,Austin Area


Single-family Home Sales Volume, Austin MLS


$0

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$250,000

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uar

y

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ruar

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ch

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e

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ob

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1998 1999 2000

17

Price Distribution of MLS Homes Sold in Austin, 2000(in percent)


Price Range 1997 1998 1999 2000

$59,999 or less 6.9 5.7 4.1 2.660,000–79,999 12.7 11.3 8.3 4.280,000–99,999 21.4 20.0 18.5 11.4100,000–119,999 14.2 14.7 14.8 15.0120,000–139,999 10.5 11.3 12.8 13.2140,000–159,999 7.5 8.1 8.7 10.4160,000–179,999 6.4 6.6 6.5 8.0180,000–199,999 4.4 4.5 4.9 6.1200,000–249,999 6.9 7.3 8.0 10.1250,000–299,999 3.5 3.8 5.1 6.3300,000 and more 5.6 6.8 8.3 12.7

The number of homes reportedsold through the Austin MultipleListing Service (MLS) fell from

18,112 in 1999 to 17,520 in 2000. Theaverage price of homes reported soldthrough the MLS was $194,200 in2000. New and existing home pricesin Austin are on an upward trend withprice distributions showing the largestpercentage increases in homes costingmore than $250,000. About 30 percentof single-family homes sold for morethan $200,000 in the Austin MSA in2000.

Austin had a 2.4-month inventory ofunsold existing homes in 2000, whileSan Marcos had an inventory of 6.7months. The total number of homessold in Austin in 2000 was 17,520,while 332 homes sold in San Marcoslast year.

During 2000, 13,045 new homeswere permitted in the Austin MSAcompared with 11,704 in 1999. Theaverage value of a new home in 2000was $127,500. During first quarter2001, 1,856 new homes were permit-ted.

The City of Austin is revising a planoutlining future development of the719-acre former Robert Mueller Air-port, located near downtown. The planfor a mixed-use and residential devel-opment was completed in May 2000.

In West Austin, subdivisions are be-ing developed around Lake Travis.

Waterford on Lake Travis has 134 lots.Seven Oaks is a 104-lot subdivisionbeing planned near the Village of BeeCave, located west of Austin whereTexas 71, FM 620 and Bee Caves Roadconverge. Two major residential de-velopments are already under devel-opment in the area. Spring Creek is a1,272-lot subdivision on 1,044 acres.The second planned subdivision is a980-acre development with larger lots,ranging from .5 to 6.8 acres. BerdollFarms is a new subdivision coming upnear Emma Long Metropolitan Park. Atpresent, 378 lots have been permittedon 81 acres.

South of Austin, developers areworking to construct Briarcreek, a172-acre subdivision with 1,193 lotsnear I-35. In southwest Austin, the230-lot Travis County West subdivi-sion is being planned.

In northeast Austin, the Circle CRanch subdivision near Hwy 183 willhave 139 lots on 20 acres. Closer todowntown in north Austin, BarkerRanch is a new subdivision nearMoPac; it has 173 lots on 95 acres.Hillcrest is another subdivision onManchaca Rd; it will have 196 lots.

Round Rock has recently issued per-mits for a number of subdivisions suchas Forest Creek, Chandler Creek andSonoma, totaling more than 100 acresof single-family residential develop-ment.

In Hutto, 3,500 new homes are be-ing built or are in the platting stages.This is a large number of homes for afarming community with a currentpopulation of approximately 1,500.North of Hutto, in Jonah, a 323-acre,44-lot subdivision, Heritage on the SanGabriel, is expected to be one ofWilliamson County’s most expensivesubdivisions.

Plans are also being made for devel-opment of the C-7 Ranch near George-town and the Avery Ranch betweenLeander, Round Rock and Cedar Park.Golf courses are expected to be amongamenities offered. Avery Ranch will bea planned unit development with4,000 to 5,000 homes. In 2000, per-mits have been issued for 1,339 lots tobe developed in Avery Ranch.

Leander is another growing commu-nity. Population and Survey Analystspredicts 28,962 housing and apart-ment starts over the next ten years. Thisgrowth is expected to be especiallystrong south of FM 1431 and nearSteiner Ranch off FM 620. An 1,100-acre residential community has beenannounced. Permits have been issuedfor development of 455 lots on 646.5acres.

