Journeyman Group's Augustine development on West Slaughter Lane is a five-story, 343-unit apartment project that will open in May 2026, according to its online portfolio. JOURNEYMAN GROUP

Austin Business Journal writes, "Multifamily development in Austin has slowed dramatically.

In April, 29,669 multifamily units were under construction across 104 communities in the metro, compared to 50,393 units under construction in 178 communities during the same month last year, according to

The Journeyman Group ranked at the top of ABJ's latest list of multifamily real estate developers, with 3,944 units in the works or delivered in the Austin area last year. Journeyman Group has an additional 1,613 units planned for the area.

Alliance Residential ranked second on the list with 3,089 units in 2023, while The NRP Group took the No. 3 spot with 2,442 units. Wilson Capital ranked fourth with 2,135 units and Endeavor rounded out the top five with 2,119 units. See the full list below this article.

To delve into the trend, the Austin Business Journal recently spoke with Kurt Goll, president of JCI Residential, the residential development arm of Journeyman Group. His answers below have been edited for clarity.

What factors are influencing the slowdown in multifamily development in the Austin area?

Multifamily starts today are down considerably from the last two years. Factors affecting starts are a high interest rate environment combined with an oversupply expected for the next two years. Austin will deliver over the next two years almost twice as many apartments than is normally absorbed. Other factors affecting the cost of development today are insurance rates and property taxes.

Are we still seeing a mass migration to Austin, and do we have enough multifamily supply to support the rising population?

In 2022, we saw over 50,000 people move to the Austin MSA. The market had great absorption of supply and rents rose almost 30%. Further, job growth in 2023 resulted in over 35,000 jobs being created. Jobs and growth are slowing somewhat but the ramp up in projects conceived in 2022 and 2023 is flooding the market with an oversupply that will not likely be absorbed for the next two years.

When do you expect development activity to ramp back up?

We have our eye on 2027 for relief in terms of oversupply. The question developers have to ask today is, when do you start a project so it delivers after the current oversupply is absorbed? Austin developers still have a lot of units in the planning pipeline that could be started anytime they determine we are going to have a shortage in the units.

We expect interest rates to come down in the next year as well, and the Fed has hinted at least two rate cuts this year assuming inflation slows enough.

Journeyman Group had nearly 4,000 units under construction or in development in 2023. Did you focus on any submarkets, or did you build across the metro?

We like proximity to jobs, proximity to downtown and growth pockets such as Northeast Austin between Tech Ridge and 130. We have two properties on East Highway 290 that are within a 10-minute drive to downtown as well as close proximity to high tech job centers at Parmer East. We are building some affordable properties where they are needed the most, such as on Slaughter Lane and South Congress.

We’ve seen the average apartment rent in the metro drop over the past year. Is that trend expected to continue?

Listed rents are dropping slightly but effective rents are dropping more due to concessions. Owners are electing in a lot of cases to keep rents in place and give six to eight weeks free (at lease signings). This strategy has an eye on renewal negotiations starting at the higher rate. As a management company we try to match concessions in the market."


Source: Austin Business Journal

Written by: Cody Baird

Published: May 3, 2024

Posted by Grossman & Jones Group on


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