In addition, there was a panel of experts commenting on each of their areas of expertise;
|Single-Family Housing:||Eldon Rude Director-Austin Market, Metrostudy|
|Commercial/Industrial Real Estate:||Mike Kennedy CEO & President, Commercial Texas|
|Multifamily/Hotels:||Sean Sorrell Senior Managing Director, HFF|
|Technology:||Scott Harmon CEO, Noesis Energy|
|Energy:||Rolando Pablos Commissioner, Public Utility Commission of Texas|
Austin should expect solid economic growth and a healthy economy in 2013 and 2014, just looking at pure numbers.
- · Stronger job growth on the horizon – Angelos Angelou, a noted national economist is forecasting the Austin economy would add 29,000 jobs in 2013 and more than 30,000 in 2014. The strongest growth areas would be in business and professional services, leisure and hospitality, construction, education and health services. The unemployment rate would drop to 5.2 percent in 2013, the lowest it has been since 2008.
The forecast for 3.0 to 3.7 percent in annualized local GDP growth reflects a level strong enough to expand employment to the projected 29,000 jobs, up from 22,000 last year. As stated unemployment is expected to remain in the low 5% range. Total employment for the 5 county metro area now sits 5+% over prerecession peaks. Local government agencies expanded this year adding a combined 4900 jobs, a reversal of the previous 4 years. Last year most forecast that Austin would add 19,500 jobs and by year’s end, it will be closer to 26,000.
During the past two years — since the Texas Legislature last met — news of layoffs have been rampant. At the start of 2011 state workers were on edge over thousands of jobs that were to be axed. But when 2011 ended the state actually employed 551 more people than it did a year before.
Austin is projected to add 130,000 people in two years, closing in on a population of 2 million people.
o Yet there is less than 4500 total rental units left in a 5 county area,
o 7200 to 7600 projected home starts in 2012. 8400 in 2013. On top of that less than a 18 month supply of lots, less than 6 month of desirable lots, putting pressure on rising values.
o 10,027 apartment rental units under construction, another 7,682 submitted according to Austin investor interests. (Who tracks Austin rentals.)
There will not be enough shelter for people moving here, and with the Austin entitlement process. The rental and for sale market will remain tight for 3 to 5 years.
- · The face of technology continues to change with Dell, IBM, AMD, still huge employers but they give way to companies like Tech giant Apple Inc. would grow to become the city’s largest employer, employing 12,000 people, by the time they are finished hiring. They started with 300 employees in 1990 in Austin.
In addition Austin is seeing jobs related to social networking would be the new industrial revolution and said it was one of the new industries in the global economy. This is a phenomena found in very few cities other than Silicon Valley.
- · Austin has attracted 283 new companies over the last 5 years.
- · The city did 28 million in retail sales and had a 22 percent increase in venture capital investment—bucking state and national trends. So far in 2012, Austin has received two-thirds of all the venture capital invested in Texas, up from a typical rate of 40 percent. That level of investment helps build homegrown companies, but also attracts more workers and businesses from outside.
- · Angelou Angelos, a premier regional economist predicted that Austin’s current total of about $500 million in venture capital investment (as of the year’s third quarter) would grow $722 million by year’s end. He reported that most investment goes into software, semiconductors, information technology services, medical devices and energy.
- · Austin added 1,100 new businesses in 2012 and boasts 44,000 businesses in its greater metro area.
- · On average, Austin households carry $262,000 in debt—less than the national average but higher than the state average of $177,000.
- · Real estate, entertainment and what Angelou Angelos called “Austinpreneurship” will continue to fuel Central Texas’ economic growth.
- · Virtually every real estate sector is stretched toward capacity. Housing prices, Commercial and office will increase with supplies increasingly tight and demand accelerating after the mild slowdown of recent years. Real estate looked strong in the Texas Capital, with strong absorption of space. The continued population growth has the potential to create a lasting and severe shortage of residential real estate in the near future, Angelou said. Landowners can look forward to higher rents and property values.
Hotels and apartments already are cropping up rapidly, along with several mixed-use projects. Office and industrial developments are sure to follow suit.
Several of the experts opined that this is the time to buy a single-family home with inventories at historically low levels of a three month’s supply, far below the six month’s supply that normally is considered a balanced ratio of supply and demand.
The average home price locally, according to Angelou, is $261,000. Coincidentally, the Austin Business Journal also reported this morning that home prices in Austin have risen 2.9 percent in the 12 months between the third quarters of 2011 and 2012. That’s the seventh-highest increase among major metropolitan areas based on the Federal Housing Finance Agency scale.
- · The new, voter-approved medical school at the University of Texas will drive significant growth in the coming years, Angelou said. The hospital will position Austin at the forefront of Texas’ medical industry and offer great resources for entrepreneurs looking to set up shop in the health care business.
- · Events such as South by Southwest, the Austin City Limits Music Festival and the Formula 1 U.S. Grand Prix bring energy to the city billed as the Live Music Capital of the World and are what make Austin’s quality of life the envy of the rest of the world. Additionally, these events draw in hundreds of thousands of visitors a year to Austin and contribute a significant amount to Austin’s economy. SXSW had 147,000 official registrants and generated more than $190 million for Austin’s economy this year, about 225,000 music fans attended ACL and its economic impact is estimated to be $106 million.
The recently completed Circuit of The Americas, which attracted 117,000 fans for its inaugural F1 USGP race, is expected to generate at least $288 million annually to Central Texas’ economy. These numbers are only expected to grow from here now that COTA is up and running. Circuit investors hope the $450 million facility will be seen as an entertainment destination within a few years. This is in addition to the many athletic events from the University of Texas.
Because of this the leisure and hospitality industry saw the highest job growth rate — 5.9 percent — among all the industries.
- · Austin is also seeing a rise in the number of jobs associated with the entertainment industry. The leisure and hospitality industry saw the highest job growth rate — .9 percent — among all the industries.
- · The establishment of a ‘ world class’ medical school at the University of Texas and the Texas A&M medical campus , along with incoming companies such as Apple, General Motors and, potentially, Visa will turbo charge both economic and job expansion in the area.
- · Angelou listed entrepreneurship, real estate and the technology industry as the other drivers of Austin’s growing economy.
As a local and regional analyst with many clients following, Angelo said “We pride ourselves on our forecast and not overshooting our numbers, but we cannot help, given the economic development here, and through the efforts of the city, county and state, but be very bullish for the next couple of years based on the numbers. Austin continues to be enjoy cachet nationally and internationally, both through its achievements and word of mouth opinions.”