In Pflugerville, 1,800 homes areplanned in Falcon Pointe. Lots will beavailable by the end of 2001. Homeprices will average $150,000.

18

New Subdivisions in Austin

Name Location No. of Lots Acres

Briarcreek Blake-Manor Rd. at Taylor Lane 1,193 172.4

Avery Ranch Far West W. Parmer Lane 868 191

Avery South Parmer Lane 471 156.93

Steiner Ranch (Phases 1, 2) N. Quinlan Park Rd. 455 646.54

Berdoll Farms (Phases I, II) Pearce Lane 378 81.52

Travis Country West Southwest Pkwy. at Sunset Ridge 230 47.67

Gaston/Sheldon Subdivision Dessau Rd. at Greg Lane 229 34.95

Hillcrest (Sections 3, 4) Manchaca Rd. 196 31.72

Village at Western Oaks La Cresada Dr. at Beckett Rd. 178 69.41

(Sections 15, 24A, 23A)

Barker Ranch at Shady Hollow Brodie Ln. at Frate-Barker Rd. 173 95.59

Circle C Ranch Hibiscus Dr. 139 20.9

Waterford on Lake Travis Lohman Ford Rd. at Ivean Pearson Rd. 134 207.75

Hielsher Walebridge Lane 132 46.63

Laurelwood Estates Manchaca Rd. at Dittmar Rd. W 132 20.59

Austin Estates FM 973 Rd. 122 41.33

Springfield Colton-Bluff Springs Rd. 107 26.38

Seven Oaks (Sections 2, 5) FM 2244 Rd. 104 139.42

Colonial Trails Colonial Park Blvd at Shelby Lane 103 16.57

Stablewood at Slaughter Creek W FM 1626 Rd. 93 26.82

Sarah’s Creek South Wells Branch Pkwy. at FM 1825 Rd. 92 10.43

Saddlewood Estates Old Manchaca Rd. at Marchitah’s Way 91 14.42

Settler’s Meadow 400 Olympic Drive 90 18.9

Speyside Boyce Lane at Harris Branch Pkwy. 87 18.59

Pioneer Crossing E Dessau Rd. at Peyton Fallas Dr. 85 16.53

Hillcrest Manchaca Rd. 82 12.55

Scofield Farms W. Howard Lane at Metric Blvd. 72 11.95

Gaines Ranch Travis Country Cir. 62 82.93

Deer Haven Deer Lane 58 12.15

Regents Southwest Pkwy. at Foster Ranch Rd. 55 54.8

WindingTrails N FM 973 Rd. at Trailsdie Estates Blvd. 54 127.72

Brodie Springs Brodie Lane at Squirrel Hwy. 52 21.55

Vista Ridge PUD Valburn Dr. 51 51.07

Grandview Hills Davis Mountain Pass 49 10.54

Senna Hills Senna Hill Dr. at Acacia Bud Dr. 49 21.3

Grand View Hills Cloud Mountain Crossing at Castle Peak Trail 40 9.5

Canyon Rim West Rim Dr. 40 10.06

Source: City of Austin

19

MULTIFAMILY

Austin MSA Multifamily Building Permits


0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

1980

1982

1984

1986

1988

1990

1992

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1996

1998

2000

Austin Apartment Occupancy Rate, December 2000

Texas MetroAustin Average

Average rent per square foot $0.95 $0.75Average rent for units built since 1990 $1.05 $0.96Average occupancy (in percent) 97.6 95.7Average occupancy for units built since 1990 (in percent) 97.3 95.4

Source: Apartment MarketData Research

20

Planned Apartments, Austin January 2001

Projects with Approved Site Plans Number of Units

Forest Hills 192Lost Canyon 29Mansions at Canyon Creek 332Plaza Lofts 53Spicewood Condominiums 22Spring Valley 230Spyglass Condominiums 34St. Elmo Condominiums 45Stoneleigh at Gracy Farms 168The Retreat at Anderson Mill 137

Under ConstructionPlaza Lofts 53Southwest Trails 160

CompletedAMLI at Monterrey Oaks 390Archstone One at Canyon Creek 444Mission Hills 346Mountain Ranch 406Townhomes of Wellwood 84

Source: City of Austin Department of Planning

Austin has one of the tightestapartment markets in the state,averaging more than 97 per-

cent occupancy. High occupancy ratesand increasing rents have led to moreapartment construction. A total of8,064 building permits were issued in2000 compared with 7,849 in 1999. Inthe first quarter of 2001, 1,381 newmultifamily building permits were is-sued, according to the U.S. Census Bu-reau.

