Austin TX Commercial Real Estate Trends
The city of Austin, Texas is experiencing tremendous economic growth and the trend is for continued growth. Both the population of Austin and the number of new jobs created are increasing at a rapid rate. Not surprisingly, the Austin real estate market is hot.
The Austin Business Journal reports that the population of Austin will double by the year 2045. Furthermore, according to the Bureau of Labor Statistics, Austin unemployment is 3.2% as of June, 2018. These trends have implications for the real estate investment market, generally, as well as for commercial real estate bridge lending activity, specifically.
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Given the significant projected economic growth in Austin, now may be an opportune time to invest in Austin real estate assets in order to capture as much of the projected appreciation as possible. As values rise in Austin, cap rates will continue to decrease. This will lower the window of opportunity over time. A structured bridge loan from iBorrow would allow a potential investor to quickly close a deal in the Austin market and maximize the asset’s IRR, especially for value-add and repositioning strategies.
The strength of the Austin real estate market is across a variety of asset types including multi-family, mixed-use, office, retail, and industrial properties. As residential property values continue to rise in Austin, multifamily housing should be attractive. Office, industrial, and retail assets are anchored by businesses that are capitalizing on the strength of Austin’s economy. Rents are expected to increase, while vacancy rates are expected to decrease in the near future. This will incentivize lenders to offer competitive bridge loan financing, especially in value-add scenarios that seek to capture the full potential value and cash flows of an asset in the Austin market.
Even if a borrower’s credit is low, a bridge lender will be able to structure a loan to accommodate the borrower in a strong real estate market. This is due to the fact that the value of the collateral, in the Austin market, is high and reduces the risk to the lender. Recourse, in this case, is achieved through the collateral, the real estate asset, as opposed to the borrower or sponsor. Furthermore, the interest only nature of the structured bridge loan will allow a real estate investor to maximize leveraged IRR. This is because the borrower won’t have to pay down principal over the course of the loan term.
The strength of the economy in Austin has boosted the real estate market in the city. Asset values are rising. This represents a tremendous opportunity for real estate investors. The barrier to entry is reduced due to the increased value of these assets. As a result, private a bridge lender like iBorrow will be able to fund a wide range of projects and assets thanks to these stellar values. As a result of iBorrow’s swift financing process, real estate investors have the opportunity to enter the Austin market in a matter of weeks.