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  • Writer's pictureJennifer Bernstein, CCIM

Why Should I Invest in Austin Commercial Real Estate in 2024?

Investing in commercial real estate provides an opportunity to enhance your financial portfolio, and Austin, Texas, has proven to position itself as a prospective hotspot in this domain. This bustling metropolis not only boasts a robust lifestyle and culture but is also a rapidly growing economic powerhouse. Here are several reasons highlighting the benefits of investing in Austin's commercial real estate. So if you are considering on investing as well, then maybe you will find some interesting facts that confirm why you should be too.

Austin's Commercial Real Estate: A Market Leader

At this point, if you have not heard of Austin, you may be living under a rock. It has been a focal point of both national and international investors alike due to its historical performance throughout economic cycles and its continued exponential growth.

Austin’s commercial property market consistently ranks high among U.S. cities, often securing top spots on investment preference lists. An attractive choice for high-performing secondary markets, Austin's promising growth opportunities have surpassed even conventional gateway markets. The city is reaping massive advantages from its 'Sun Belt' location, which has also been a new darling among the aspects of investor interest.

Lender Interest and Investment Opportunities

Lenders are also keen on Austin due to it's robust developmental projects in the pipeline and a strong economy pushed by becoming 'Silicon Hills' through the influx of tech including Samsung, Apple, AMD, Facebook, Dell, Oracle and the added bonus other giants like Telsa and General Motors.

Multi-family Assets: A Sought-after Investment

As the city grows, there has been a significant increase in the demand for multi-family assets like apartment complexes, turning them into lucrative investments. These assets have significant implications for investors as more people flock to Austin, contributing to its real estate's high performance. A year-over-year investment of billions of dollars testifies to the potential of multi-family units, making them a key investment in the U.S.

The Austin Edge

Austin has much to offer when it comes to commercial property investment. The city is backed by a strong job market, increased rent growth, a booming tech industry, excellent return on investments, diverse options to invest, a stable investment portfolio, and favorable tax policies.

Robust Job Market: Austin shows a robust job market, evidenced by various tech and non-tech companies setting up offices in the city. This growth in employment opportunities is getting more people to move to Austin, leading to a substantial increase in demand for residential properties. For the last ten years we have had over 100 people a day after attrition moving into the Austin area. Primary workforce are 74% white collar and 57% are college educated, according to Esri 2023.

Employment Overview in Austin, TX
Austin Texas Employment Overview

Above-average Rent Growth: Austin real estate offers an above-average rent growth due to the constant influx of people relocating to the city for its work and lifestyle opportunities. The tech influx enhances the economic stability of the city, influencing property appreciation and neighborhood developments, thereby offering lucrative benefits for property investors.

Diverse Investment Options: As an established city, Austin offers a range of investment options, such as mixed-use developments, robust retail properties, growth of the industrial sector, and STRs to meet various investment needs. There are still land opportunities to develop ground up if that is of interest too. In the last year, we have experienced a major uptick in land sales.

Stable Investment Portfolio: Austin real estate investment, as part of your portfolio, could provide a robust strategy to spread out risk. Historically, it has been among the last to succumb to economic down turns and among the first to climb out. The overall equity growth year over year remains strong amid continued interest to keep pricing stable during tougher times.

Tax Benefits: Real estate investment in Austin comes with substantial tax benefits that significantly contribute to the ROI. There are 21 census tracts that are designated as Opportunity Zones that boast incentives such as Tax Deferral, Step-Up in Basis, Permanent Exclusion, and the possible access to of Qualified Opportunity Zone Funds.

The future of Austin’s commercial real estate market appears bright. This Texas metropolis offers favorable conditions for real estate investments, making it an ideal choice for investors eyeing the market in 2024. Whether you're locally based or hail from another part of the world, taking a closer look at properties in Austin might just find you your next ideal investment opportunity.

Despite these advantages, one must remember that investing in real estate, like all investments, come with certain risks. A comprehensive market study, along with professional advice, is recommended before going ahead with an investment. We would be happy to be a part of your team in that analysis process and look forward to working with you.

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