A total of 6,268 units were com-pleted in 2000, continuing to reflect ashortage of inventory as occupancyrates remain high and rental rates in-crease. Six new projects were com-pleted in fourth quarter 2000, totaling2,255 units. At the end of fourth quar-ter 2000, 13,435 apartments were un-der construction in 47 projects, ac-cording to Austin Investor Interests.Forthcoming development includesmore than 13,000 units with expected

construction start dates in 2001. Map 2shows the locations of multifamily per-mits issued in 2000.

During November and December2000, the City of Austin received siteplans for eight new multifamilyprojects. A cluster is emerging in southAustin on Slaughter Lane. Swanson’sCross will have 348 units. A develop-ment by Fairfield will have 875 units atSlaughter Creek east of I-35. FortBranch Landing will have 250 units ineast Austin on Ed Bluestein Boulevard.In Northwest Austin, Montandon Oakswill have 146 units at FM 2222 and FM620. Escalon at Canyon Creek with568 units will be in the same area.

A 243-unit apartment complex,West Avenue Lofts, was completed infall 2000. The $21 million project isalong Shoal Creek. The Nokonah is a99-unit condominium project withunits priced from $200,000 to $3 mil-lion. The project at Ninth Street and

North Lamar will be completed in fall2001; it includes 15,000 square feet ofretail space on the ground floor and apool and health spa on the secondfloor. 54 Rainey Place has 76 units andwill also be completed in 2001. Thecondominiums are priced from$250,000 to $2 million.

Plaza Lofts is located at Guadalupeand West Fifth Streets. The 55-unitproject has units priced from $200,000to $3 million and will be completed infall 2001. The Residences at the FourSeasons has 112 planned units. Theproject is located at San Jacinto andCesar Chavez and has units pricedfrom $400,000 to $1.5 million. Theproject is expected to be completed inMay 2002.

The Triangle project, a developmentlocated between West Guadalupe, 45th

Street and Lamar Boulevard, is undernew ownership. The project, originallymarketed as a retail development, will

21

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Map 2. Multifamily Building Permits, 2000

Source: Austin Building Permit Office


� Multifamily

US 71

US 183

US 183

SH 360

I 35

I 35

US 290

US 290

SH 1

SH 1

�

consist of 600 apartment units,180,000 square feet of retail-officespace and a four-acre park.

Spring Valley Townhomes, a 230-unit complex, received federal housingtax credits from the Texas Departmentof Housing and Community Affairs tobuild affordable housing. The projectis on East William Cannon Drive.

Parmer Lane in north Austin is see-ing apartment growth as is the City ofRound Rock. On Parmer Lane,

Spraddle Creek Apartments andAlexan at Rattan Heights are two de-velopments that opened in 2000.Jefferson Center with 652 units is alsoapproved for construction on ParmerLane. Seven projects totaling 3,700units are planned over the next severalyears in Round Rock, the majority ofwhich will be east of Dell Computer,along Louis Henna Boulevard.

In northwest Austin, Jefferson Can-yon and Jefferson Lakes, totaling 549

units, are being constructed near LakeTravis. Southwest Trails is under con-struction on Fletcher Lane. The Ter-race, another apartment project underway at Cedar Park, will have 251 units.

In southwest Austin, Lantana Apart-ments, a 403-unit complex, is underconstruction at Rialto Boulevard andTerravista Drive. The project should becompleted in fall 2002.

22

MANUFACTURED HOUSING

Austin MSA Manufactured Home Sales

Proportion of NewManufactured Single-family HomesHomes Sold (in percent)

1997 2,628 23.71998 2,402 18.21999 2,419 17.12000* 2,843 24.92

*Through third quarter 2000Source: Texas Manufactured Housing Association

The majority of manufacturedhome subdivisions are outsidethe city in places like Buda and

Pflugerville. One of the area’s largestdevelopers of manufactured homes isSun Communities, Inc., which is de-veloping several projects, including

River Ridge, a 490-pad project in southAustin on Slaughter Lane.

Manufactured homes are increas-ingly popular because of their improv-ing image and affordability. For an av-erage price of $37,500, an individualcan purchase a home averaging 1,380

square feet, excluding the cost of land,according to the Manufactured Hous-ing Institute. The median income ofmanufactured home owners is$24,500.

