“Real Estate Council of Austin invited a slew of real estate, development and transportation experts to speak Aug. 12 at the JW Marriott Austin as part of the advocacy group’s mid-year economic forecast event.
Austin Mayor Steve Adler kicked off the event to address three of his top initiatives: 1) Find homes for the 234 homeless veterans in Austin, 2) Streamline the development permit review process, and 3) Address mobility issues at the neighborhood, city and regional level.
Adler’s transportation concerns served as an appropriate segue to introduce keynote presenter Jarrett Walker, a Portland, Oregon-based transit expert who wrote “Human Transit,” a book that details essential elements of a successful transportation system.
Walker’s speech touched upon the freedom that potentially comes with a high-frequency, effective transit system and the personal responsibility that individuals and businesses must take when they choose to reside in an area incapable of being served by transit.
“You are choosing your transit experience when you choose your location,” Walker said. “The big difficulty we have is so many people … feel entitled to the same [transit] service no matter where they live. … What they’re asking for is geometrically impossible.”
He also touted a concept called abundant access, or getting as many people as possible to as many destinations as possible as quickly as possible. Higher frequency transit services helps accomplish this, Walker said, but the notion of frequency is difficult for some traditional commuters to understand.
“Imagine there is a gate at the end of your driveway that only opens once an hour on the hour. You can’t get your car out any other time,” he said. “That’s frequency. If that were your problem you would probably care less about how fast you can drive on the road and more about how to get that gate open more often.”
Fewer transit lines at more frequent rates have proven successful in other markets, such as Houston, Walker said. That often means transit users have to walk farther to their stops, he said, but they gain access to better services.
He also advised transit planners to get away from the notion there are only captive riders—those who have no other transportation alternative than transit—and choice users—those who must be lured by a luxury transit experience—when there is a much wider ridership spectrum.
“We’re actually all on a continuum between those two extremes,” Walker said.
Upgrading to higher-frequency transit systems can cause some routes to be removed, he said. Transportation network companies, such as Lyft and Uber, could potentially replace those routes using a dial-ride system—similar to Uber Pool—in which multiple individuals are picked up at different stops during the same ride.
“It creates some interesting partnership possibilities,” Walker said.
UPDATE: 11:45 a.m.
A four-person panel of Austin multifamily market experts discussed observations and opportunities for developing apartments throughout the city.
Charles Heimsath, president of Capital Market Reseach, a real estate analysis firm that tracks Austin-area multifamily rental data, said the city’s apartment market is not overbuilt and is unlikely to become saturated during the next 18 months.
However, there is not enough qualified labor to help keep up with rising apartment demand, according to Dennet Wenske with Harvey-Cleary Builders. That adds cost to any project, he said.
“We’ve seen a pretty good increase in construction costs over the past year, and we don’t see any sign of it letting off,” Wenske said.
Multifamily construction is highest along South Lamar Boulevard and the Lakeline area in Northwest Austin, according to Heimsath. Big Red Dog CEO Will Schnier also said Airport Boulevard in East Austin is poised for major multifamily growth.
Many new units—whether they be three bedrooms or studios—are smaller in size compared with apartments built 10 to 20 years ago, according to Jennifer Wiebrand, director for Gables Residential, which manages multiple Austin-area apartment complexes.
“As developers and as apartment dwellers, that makes common spaces much more important,” Wiebrand said. “What I do with the rest of those common elements becomes more important as I shrink the home size.”
As an influx of new apartments hit the market, Wiebrand said this summer will prove more favorable to consumers than next summer, at which point the market should stabilize.
UPDATE 1:55 p.m.
Approximately 675 people attended the RECA Exchange Mid-Year Economic Forecast with Mark Dotzour, chief economist and director of research for the Texas A&M University Real Estate Center, who provided the keynote address.
Dotzour began by advising attendees that he does not anticipate federal interest rates to significantly increase despite expert warnings the past three years. He also attempted to squash fears that China or other regimes could somehow dictate the success of the U.S. economy.
“United States and Germany are the only two countries generating economic growth,” Dotzour said. “That’s it.”
Despite being the “strongest economy on Earth,” he said the U.S. economy is growing at a 2 percent to 3 percent rate annually but should be increasing by 4 percent to 5 percent. Growth is somewhat hindered, Dotzour said, by the U.S. engaging in a five-front war—an ongoing ground war in the Middle East; a cyber war with Russia, North Korea and China; a currency war with China, Japan and Europe; a carbon war with the Organization of Petroleum Exporting Countries, or OPEC; and a mortgage war with Dodd-Frank Act regulators.
“Faced with these kinds of headwinds, I’m proud of American people to be able to survive and thrive in this type of environment,” Dotzour said.
America’s economy is in the sixth inning of a nine-inning baseball game, he said, explaining there is still two to three years of potential growth remaining before the next recession. However, historical data shows the U.S. is already behind on the next recession:
- Since 1945, there have been 11 economic cycles—a series of downturns and expansions, according to Dotzour.
- The average economic downturn lasts 11.1 months
- The average economic expansion is 58.4 months
- As of August, the current expansion has lasted 74 months
More housing options will help Texas avoid—or at least delay—an economic downturn, he said. Otherwise, the state risks only being attractive to “really rich” individuals.
“The cost of living Texas always was our global competitive advantage, and [low housing inventory] is killing our competitive advantage,” Dotzour said. “We need more lots—thousands more lots—on the ground right now.”
Texas, nonetheless, has added more jobs since 2000—2.5 million—than any other state, he said. Rather than rely on experts to predict the next recession, Dotzour offered an alternative.
“If you want to know what’s going on with the economy, all you have to do is find out what you’re neighbor is doing,” he said.