By: Shonda Novak
After a slow start in January and February, momentum is building in downtown Austin’s condominium market, with 17 sales closing in March in the four newest projects, a survey shows.
Six sales were completed in January, and nine sales closed in February, according to a first-quarter report from Capitol Market Research, a real estate consulting firm that tracks downtown condo sales.
The survey covers sales in the Four Seasons Residences, the Austonian, the W Residences and the Spring condominiums. The projects, which have been open since 2009, were part of a downtown building boom in the past decade that added hundreds of residential units.
The 32 condo sales in the first quarter had a total value of nearly $30.5 million, with the average sale price at $952,800, according to Capitol Market Research. To date, 513 of the 732 units — 71 percent — in the four projects have sold.
Charles Heimsath, president of Capitol Market Research, said units are selling well, even at their lofty price points.
At the three “super luxury” projects — the W, Four Seasons and Austonian — average sales prices have consistently been in the range of $500 to $600 a square foot, which make them among the most expensive units in the Austin region, he said.
“And even so, they’re selling at a very rapid pace in contrast to some of the older, less expensive downtown projects,” which have units in the range of $300 to $400 a square foot.
The success of the new wave of luxury condos “is largely due to their wide appeal to a large range of buyer groups,” said Heimsath, whom developers hire to conduct market analyses for their planned projects. Those include out-of-state buyers purchasing a second home, “empty nesters” and affluent singles and couples.
At Spring, only five of the 247 units remain.
“More than 55 percent” of the 162 units at the Austonian have sold, said Terry Mitchell, strategic marketing director for the 56-story high-rise.
“The market is good,” Mitchell said. And with no new condo projects currently planned downtown, “prices have gone up as folks see scarcity,” Mitchell said.
At the Four Seasons, 108 of the 148 units — or 73 percent — have either sold or are under contract, according to the Four Seasons sales office.
Heimsath said there is a lack of financing for high-rise condos because of “the inherent risk and enormous supply that exists nationally.”
Larry Warshaw, a Spring developer, said the financial markets “are all chasing apartments now” as the rental market experiences high demand, rising rents and scarce new supply.
At the current sales pace, Warshaw estimates that downtown would deplete its supply of new condos in 10 to 12 months, “and then that’s all she wrote for several years at least” because of financing challenges and the time it takes to bring a project to completion.
“You’d have to pre-sell 40 or 50 percent of a tower before you could even start construction,” Warshaw said. “At the moment, I don’t think buyers are pre-buying after the recession. I wish they were, but I don’t think people are ready to buy pre-construction yet.”
Just south of downtown, about 100 units — about 40 percent — remain to be sold at Barton Place, a 270-unit condo complex that Warshaw co-developed behind Austin Java on Barton Springs Road. Prices start at $272,000 for one-bedroom units, $344,000 for two-bedrooms and $555,000 for three-bedrooms, said Mike Cummins, director of sales.
Cummins said he’s been selling residential units since 1978 and that there have been only a couple times when it has cost less to own than rent. He said some prospective buyers’ accountants “are yelling at them” to buy versus rent.
“That’s given us tremendous momentum right now,” Cummins said. “It’s the perfect storm for buying. (Mortgage) interest rates are low, rents are high, and compared to other cities, prices are downright reasonable.”
Danny Hamilton and his partner Paul Hilliard moved into a 2,000-square-foot condo on the 24th floor of the W project in March 2011.
Prices for the remaining units in the W range from $441,000 to upwards of $3.5 million.
Hamilton said he and Hilliard liked the design, the amenities and that the W shares a block with the new venue for “Austin City Limits.”
“We envisioned it being the hub of downtown activity, which it has become with ACL,” said Hamilton, who works in the financial services industry, while Hilliard is a vice president for Whole Foods Market Inc.
The services at the W “are just amazing,” Hamilton said