SENIORS HOUSING

The Texas State Data Center esti-mates that 10 percent of theAustin MSA’s population is age

60 and older and that this group willgrow to 17 percent of the populationby 2030. Austin’s high quality of lifeand strong amenity base are attractiveto retirees and to senior housing devel-opers.

According to the Texas Departmentof Human Services, Austin has 45 as-sisted-living facilities with 1,636 beds.The American Seniors Housing Asso-ciation reports that Austin has a 61 per-cent occupancy rate for assisted-livingfacilities.

The Summit assisted-living commu-nity on Mesa Drive opened in August2000. The community has 122 units.

Sun City Texas in Georgetown is thelargest residential development gearedtoward seniors in the area and has thepotential for 9,500 homes. The devel-opment sold 233 homes during 2000,according to Sun City.

Bethany Estates, a $32 million hous-ing community for seniors, has con-tinuing-care facilities and planned toopen in spring 2001. The Summit atWestlake Hills is adding 150 indepen-dent living units, 50 assisted-living

apartments and a 20-bed Alzheimer’sunit to its existing facility.

An article in the Austin BusinessJournal reports there are approximately30 apartment-style facilities for seniorsin the Austin area. The federal govern-ment announced in October 2000$3.8 million in funds to provide afford-able local housing for seniors. The firsthousing complex of the smart housinginitiatives will be built on Oak SpringsRoad and will have 55 one-bedroomapartments and an on-site manager’sapartment.

23

RETAIL MARKET

Retail Property Statistics

Austin Area Market 1998 1999 2000

Total space (in square feet) 13,958,132 14,563,469 15,678,458Occupancy (in percent) 93.49 94.83 95.77Base rental rate 50,000–100,000 square feet $1.21 $1.25 $1.36Base rental rate more than 100,000 square feet $1.40 $1.44 $1.57

Source: NAI/Commercial Industrial Properties Co. The Source

Retail Property Statistics, Submarkets

Square FeetAbsorbed Six

Months EndingPercent of Total Square December 31, Occupancy

Submarket Total Market Feet* 2000 (in percent)

Arboretum 9.9 1,567,866 14,595 95.67Central 3.7 593,563 (590) 97.83Cedar Park 1.4 223,928 (1,579) 91.76East 6.4 1,022,514 18,625 94.86Far North 6.3 1,000,263 13,657 97.58Far Northwest 14.1 2,231,203 19,313 98.06North 14.8 2,350,394 63,727 95.38Northeast 0.4 68,550 (900) 98.69Northwest 0.3 50,000 (1,200) 92.60Pflugerville 2 318,932 88,068 95.00Round Rock 10.3 1,642,854 (3512) 93.41South Central 12.7 2,009,713 24,863 95.09Southeast 2 317,606 27,980 98.88Southwest 11 1,744,869 63,404 96.11West 4.6 736,203 36,932 93.88Total 100 15,678,458 363,383 95.77

* Tracked centers larger than 50,000 square feet excluding regional malls and owner-occupied, freestanding buildings.Source: NAI/Commercial Industrial Properties Co. The Source

24

Austin’s retail market ended2000 on a high note with anoverall occupancy of nearly

95.8 percent, according to NAI/Com-mercial Industrial Properties Com-pany. The high occupancy rates keptrental rates high. The average rentalrate for centers of more than 50,000square feet rose by 9 percent during2000.

Austin’s retail market grew by morethan one million square feet in 2000.Much of this space resulted from theopening of La Frontera at I-35 and FM1325 in Round Rock and the StassneyHeights Shopping Center at I-35 andStassney Lane. La Frontera is a master-planned development that includes800,000 square feet of retail space; it isthe largest nonmall retail center in theAustin area and has eight restaurants.The development also has two mid-rise office buildings and a hotel.

Grocery-anchored neighborhoodstrip centers also contributed to the in-crease in retail space. There were alsoa number of freestanding “box” devel-opments in the retail market. The retailmarket is slated to continue growingbecause of the demand created by the

residential building boom of the late1990s. Sixth Street Market and Tri-angle projects are two large mixed-usedevelopments planned in the near fu-ture.

During the first three quarters of2000, $36.8 million in constructionstarted on 559,751 square feet of com-mercial space. New commercial spacecost an average of $51 per square footto construct during third quarter 2000,according to the City of Austin. Map 3shows the locations of retail buildingpermits for Austin in 2000.

