Developers have been throwing up huge condo towers in downtown Austin with a "build it and they will come attitude". It isn’t that buyers haven’t been coming- but units have been coming online faster. This has started to create problems: [Hat tip to new poster Roophy!]
First, AquaTerra was cancelled. Then the Monarch converted from condos to rental units. 1155 Barton Springs was indefinitely postponed. Now, the Metropolitan has decided to throw in the towel and shut down prior to construction.
The Metropolitan was conceptualized as a $50m 8 floor condo project on 11th Street near the Capital. With units priced from $250k to $1 million, the 84 unit project was expected to be completed in 2010. Like many real estate developers, the team behind the Metropolitan was facing tough times and a tough market. In fact, the developer — Mote Group Real Estate Partners LLC — filed for Chapter 11 bankruptcy June 30. As a result, the land for the project will be point up for sale soon.
As the credit crunch continues, there is less margin of error for poorly conceived projects. While Austin has seen some big recent successes - tthe Shore and 360, both of which sold out before completion — other projects have struggled. As with other project cancellations — the market worked quite well: the project was unable to get enough interested buyers to secure funding, leading to cancellation prior to ground-breaking. Outside of collapsing markets like Miami and Las Vegas, it is very uncommon for projects to be cancelled once ground has been broken. With more than a dozen planned condo projects and an uncertain market, the Metropolitan won’t be the last cancellation.
Nope, it won’t. There are some lovely projects downtown, but there are too darn many of them for the market.
I’m moving to Austin in a couple of weeks from vegas and am looking forward to the sanity. I have been curious about the downtown condo explosion and the seemingly high rents. Austin’s growth outside of downtown seems to be nicely controlled. Rents on apartments with really cool views of the hill country seem to be ok. I recollect a post here recently that predicted rent going down in Austin. It does seem like there is a lot of availibilty. Gotta love the topography
freemonster -
Its funny, earlier today Mrs. M and I were around Spring Garden & South Park and stepped into The Grind for coffee and a million calories each
I was thinking about the twists and Austin when I found a long article in a Canadian glossy extolling the virtues of the city. Luckily it’s posted online. Enjoy …
“All The Way Home”, by Wendy Dennis, The Walrus, July, 2008.
Freemonster-
Growth isn’t more controlled here- but you don’t notice all the developments like you do in Phoenix because in Austin, there are hills and trees in the way. I went for a Sunday afternoon drive south down Manchaca [Which locals pronounce "Man-shack"] and couldn’t believe all the empty new homes and foreclosures I saw.
Austin didn’t miss the party- it’s just late.
Apartment/condo overbuilding has been huge- and more is coming online.
There are a lot of things to like about Austin- but “sanity” in the housing market isn’t one of them.
John M,
All the way home-Great read. Thanks
Twist,
When I was there a couple of weeks ago I did notice a fair share of foreclosure signs. Comparing it to vegas it appears to have a foreclosure rate that’s 1/5th or 1/6th. I do still find that higher than expected. But hey, I’m going to be a renter. Thanks for the heads-up
John-
Austin really is as quirky as Dennis describes, although I live in the hills out west of town where the culture isn’t quite as “colorful”.
I live on a quiet hill where I can barely see the neighbors though- and an easy commute into town.
Life could be worse. : )