Q2 2012 Austin, Texas Commercial Real Estate Economy

CRE Resources

View our Austin, Texas Submarket Map

Q2 2012 Austin, Texas Commercial Real Estate Economy

“Austin ranked best for…everything and everyone,” the Austin Business Journal reported in July, summarizing the metro area’s ranking on various lists of good places to live, work, and open a business. “Not a week goes by without Austin showing up high on a best-cities list,” including Forbes best big cities for jobs, The Fiscal Times 10 Top Cities People Are Moving to in 2012, U-Haul’s moving destinations, Realtor.com’s best investment markets, the Census Bureau’s fastest-growing cities in America, Adecco’s best U.S. cities to find work, Forbes, best cities for business and careers, and Forbes cities where a paycheck stretches the furthest. Among others.

The available data certainly show the Austin Metropolitan Statistical Area (MSA) is booming. According to Current Employment Survey (CES) data from the U.S. Bureau of Labor Statistics (BLS), the number of non-farm wage and salary employees working in the area increased by 22,900 (2.9%) from June 2011 to June 2012, including an increase of 22,600 (3.6%) in the private sector. Since Austin barely lost jobs in the Great Recession, its employment totals are in record territory for June. According to household-based data from the BLS, the year-over-year gains in the number of employed residents of metro Austin, including the self-employed, was 32,050 (3.7%) in the year to June 2012. That outstripped the increase of 25,040 in the labor force during the latest June-to-June period. Unemployment is no longer high here, and is trending rapidly toward low.

In fact, if Austin has a problem it is too much of a good thing. Moody’s Economy.com predicts the local population will rise by about 50,000 (2.7%) in 2012 and each of the subsequent four years, continuing a pattern of rapid growth that saw the metro area total more than double from 1991 to 2011. Although the Austin metro area is still small enough that there is plenty of land for expansion, some strains are starting to show. The Business Journal reported that recruiters are having trouble finding enough IT workers in the red hot Austin market, complicating General Motor’s plan to hire 500 such workers in the area. “The market for IT talent in Austin is extremely competitive,” according to one staffing executive. “If GM wants to attract A-players, they will need to use all avenues to recruit, including recruiting from outside Austin.” The median existing home sales price in metro Austin, according to the National Association of Realtors, is up 7.8% from a year earlier to $214,900, well above the U.S. average of $185,500. Not surprisingly, CES data show

Construction and related sectors, still in the doldrums in most of the U.S., added 3,200 jobs (8.1%) here year-over-year in June.

CES data also shows strong year-over-year employment growth in the Professional and Business Services sector, with a gain of 8,600 (7.4%) year-over-year in June. Financial Activities added 1,900 (4.3%), adding to the office-based boom, while among industrial sectors there was job growth in Manufacturing (plus 1,600 or 3.2%), Wholesale Trade (plus 1,800 or 4.3%), and Transport and Utilities (plus 500 or 3.8%). The Leisure and Hospitality sector added 4,500 jobs (4.9%), but Retail Trade remained in the doldrums with a loss of 1,500 (1.8%). With that sector, however, the Food Store industry, which includes supermarkets, added 500 jobs (3.0%). Also relatively weak according to CES data is the Government Sector and the substantially government subsidized private Education and Health Services sector. Both still managed small employment gains in the latest June-to-June period.

One negative is the metro area’s below average household average income given its above average housing prices. This, however, can be explained by students at the huge University of Texas at Austin living off campus and the metro area’s youthful profile. If Austin is compared with places such as New York and San Francisco rather than other parts of Texas, moreover, its affordability is solid.