Hotels-MotelsAustin’s hotel occupancy is nearly 5

percent higher than that of other majorTexas cities according to a study con-ducted by PKF Consulting. New con-struction may change this. An 800-room hotel is scheduled to open byJune 2002 near the convention centerdowntown. A new five-story hotel willgo up on Riverside Drive and anothernew hotel is planned on I-35.

The PKF Consulting study found thathotel construction in Austin has shiftedfrom northwest to south Austin, prima-rily to meet the demand created by the

opening of Austin-Bergstrom Interna-tional Airport. Five hotels were com-pleted in South Austin during 1999.Two more were completed in 2000and another will be completed in2001. These new hotels will add 1,175new rooms to the submarket. A lack ofnearby retail businesses and stiff com-petition in the area may prevent theairport submarket from reaching highoccupancy levels.

In southwest Austin, a 126-room ho-tel is planned between I-35 and SouthCongress. Surrounding developmentwill include four restaurants, apart-ments and a commercial building.

Barton Creek Resort is adding 138rooms and 11,000 square feet of ball-room and meeting space at a cost of$47 million. In Round Rock, a 96-roomResidence Inn opened. A 300-roomMarriott will be constructed in RoundRock as part of the La Frontera devel-opment.

A Springhill Suites by Marriott isplanned for I-35 and Parmer in Austin.An 800-room, 26-story city-ownedconvention center hotel is planned.The $225 million hotel broke groundin late 2000.

Hotel Occupancy and Rental Rates

1998 1999 2000

Central business districtOccupancy rate (in percent) 72.6 72.5 80.1Average daily rental rate $119.65 $129.44 $134.97

North AustinOccupancy rate (in percent) 69.0 66.3 70.8Average daily rental rate $70.29 $72.26 $73.73

Northwest AustinOccupancy rate (in percent) 75.2 73.4 76.9Average daily rental rate $85.23 $85.09 $96.67

South Austin/AirportOccupancy rate (in percent) 73.0 73.6 79.5Average daily rental rate $79.24 $78.54 $80.65

Austin TotalsOccupancy rate (in percent) 71.4 70.2 75.8Average daily rental rate $87.36 $91.60 $95.90

Texas TotalsOccupancy rate (in percent) 66.6 63.7 67.2Average daily rental rate $82.43 $85.11 $86.75

Source: PKF Consulting

25

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Map 3. Retail Building Permits, 2000



� Retail

US 71

US 183

US 183

SH 360

I 35

I 35

US 290

US 290

SH 1

SH 1

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Permits have been issued for two ad-ditional hotels: a $25 million hotel innorth Austin and a five-story hotel onRiverside Drive in southeast Austin.

Retail DevelopmentsThe Texas Restaurant Association

projects that Austin will have thestate’s fastest growing restaurant mar-ket during 2001. Sales are expected tosurpass $26.4 billion, with a growthrate of 13 percent, nearly 7 percenthigher than that of 2000.

A new Wendy’s at 41st Street, a newChick Fil-A on U.S. 290, Krispy KremeDonuts at Research Boulevard and anew fast food restaurant on SlaughterLane are scheduled to open in 2001.Jack in the Box constructed a restau-rant on Ben White Boulevard.

Texas Land & Cattle Company iscompleting a restaurant on South I-35.Higher-end restaurant clusters are pre-dicted for southwest Austin, especiallywith improved transportation routes toplaces like Oak Hill.

Downtown, Kaya Blue on Sixthopened in August 2000, while ASTITrattoria & Wine Bar opened in HydePark and two new Antonio’s Tex-Mexrestaurants were added to Austin’s listof dining places.

In north Austin two 15,000-square-foot Walgreens stores are proposed onParmer Lane and Braker Lane, and anAlbertsons is proposed along I-35.Also on Braker Lane, Discount Tirebuilt a new store. Haverty’s is buildinga $3.5 million store on Pecan ParkBoulevard.

H-E-B built a store and strip centerjust east of downtown Pflugerville andalso is planning to open a store inBuda, on I-35. An H-E-B is under con-struction at Brodie and William Can-non in southwest Austin.

