Austin apartment vacancy rate falling, rents rise

September 3rd, 2010 11:18 AM

A glut in Austin's apartment supply is slowly leveling out this year and analysts expect vacancy rates to fall an estimated 9 percent, according to the latest market data from Marcus & Millichap Real Estate Investment Brokerage Co.

The real estate investment firm said the city is forecast to add 19,100 jobs this year, prompting a rush of new residents and a rise in demand for residential rentals. At the same time, the apartment development pipeline has drastically thinned out, with 2,860 new units expected this year, down from 10,340 in 2009.

All of these factors will put upward pressure on pricing, Marcus & Millichap reported, and average rent is expected to rise 2.4 percent to $864 a month. The average slid 3 percent last year. At the same time, the end of the first-time homebuyers' incentive will keep would-be homebuyers in the rental market.

The near South Central part of the city is expected to experience to highest decline in vacancy, a 5.1 percent shift to 7.2 percent. Though the North Travis area will have the lowest vacancy at 7 percent. Southeast is expected to see the highest vacancy at 11.1 percent, which is mostly stable from 2009. Central Austin is the only region where vacancy rates will rise, jumping 3.6 percent to 9.4 percent, likely because of its highest average rent of about $1,014.

Read more: Austin apartment vacancy rate falling, rents rise - Austin Business Journal

West Lake shopping center sold

August 27th, 2010 10:38 AM

A West Lake Hills retail development has a new owner after STJK Property LP sold the Cornerstone Market shopping center to an undisclosed buyer, according to brokers who worked the deal.

Grubb & Ellis Co. (NYSE: GBE) officials said they represented STJK Property L.P. in the all-cash sale of the 18,000-square-foot property located at the southwest corner of Bee Caves Road and Westbank Drive. It was listed on the market for $6.9 million.

Built in 1995, Cornerstone Market is 100 percent leased with retail, medical and office tenants. The largest tenants are Coamerica Bank, which consumes 5,000 square feet, in addition to Miracle Ear, Carus Dental, Children’s Dentistry of Austin and Trustland Development.

Commercial real estate developers face numerous barriers to entry on Bee Caves Road and difficulty obtaining favorable zoning for new retail and bank developments in prestigious West Lake Hills’ highly restricted development environment, said Ben Kogut, the Austin-based Grubb & Ellis Co. broker who worked on the deal. He said those factors contribute to Cornerstone Market’s highly desirable location, an area that doesn’t see much on sale in the area’s retail real estate market.

Kogut also plans on continuing to work with this all-cash buyer to identify additional trophy assets in the Austin market, but he wouldn’t disclose the buyer’s identity.

Along with Kogut, George Cushing and Wendy Vandeventer in the Houston office of Grubb & Ellis Co. represented the seller. The buyer was represented by Sean Quinn of The Quinn Co.

Read more: West Lake shopping center sold - Austin Business Journal

Facebook expected to check-in with location-based features.

August 19th, 2010 11:37 AM

Social networking giant Facebook Inc. is expected to announce new location-based features.

The company is holding a press conference at its Palo Alto, Calif. headquarters where it is anticipated it will talk about features that take advantage of the fact that about a quarter of its 500 million users access its site with mobile devices. The company opened an office in Austin earlier this year.

One of the more popular activities by Facebook users is to "check in" to locations with updates to the site using an application developed by Foursquare Labs Inc. Foursquare users earn rewards by announcing when they visit locations, similar to Austin-based Gowalla Inc. software.

Market research firm Borrell Associates estimates that advertising on location-based services could grow to $4.1 billion annually by 2015.

Read more: Facebook expected to check in with location-based features - Austin Business Journal

Wells Fargo Ordered to Pay $203M in Restitution for Overdraft Fees

August 12th, 2010 11:37 AM

Wells Fargo must return $203 million to customers because it manipulated the processing of customer debit card purchases to maximize overdraft fees, a judge held Tuesday.

In connection with a class action lawsuit by California consumers, U.S. District Court Judge William Alsup held in a 90-page opinion that San Francisco-based Wells violated California law.

