APARTMENT TOWER BOOM: Burst of new construction continues in downtown corridor

The apartment building boom sweeping across Central Texas is continuing in downtown Austin, pushing forward the ongoing evolution of the city’s skyline.

More than a half-dozen high-rise apartment projects are in the planning stages or currently being built in the downtown corridor.

Among the new projects is an Alexan-brand apartment tower under construction at 700 E. 11th St., near the Texas Capitol. The high-rise will have 29 stories above ground and four levels of underground parking.

The developer is Trammell Crow Residential. The tower will be the tallest in the company’s Alexan portfolio in Texas, said Matt Enzler, senior managing director with Trammell Crow Residential.

The building will have 274 units. Rents are expected to be more than $3,300 a month, on average, Enzler said. The average unit size will be 1,076 square feet.

In the five-county Austin region overall, average apartment rents across all unit sizes hit an all-time high of $1,363 a month at the end of December, according to Austin-based Capitol Market Research, an Austin-based consulting firm that tracks the apartment market.

In the Alexan tower, the first apartments are expected to be ready in May 2021. The project is due to wrap up by the end of 2021, Enzler said.

Amenities will include co-working space, a fitness center, a dog park, and a pool and amenity deck on the top floor.

The fifth floor will have 10,000 square feet of office space with a separate entrance and elevator lobby facing Sabine Street.

The Alexan tower is across from the Sheraton Austin Hotel on the west side of Interstate 35. Just east of the interstate, a 15-story apartment tower is under construction called the Huston. It will have 387 apartments and is due to open in the summer of 2021. The developer is Lennar Multifamily Communities.

At East Fifth and Brazos streets downtown, work continues on a 34-story mixed-use project that combined will have 298 apartments and more than 400 hotel rooms, along with ground-floor retail space. Chicago-based Magellan Development Group, Ryan Companies and Wanxiang America Real Estate Group are the developers of that project, called 5th and Brazos. Magellan’s website lists the total development cost at $294.7 million.

Slated for a February 2021 completion, the building will feature the Thompson and tommie hotel brands. Apartment residents will have access to the hotel amenities, which will include dining and drinking venues, lounges and a fitness center, but there also will be amenities for apartment residents only.

Nearby, at East Third and Brazos streets next to the Hyatt Place hotel, Houston-based Hanover Co. plans to build a 44-story apartment tower with 308 units. Called Hanover Brazos Street, the project is due to start construction in January and open in the summer of 2023, said David Ott Jr., development partner with Hanover.

Hanover is currently building another 44-story apartment tower at the southwest corner of Fifth and Lavaca streets downtown. Called Hanover Republic Square, the project will have 310 units and is due to be completed in the summer of 2022.

Each development will have about 4,500 square feet of ground-floor restaurant space.

In downtown Austin, ”we believe robust housing demand should continue to be fueled by strong job growth and the desire to live, work and play without a car,“ Ott said.

Hanover Republic Square is just north of a newly opened 24-story building that includes 221 Gables Residential apartments and a 159-room Hotel ZaZa.

Austin’s central business district continues to see growth by technology companies that have diversified downtown’s traditional tenant base of banks, law firms and other professional services. Companies including Google, Facebook and Indeed have all taken up residence in new high-rises, furthering demand for more downtown housing.

“I am seeing the expansion of Facebook, Google, etc. driving a lot of the demand for apartments that are walkable to their respective offices,” said Kevin Burns, a real estate broker who specializes in the downtown residential market. “With the millions of square feet of office currently under construction, I do not feel that the development community will be able to build enough housing in downtown to keep up with the demand.”

Burns, founder and CEO of Urbanspace Real Estate + Interiors has his own proposed apartment/hotel project working its way through the city approval process. He’s heading a development team that plans to build a 53-story tower at the corner of Davis and Rainey streets, currently home to Bungalow and the Container Bar. Plans call for 198 apartments and 424 hotel rooms. Burns hopes to start construction in the second quarter 2021.

Currently, there are just over 5,400 apartment units in 25 properties in the downtown market, said Charles Heimsath, a real estate consultant who conducts feasibility studies for developers’ proposed projects. The occupancy rate of the downtown rental market averages 92.2%, he said.

Rents across the existing properties average $2.70 per square foot, or $2,561 a month, according to Heimsath’s research. He is tracking six apartment projects now under construction with a total of 1,831 units that will come to market over the next three years.

Cindi Reed, Southwest regional manager for ApartmentData.com, said the downtown Austin rental market is “seeing a burst of new construction." Leasing activity is steady, and rents are rising at a rate of about 8%, he said.

On downtown’s west side, work continues on a mixed-use tower slated to become Austin’s tallest building, with 66 stories. Called 6 X Guadalupe, the high-rise will have 349 apartments, plus nearly 600,000 square feet of office space and 42,000 square feet of retail space.

On downtown’s east side, the Quincy, a 30-story tower is rising in the Rainey Street area, across from Hotel Van Zandt. The tower, which will have 347 apartments along with office and retail space, is being developed by Endeavor Real Estate Group and MetLife Investment Management.

As downtown’s high-rise building boom has seen buildings rise ever taller and become more costly, both to build and to live in, Heimsath previously has remarked: ”We are entering into an era where we're planning projects that would be at home in Dubai or Singapore or London in terms of their scale and expense. It really is astounding."