A 75,000-square-foot storage facilityhas been built on I-35 at SlaughterLane in south Austin. Sunset ValleyVillage was built in 1999 at BrodieLane and U.S. 290 West. The 245,000-square-foot retail center includesBarnes & Noble, CompUSA, Linens N’Things, Michael’s, Petco, Kinko’s andOld Navy.

Retail development has been strongin Williamson County. The most no-ticeable retail development has takenplace in Cedar Park at FM 620 andHighway 183 and along the I-35 corri-dor, both in Round Rock at FM 1325and in San Gabriel Village inGeorgetown.

Greenlawn Crossing is a plannedshopping center in Round Rock. H-E-Bwill anchor the 112,500-square-footcenter at Louis Henna and GreenlawnBoulevards.

In Georgetown, at San Gabriel Vil-lage, a Chili’s, Applebee’s and Luby’sCafeteria have already opened. The52-acre commercial development alsohas a Holiday Inn Express and a 180-unit apartment complex called TheWater’s Edge. Texas Heritage Bank, alocal independent bank, opened abranch in Georgetown and has plansfor future area expansion.

In the Cedar Park area, Homestead,the most recent retail development, iscompletely leased to companies likeBarnes & Noble, Pier 1 Imports andPaul’s Home Fashions. There is also anew Lowe’s in the area.

Home Depot's Expo Design Centeris planned for South Austin at BrodieLane. Kohl's is building three stores inAustin that will open in October.

In Buda, at I-35 and Loop 4, a newshopping center anchored by H-E-B isplanned.

25

26

OFFICE MARKET

Austin Office Market

Fourth Quarter1997 1998 1999 2000

Central business districtAverage rent per square foot $18.17 $21.25 $22.66 $30.05Occupancy (in percent) 90.9 94.7 95.5 97.0

SuburbanAverage rent per square foot $17.09 $20.85 $22.04 $25.44Occupancy (in percent) 97.1 92.8 91.8 95.8

City-WideAverage rent per square foot $17.65 $20.95 $22.15 $26.32Occupancy (in percent) 94.7 93.4 92.9 95.3

Source: Colliers Oxford Commercial

Austin Office Market Absorption(in square feet)

Source: Colliers Oxford Commercial Research Services

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

1989

1990

1991

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Map 4. Office Building Permits, 2000



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US 71

US 183

US 183

SH 360

I 35

I 35

US 290

US 290

SH 1

SH 1

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Office Submarkets, End of Year 2000

Overall WeightedInventory Vacancy Rate Average

Submarket (square feet) (in percent) Rental Rate

Central business district 7,061,339 3.0 $32.66North 2,632,956 7.0 22.42Northeast 1,938,166 2.0 20.33Northwest 10,180,428 2.0 28.45South 1,464,669 6.0 20.84Southeast 233,985 1.0 21.45Southwest 4,644,128 1.0 27.67Citywide Total 28,155,671 3.0 $27.83

Source: NAI/Commercial Industrial Properties Co. The Source

Colliers Oxford Commercial, Inc.,estimates that 1.1 millionsquare feet of office space came

on the Austin market in 2000. Austin’soffice market now consists of morethan 28 million square feet. The major-ity of the new space is located in thenorthwest and southwest submarkets,meaning that the northwest submarketnow has more space than the centralbusiness district. The northwest sector

contains more than one-third of the of-fice market, with 2.2 million squarefeet absorbed during 2000.

According to the City of Austin theaverage construction cost per squarefoot of office space was $39 in thethird quarter of 2000. During the firstthree quarters of 2000, $267 million inoffice projects totaling 6.4 millionsquare feet of office space were per-

mitted. Map 4 shows the location ofoffice building permits issued in 2000.

At the end of 2000, more than 3.4million square feet had been absorbedoverall in Austin, the highest annualabsorption in 20 years. Class A build-ing space in downtown has a 97.5 per-cent occupancy rate with average rentsof $30.10 for the first quarter of 2000,according to Colliers Oxford.

28

Occupancy rates are down 0.9 per-cent. NAI/CIP predicts about 950,000square feet of new construction bymid-2001, with 87 percent currentlypreleased. About 3.5 million squarefeet is expected to be available byyear-end 2001.

In the north, Parmer@Mopac is anew type of office building with58,000 square feet of space being pro-moted to smaller technology tenantswho may only need 5,000 to 15,000square feet. The building has two sto-ries and provides wider, shallower baydepths, along with a lower parking ra-tio of one parking space to every 200square feet of office space, and isequipped with optic infrastructure andhigh-capacity electrical systems.