Instead of posting each transaction chronologically, the evidence presented at trial showed that Wells Fargo deducted the largest charges first, drawing down available balances more rapidly and triggering a higher volume of overdraft fees.

The suit covers customers of the bank between Nov. 15, 2004 and June 30, 2008 – a time in which Wells Fargo generated $1.7 billion in overdraft fees. Wells Fargo is the No. 2 bank in Austin with a 15.1 percent market share, according to the latest Federal Deposit Insurance Corp. report, though it is expected to take the top spot with the finalized Wachovia Corp. acquisition, which doubled its size.

Commenting on the court’s decision, lead trial attorney Richard M. Heimann said the court ordered Wells Fargo to return $203 million "of its ill-gotten gains to its customers. We are grateful for the opportunity to try this case in order to successfully reveal that the bank's true motives behind its overdraft bookkeeping were profiteering and the gouging of its customers."

Heimann, of Lieff Cabraser Heimann & Bernstein LLP in San Francisco, said the bank's "after-the-fact excuses were soundly rejected by the Court, and rightfully so, as it not only never made an honest effort to disclose its true practices to its supposedly valued customers, but worse yet, misled them. This is not only an actual victory for Wells Fargo customers, but a symbolic victory for consumers throughout the country who are subjected to these kinds of oppressive business practices."

Wells Fargo was also given until Nov. 30 to stop the practice.

In his opinion, Alsup wrote that while customers can expect to pay a fee if they overdraft their accounts, they don't expect to pay up to 10 overdraft fees when only would ordinarily be incurred.

A copy of the court's order can be found here.

Read more: Wells Fargo ordered to pay $203M in restitution for overdraft fees - Austin Business Journal

Bigelow Homes building in Kyle's Plum Creek

August 9th, 2010 4:34 PM

Chicago-based Bigelow Homes will begin building homes in Kyle's mixed-use, master-planned Plum Creek community this fall.

The 2,200-acre community near the intersection of Fairway and FM 2770 was founded by Plum Creek Development Partners in 1997, and currently houses about 1,500 homes. Plans to build an Austin Community College campus (if the city is annexed), nursing home and rehabilitation center, 264-unit apartment building, and other projects are in the works.

Bigelow plans to start selling homes ranging from 1,100 square feet to 3,000 square feet this fall. The company has signed on for 40 new builds in the development's Negley Elementary, Plum Creek Square and Kohler’s Crossing tracts, with the possibility to add more. Prices will range from the 120s to 200s.

The company first entered the Central Texas market in the Blanco River Village development in San Marcos four years ago.

KB Homes has been building in Plum Creek since 2007.

Read more: Bigelow Homes building in Kyle's Plum Creek - Austin Business Journal

Austin among top cities for young adults

July 30th, 2010 3:35 PM

Austin was picked as one of 10 cities best suited for young adults, according to Kiplinger.com.

The business forecast and finance publisher chose 10 U.S. cities with higher-than-normal, youth-friendly factors such as low cost of living, rich culture and an active nightlife. Statistics such as percent of people younger 35 were also considered on list.

Austin was picked for having one of the highest percentages of Generation Y residents in the U.S., about 30 percent of Austinites. The city has the fourth-lowest jobless rate (7.4 percent in June) among metros with more than one million people and cost of living is below the norm, according to Kiplinger's. Austin is home to eight colleges and universities and hosts two huge music festivals — South-by-Southwest and Austin City Limits.

Austin's negative aspects, according to the ranking's researchers, is the state's long hot summers, urban sprawl and limited public transportation.

Houston was the only other Texas city on the list, with 23.9 percent Generation Y in the populace. Others include (not ordered): Kansas City, Mo.; Washington, D.C.; Salt Lake City, Utah; Portland, Ore.; New York; Lansing, Mich.; Chicago; and Charlotte, N.C

Read more: Austin among top cities for young adults - Austin Business Journal

Red McCombs revealed as F1 Austin investor

July 27th, 2010 4:19 PM

Applied Materials hiring 200 in Austin

July 26th, 2010 5:06 PM

Nanotechnology developer Applied Materials Inc. plans to add about 200 jobs in Austin by October to meet a rising demand from chip makers.

