A venture of Empire Square Group and Ryan Companies aims to capitalize on downtown Austin’s growth, adding to a multifamily development pipeline that’s been drying up over the past couple years.
New York-based Empire Square and Minneapolis-based Ryan want to demolish three commercial buildings at 611 East Sixth Street to make way for a 258-unit apartment complex, the Austin Business Journal reported.
The project, called the Grant Building, will span 260,000 square feet on a 1.8-acre lot. It’s also slated for retail, a courtyard, coworking space and a fitness center.
Austin saw a massive influx of multifamily development during the initial years of the pandemic amid surging demand. However, demand has cooled in recent years, resulting in oversupply and declining rents.
Austin’s apartment occupancy hit 86 percent in January, the lowest among 12 Sun Belt markets tracked by MRI ApartmentData. Occupancy has ticked up since then, to 87 percent, the outlet reported.
Austin’s multifamily market may be oversaturated, but the downtown area presents some enticing opportunities. The central business district’s population increased by roughly 850 last year, bringing it to 15,360. Of the 81 proposed multifamily projects in the Austin metro, 17 are downtown, according to MRI ApartmentData.
Just over 1,300 units were added to downtown’s apartment stock last year, and another 3,062 are under construction.
Multifamily starts are down and may not increase until at least 2027 due to oversupply issues, coupled with high borrowing costs, said Kurt Goll, president of Austin-based JCI Residential.
“The question developers have to ask today is, when do you start a project so it delivers after the current oversupply is absorbed? Austin developers still have a lot of units in the planning pipeline that could be started anytime they determine we are going to have a shortage,” Goll told the outlet.
—Quinn Donoghue
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