Parmer Business Park has 151,407square feet of a potential 260,000-square-foot office building under con-struction at Riata Vista Circle. A two-story, 9,600-square-foot office buildingis planned for Airport Boulevard.

Barshop & Oles Co. is planning a42-acre, mixed-use development onParmer Lane near Dell Computer’snew buildings. Plans have been sub-mitted for a two-story office projectand a hotel, with restaurant and retailpads also included.

DaimlerChrysler Financial Servicesin conjunction with Hillwood Devel-opment Corp. will build a 130,000-square-foot operations center largeenough to house 1,000 workers. Thecompany currently has 600 employeesin the area. The facility will be built atCircle T Ranch. Move-in is expected infall 2001.

McShane Corporation plans to buildthe Riata Gateway, a 150,000-square-foot, three-story office building, on Re-search Boulevard. A new 149,983-square-foot office building is beingplanned near the Riata Gateway. An-

other single-story, 45,000-square-footoffice building is planned on ResearchBoulevard.

Lend Lease Real Estate Investmentsand Lincoln Property Co. have joinedto build a speculative office buildingon Loop 360 near Bee Caves Road.The 160,000-square-foot building willcomplement Las Cimas I, which wasalso purchased by the partnership. Thepartnership may build a third phase atthe site.

In Round Rock, construction has be-gun on 200,000 square feet of officespace on 17 acres in the La Fronteraproject.

In downtown Austin, a new officebuilding is under construction on WestSixth Street. The 23-story, 440,000-square-foot project will cost $88 mil-lion to build. Computer Sciences Cor-poration is also under constructiondowntown. The company will locateon city-owned land. The project in-cludes three six-story buildings onthree city blocks. The city plans tobuild a 100,000-square-foot city hall.

Charles Schwab and Companyopened a new office building on OakKnoll Drive near Research Boulevard.Currently, 400 work at the facility.There are plans to build additional of-fices to accommodate 3,500 employ-ees.

Congress Holdings Group plans afour-story office building on CongressAvenue that will have 26,800 squarefeet. Plans have also been made forconstruction of a 27-story, 495,000-square-foot, $99 million office andretail project at Fourth Street andCongress.

Lowe Enterprises Investment Man-agement, Inc., has acquired Stone-bridge Plaza, a 193,000-square-footoffice building at North MoPac Ex-pressway. It is the first of a twin-tower

project. The second tower is underconstruction. An Austin developmentfirm, Sage Land Co. plans to buildHartland Plaza, which will contain125,000-square-foot of office spacenear MoPac Expressway and FifthStreet. Partnerware, Inc., tripled itsspace when it moved into 17,000square feet at Wells Fargo Tower, for-merly First State Bank. College Hire,Inc., also moved downtown near SixthStreet.

Hutto Exchange, an office and retailproject, will consist of eight one-storybuildings totaling 68,830 square feet.It will be located on a ten-acre tracteight miles east of I-35 on Highway 79just east of Round Rock. The City ofHutto’s town hall will move into one ofthe buildings.

Medical OfficeA 48,000-square-foot medical office

building is planned near Round RockHospital. Park West Corporate Centeris planned in Round Rock near McNeilRoad. The project will consist of two14,000-square-foot buildings, but con-struction is not expected to begin untilthe project is 60 percent preleased.

Wyoming Springs Medical Center, a63,000-square-foot medical building,in Round Rock was initiated by 27doctors in an effort to combat risingrental costs. The $8.2 million facilitywill include a laboratory and at least14 physician offices.

In Lakeway, Towers of Lakeway is aplanned medical project. The firstbuilding will have 25,600 square feetand include a therapy pool. Theproject is located on Lohman’s Cross-ing Road.

Permits have been issued for a14,000-square-foot outpatient facilityin south Austin and a 5,300-square-foot dental office on Medical Parkway.

