April 3, 2017
Connect Austin will debut on April 19, 2017, with local experts gathering to talk about trends, issues and news happening throughout the metro. Connect Media queried Brant Smith, Berkadia’s Senior Managing Director, on investments and growth in Texas’ capitol city.
Q. Austin seems to be on a host of “up-and-coming” lists. What types of investor is the metro attracting?
A. When Forbes and US News and World Report, among others, rank your city as one of the top places to live and do business, it certainly helps attract investment from the large, well-heeled domestic capital such as Carlyle, AEW, Goldman Sachs and TIAA. We are also seeing a healthy amount of foreign capital flow in from Canada, Mexico and other overseas investors and owners.
Q. There’s been considerable buzz about interest rate increases — not the recent federal funds raise, so much, but what’s likely to come in the near term. Will higher rates mean less investment in Austin or Central Texas?
A. First and foremost, we enjoyed a long run in a low, stable rate environment that resulted in record-breaking years in trade and dollar volume in Central Texas. With that being said, a rising-rate environment generally creates a bid/ask gap between buyers and sellers. Rates popped up right after the election, when Treasuries increased and held at higher levels. This run-up has been somewhat mitigated by lenders decreasing spreads. However, the market generally expects that rates will rise over the next 12 months. As that happens, we will likely see a slowdown in trade volume, as buyers and sellers look for rates to stabilize. For now, most buyers and sellers are finding ways to make deals pencil.
Q. Austin’s growth has been a topic of discussion. From an investment and construction perspective, what are some of the Austin suburbs/exburbs that are experiencing the most growth?
A. No secret here. Austin’s second downtown, the Domain/Arboretum, has and will continue to see healthy growth in office, retail and multifamily. So will the East Side. The other suburban hot spots are Cedar Park/Leander in the northwest and Kyle/Buda to the south.
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