Archives for January 2013

Why Are Prices Surging At The Railyard Condos?

Why Are Prices Surging At The Railyard Condos?

The Railyard condos are unique.  The two low-rise buildings sit on two of the best sites in downtown Austin, and have usually been more affordable than the newer, sexier high-rises.  Part of the appeal is location: situated across from the Austin Convention Center, 100 feet from the MetroRail, one block from Congress Avenue, three blocks from competing luxury towers, the Austonian and Four Seasons.  The Railyard has enviable proximity to most anything in downtown Austin.

Remember last year’s NIMBY fury over Austin’s Short Term Rental ordinance (pdf)?

You would be in good company if you assumed that all of downtown Austin’s condos and apartments were making money on STRs.

You would be wrong, though.  

Downtown condos have home owners associations (HOAs).  HOAs have rules, and in downtown Austin those rules are usually antagonistic to short term rentals.  Breaking those rules could result in a $1000 per day fine by the HOAs.  Despite the fact that the STR ordinance does not regulate apartments and condominiums, last year’s fight with the City of Austin to regulate STRs wasn’t going to impact most of us living in downtown because of these HOA rules. [UPDATE: rules have been revised to cap STR permits in CBD multi-family buildings at 25%]

The Railyard condos are very, very unique.

This past November, just a month after Austin’s new Short Term Rental ordinance took effect, an enterprising Railyard owner recognized the Railyard’s bylaws did not forbid short term rentals and put together a fund to purchase several units.

The investment rationale is simple: opening up your condo as a vacation-rental-by-owner (aka. VRBO) during SXSW, ACL, F1 (just to name just the big opportunities, not to mention conventions) can yield more rent during those events than the total rent from a typical 12 month lease!  Same for Railyard owner-occupants who can lease their place out for a few nights, take a vacation, and make a couple thousand bucks.

The economics of Railyard ownership shifted overnight. Word quickly spread to the owners and a handful of Austin Realtors.  In the previous year (Nov 2011 – Nov 2012), 1bd/1ba units at the Railyard condos were trading at an average of $285/foot, and units with at least 2bd/2ba units were trading at an average of $275/foot. [UPDATE: one year after posting this article, the last recorded MLS sale at Railyard was a building record $415/foot]

Going forward, expect sale prices at the Railyard condos to be 20-25% more than last year, reflecting the new economics of embracing downtown short term rentals.  Owner-occupants are getting in on the action, too.

Offering the flexibility to lease your condo on a short term basis is a privilege that makes the Railyard unique among downtown condos.   This privilege has significant value.

STRs can be a win-win for owners and associations.  The key is balance and monitoring the impact on residents.

The Railyard HOA is smart to approach STRs with reasonableness and attach fees to the process.  These extra fees will help fund their operations, building improvements, and keep HOA dues low for homeowners.  Homeowners, who are also able to capitalize on their property.

I’ll stop short of advocating that all downtown buildings should permit STRs – I don’t agree with that.  However, there are several buildings that should be paying attention to what the Railyard is doing.  It seems reasonable for more HOAs to experiment with loosening their STR rules, monitor the process, use the money for building improvements, and course correct as needed.

-Jude

[updated 06/01/2014: It has been discovered that Brazos Place Condos at 8th Street & Brazos Street is doing something similar by permitting one-month minimum lease terms.]

B-Cycle Chosen For Austin Bike Share Program

B-Cycle Chosen For Austin Bike Share Program

The Downtown Austin Blog has confirmed that B-cycle is the bike company of choice for the new Austin Bike Share program.

DAB reported last week that three companies had submitted proposals to supply Austin Bike Share equipment. We don’t know who yet else applied, but there is some small comfort in knowing that the people in San Antonio seem quite pleased with B-cycle, where they are growing from 30 stations to 45 stations. (Check out their San Antonio rates and coverage here.) B-cycle implementation has been successful in 15 other major cities, including Denver, San Antonio, and Houston and the city aims to have the bike share program operable by late spring 2013.

Here’s Here are some more details on what to expect in Austin:

[Read more…]

Austin Bike Share Enters the Homestretch

Austin Bike Share Enters the Homestretch

It’s been almost two and a half years since I started advocating for Austin Bike Share in the state capital.  It became the highest rated of any SpeakUpAustin initiative, ever.  Because of incredible grassroots support, generous financial support by several local businesses, and hard work by City staff, Austin Bike Share is finally happening for Austin.

Austin City Council this week is expected to approve an important step in the process, which will allow the city to form a partnership with nonprofit Bike Share of Austin to operate the bike share program.

The City and Bike Share of Austin are aiming to have the bike share program up and running by spring 2013. A separate contract with a bike share vendor for the purchase of bicycles, kiosks, and the bike share system network is scheduled to come to City Council for approval at the next scheduled council meeting, which would be Jan. 31.