Officials at California-based Applied Materials (Nasdaq: AMAT), which employs about 1,500 local workers, said the new jobs would be in manufacturing and logistics. About half of the jobs will be temporary positions, but the remainder would be full time, spokesman Steve Taylor said.

Applied Materials, which was founded in 1967, develops semiconductor industry manufacturing equipment. It employed 2,700 local workers in 2007.

The hiring news comes about two months after Applied Materials said it was selling a third of its 1.6 million-square-foot Northeast Austin campus, and as Applied wrote down $83 million in thin film solar panel manufacturing equipment in the spring. Company officials said last week Applied Materials would cut up to 500 jobs to shift from selling its SunFab thin-film solar panel manufacturing equipment and concentrates on other energy businesses.

Last year, the company eliminated 69 jobs in Austin and 1,500 company-wide. Also, in February 2009, officials announced plans to suspend Austin manufacturing operations for four weeks.

In May, Applied Materials reported a $264 million second-quarter profit on $2.3 billion in revenue compared with a $255 million loss on $1.02 billion in revenue during the same period last year. On Monday, company shares were trading at $12.57, up 6 cents or 0.49 percent.

Austin picked as top entrepreneurial center in U.S.

July 23rd, 2010 4:40 PM

Austin was picked as the nation’s most progressive and proactive entrepreneurial center, according to an article from Entrepreneur.com.

The publication identified 50 cities that best promote entrepreneurial pursuits. It touted Austin’s innovative spirit, commerce and emerging technology culture. Among those efforts, the city's Emerging Technology Program attracts growing firms and supports established locals.

Austin is home to many successful start-up companies, as well as the growing South-by-Southwest Interactive conference, where social media giant Twitter first announced its micro-blog model. Also in the past year Facebook Inc., LegalZoom Inc. and Host Gator LLC have announced offices in Austin, while other established companies have grabbed funding, new space and people.

This year alone has seen 31 relocations and expansions in the technology-related space, representing nearly 3,000 new jobs, according to the Austin Economic Growth and Redevelopment Services Office.

”Austin is a magnet for talent and a leader in innovation which makes it an ideal location to grow your business,” Economic Growth Director Kevin Johns said.

Others on Entrepreneur.com's list (in order) include Brooklyn, N.Y.; Seattle; Nashville, Tenn. and Providence, R.I., among others.

Venture capital flowing strong to Austin

July 18th, 2010 10:32 PM

Austin startups collected more than twice as much venture capital during the second quarter compared with a year ago, according Dow Jones VentureSource.

Local companies received $94.4 million in 17 deals during the three-month period versus $43.8 million in 13 deals during the second quarter of 2009. At the midyear mark, the funding of Austin-based, VC-backed companies increased 82 percent to $160 million compared with $87.9 million during the first six months of last year, Dow Jones reported.

The median funding deal reached $4.6 million during the quarter compared with $400,000 during the second quarter of 2009. The $10 million Series A funding of Austin-based medical device developer Inova Labs LLC in May was one of the largest deals of the quarter in Central Texas.

Nationally, VCs invested $7.7 billion during the quarter, a 26 percent increase versus $6.1 billion invested in the second quarter of 2009. It was the highest quarterly total for capital invested since $8.4 billion was doled out during the third quarter of 2008, according to Dow Jones.

The strong quarter was the result of VCs sustaining portfolio companies while also investing from new funds, Dow Jones Research Director Jessica Canning said.

She said the number of deals and the amount being invested is near levels seen before the recession in 2008.

The median deal size nationally during the second quarter reached $4.9 million, versus $5 million last year.

In Austin, four VC firms shared the lead as most-active investors during the quarter with two fundings apiece in local companies. The firms were Floodgate Fund LP, DFJ Mercury, Austin Ventures and Silverton Partners.

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