29

INDUSTRIAL MARKET

Average Industrial Rental Rates

Annual Monthly

R&D $10.20 – $15.00 $.85 – $1.25Flex $7.80 – $10.80 $.65 – $.90Bulk Warehouse $4.44 – $8.40 $.47 – $.70Office Warehouse $5.64 – $8.40 $.47 – $.70Manufacturing Warehouse $6 – $9 $.50 – $.75

Source: NAI-Commercial Industrial Properties Company’s The Source

Office/Bulk/Manufacturing/Warehouse by Submarket

Existing Current VacancySquare Feet (In percent) Under Construction

Round Rock 1,376,891 1.0 336,880North 7,221,219 2.0 434,220Northeast 2,229,952 1.0 489,424East 1,371,258 6.0 0Southeast 2,771,152 8.0 371,000South 1,917,823 13.0 0Total 16,888,295 4.0 1,631,524


Flex/R&D by Submarket

Existing Current VacancySquare Feet (In percent) Under Construction

Round Rock 522,240 8 140,986North 5,553,934 7 202,488Northeast 2,051,647 2 0East 0 0 0Southeast 3,070,328 13 467,200South 67,858 0 140,000Total 11,266,007 8 1,545,230


30

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Map 5. Industrial Building Permits, 2000



� Industrial

US 71

US 183

US 183

SH 360

I 35

I 35

US 290

US 290

SH 1

SH 1

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The Austin industrial market hasgrown to more than 28 millionsquare feet and has low vacancy

rates. Forty-five percent of the city’s in-dustrial space is in the north sub-market. The southeast submarket is thecity’s second largest, capturing 21 per-cent of the market, and benefiting fromproximity to the airport. NAI-Commer-cial Industrial Properties Company’sThe Source reported a total absorptionof nearly 2.5 million square feet in theindustrial market during 2000, the larg-est in Austin’s history. Fifty percent ofthis was warehouse space, and 41 per-cent was Flex/R&D space.

Austin-Round Rock as a whole has a96 percent occupancy rate for offices,bulk, manufacturing and warehousingspaces and 92 percent for Flex/R&Dspace, according to NAI-CommercialIndustrial Properties. Bulk warehousespace is renting for $4.44 to $6.96 persquare foot, manufacturing space for$6 to $9 and flex space for $7.80 to$10.8, according to NAI’s The Source.

During the first three quarters of2000, industrial construction startedon 378,658 square feet of industrialspace valued at $7.95 million. The av-erage construction price per squarefoot in Austin was $21 during the thirdquarter of 2000, according to the Cityof Austin. Map 5 shows the locationsof industrial building permits issued in2000.

In Northeast Austin, Hill Partners,Inc., is building a nine-building,750,000-square-foot industrial-officepark at McNeil-Merrilltown Road andHoward Lane, behind Abbott Labora-tories. Pro Line Warehouse and Distri-bution has preleased 98,000 squarefeet in the park. The majority of newwarehouse space in Austin serves themanufacturing industry. Dell Com-puter Corporation owns five millionsquare feet and has 750,000 squarefeet of warehouse space under con-struction.

Many Internet firms choose to locatetheir facilities in the Austin area, which

offers a good transportation infrastruc-ture and economical real estate. TheBusiness Center@TechRidge brokeground for a 218,000-square-footwarehouse in June 2000. Two officebuildings are planned for the park.When complete, TechRidge will in-clude 1.1 million square feet of distri-bution space. Dell Computers hascompleted two buildings just east ofTechRidge, which is located at ParmerLane and I-35.

Near the Austin airport, MetCenter isexpanding. A 345,000-square-footbuilding is under construction. PSINetwill occupy the building with a datacenter.

Redi-Packaging, a corrugated boxmanufacturer, is taking over the facili-ties of a failed shrimp farm in Buda justsouth of Austin. The company will op-erate in the 115,000-square-foot facil-ity as well as a new 45,000-square-footbuilding under construction.

31

CONCLUSION

701-50-1483

The Austin-San Marcos MSA,along the I-35 corridor, contin-ues to expand. Much of the

growth in the MSA is taking place out-side and on the outskirts of Austin. Thearea is dominated by high-tech indus-tries, helping to bring higher salariesand lower unemployment to the area.While dot coms have been laying offemployees, the employment markethas remained strong.

The MSA continues to be environ-mentally conscious. Development re-strictions are in place to protect theEdward’s Aquifer as a water source.Recreational activities abound, includ-ing hike-and-bike trails, swimming inthe San Marcos River and boating onTown Lake.

Increasing population, job growthand a good business climate haveraised rents and occupancy levelsthroughout the area. Growth is ex-pected to continue at a relatively stablerate. The overall outlook for Austin andsurrounding areas appears positive.

jennifer s. cowley - texas a&m university · 2015-08-11 · integrated circuit manufacturing...

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