It has long been rumored around town that Austin is going to pick B Cyclethe same bike share operator as San Antonio, to supply the bike share system for Austin.  San Antonio’s system is a phenomenal success and expanding.

According to the City, the bike share will bring about 40 bike share kiosks, with as many as 400 bikes, to Central Austin area.  That’s a good start.

jude-bike-shareIt was around 2009, when traveling in Montreal, that I was first introduced to a robust bike share system. That system was called BIXI, but it was the same bike design used in Minneapolis.  The system works impressively well.  You can become a member, or pay-as-you-go. The three-geared bikes are comfortable and well maintained.

That Austin’s Bike Share initiative seems to be heading for the final stretch is superb news, and I’d like to thank all of our City Council members and all the folks at the city who are working to make this happen.

We can expect a draft map of the locations within the next couple of months.

I’ve learned that City staff’s process of identifying possible sites for bike share kiosks is based on several criteria:

  • Proximity of bike infrastructure such as bike lanes or cycle tracks
  • High employment density
  • Nearby parks, recreation facilities, tourist attractions, or other destination
  • Favorable topography
  • Public transit services

Get it out there.

For the sake of getting bike share off the ground, I really hope the City doesn’t let perfection get in the way of progress.  I, myself, would be in favor of a phased launch and the City says, “we are putting half the stations in these spots. Deal with it.  However, we would like to hear from the public about where we get the other stations set up at.”

That would get Austin Bike Share rolling, with kiosks being put into the ground, instead of letting all the zealots debate the minutia and delaying having something the public can actually use.

-Jude

Kevin Gant

Kevin Gant

Back in the early ’90s, an aspiring Austin musician was gaining lots of attention.  Kevin Gant was on a trajectory for becoming really famous, and suddenly he disappeared from the scene and his fans… for 25 years.

Kevin wouldn’t reappear to the public light until director Jay Duplass reached out to him.  Their conversation turned into a documentary, “Kevin”, that stumbled upon two weeks ago while browsing Netflix (I’ve been pushing the limits on the number of times a sane person can watch TopGear reruns, and this looked interesting enough).

Wow!  What a story. Huge talent.  Fascinating documentary about a local musician.

So, I finished the movie and went about my normal weekend.

Then, this past week while walking downtown after a DAA meeting with fellow board member, Fred Schmidt, I recognized Kevin from under his hat, waiting for the bus at Congress & 7th Street.  Being a newly minted fan, I dorked out a little, and approached him just to share my enthusiasm for him and his story.

If you couldn’t immediately tell from the documentary, Kevin simply exudes positive energy.  He was incredibly gracious given that a complete stranger (me) had just approached him.  When I asked for a picture, he even suggested “hold on, let me get my guitar out!”, then handed Fred and I free copies of his latest CD.  Cool!

Chance encounters with remarkable people.  This is what makes downtown Austin such a great place to live, work, or just walk through.

If you don’t have a Netflix account, you can buy the movie on YouTube, “Kevin“, or checkout his music on iTunes.

Kevin, it’s nice to have met you.  Thanks for telling your story.  Cheers to your journey.

-Jude

BREAKING: Sales Of New Downtown Austin Condos Average More Than $1,000,000

BREAKING: Sales Of New Downtown Austin Condos Average More Than $1,000,000

For the first time, the average sales price of a new condo in downtown Austin is more than $1,000,000.

It’s not news that residences cost more than $1,000,000.  It is news when we’re talking about averages!  To be clear, we are focusing on new construction only, not resales (which have also had a banner year, and we’ll cover that in a future post.)

In 2012, the Austonian, Four Seasons Residences, W Hotel Residences, and Spring Condos (which in 2012 closed out their sales), accounted for 124 sales.

According to builder reports assembled by Capitol Market Research for new construction condos sold during the past 12 months:

  • average price = $1,061,682
  • average size = 1,701 ft.
  • number new condos sold = 124

The data is provided to us monthly as an aggregate of the above four buildings.  Anonymizing individual building sales was the only way to convince the developers to share their sales data.  To qualify the average price, we can approximate a median price using the 12 monthly aggregate records we have.

  • median monthly average price = $1,044,181 (min $777,813 to max $1,687,857)

The refrain which began in 2010 continues: there are no new downtown Austin condos being built.  Nor have we seen any new site plans for downtown condos.  Inventories continue to decrease (by 124 units in 2012) and residences are selling quickly at prices close to the asking price.  An ancillary effect of this shrinking inventory is rising prices for resales.

By my estimation, when compared against TCAD records, only 115 new construction units remain.  If interest rates remain low, the downtown Austin real estate market is on a trajectory to complete sales of new construction condos in 2013.

I’ll continue to provide detailed analysis of 2012 results over the coming weeks, including resales and analysis of building-by-building performance.

-Jude