Still a developer's darling?

Austin slips 2 spots among country’s hottest commercial real estate markets

Despite the drop in ranking, Austin is still considered one of five "supernova" cities in the U.S.

Nicholas McComber/Getty Images

Austin has lost a bit of its luster on an annual list of the country’s hottest commercial real estate markets.

The latest Emerging Trends in Real Estate report from professional services firm PwC and the nonprofit Urban Land Institute puts Austin at No. 4 among the U.S. commercial real estate markets to watch in 2022. Austin ranked second in last year’s report and first in the 2019 report. Since 2010, Austin has appeared at No. 7 or above in the closely watched Emerging Trends report.

The report, released October 14, bases its rankings on interviews with hundreds of commercial real estate professionals.

The report groups Austin with four other metro areas in a first-time category called “supernovas.” The four others are Nashville; Raleigh-Durham, North Carolina; Boise, Idaho; and Jacksonville, Florida.

“In astronomy, a supernova is the explosion of a star that creates unusual brilliance, but more generally the term refers to things that explode into prominence or popularity. So it is with the five metro areas in this new category,” according to the report.

“Austin has long been among the brightest stars in the constellation and a darling for investors and developers alike, first breaking into the [top 10] markets to watch in 2009,” the report adds.

Ahead of Austin in this year’s ranking are Nashville (No. 1), Raleigh-Durham (No. 2), and Phoenix (No. 3). Behind fourth-place Austin are:

Fifth-ranked Tampa-St. Petersburg, Florida.
Sixth-ranked Charlotte, North Carolina.
Seventh-ranked Dallas-Fort Worth.
Eighth-ranked Atlanta.
Ninth-ranked Seattle.
10th-ranked Boston.

Elsewhere in Texas, San Antonio lands at No. 21 and Houston at No. 24 among 80 U.S. metro areas.

“An abundance of investable capital, low interest rates, and a continued demand for many product types has created a positive environment for our industry,” Byron Carlock, leader of the U.S. real estate practice at PwC, says in a news release. “However, not everything is rosy, and real estate still has its challenges ahead. There are rising costs, pending tax reform, and new infrastructure spending that could impact the labor market.”

renting in the big city

Austin suburbs are some of the top U.S. hot spots for new rental homes

Photo by Josh Olalde on Unsplash

Austin

A new rental report has revealed Texas is leading the nation with the highest single-family home rental construction growth, and Austin is among the top 10 U.S. metros building the most new homes for rent.

The analysis from rental listings website Point2Homes examined construction rates and building permit data for single-family homes that are "located in build-to-rent, professionally managed communities" across America. For the purpose of the study, build-to-rent communities are defined as those where a majority of homes eitherdon't share any walls with each other, or so have some shared walls but do not have neighbors above or below, or have a direct-access garage.

According to the report's findings, Austin's rental home construction rate is the 6th highest in the nation, and the metro area is expected to build 4,313 new single-family homes for rent in 2025.

The greatest share of rental homes – 1,253 units – are being built in Hutto, while Austin proper is only expecting to build 214 rental homes.

This is how many build-to-rent homes are being built across other Austin-area cities:

860 units – Leander
651 units – Round Rock
392 units – Georgetown
260 units – Liberty Hill
239 units – Dripping Springs
234 units – Pflugerville
210 units – San Marcos

"Austin is one of the fastest-growing large cities in the nation, its graduates and new residents naturally attracted to the area's booming high-tech sector, as well as its emerging pharmaceutical and biotechnology companies, which all contribute to the metro's strong job market," the report's author wrote. "It's no wonder then that developers are hard at work in the metro, building hundreds of new single-family homes for rent, the largest ones being The Mansions Eight65; YardHomes Cottonwood Creek; and Avilla Rio Oaks in Hutto and Liberty Hill."

Build-to-rent growth rates in Texas
Austin's rental home construction helps make up the total 21,812 units that are planned or currently being built in Texas this year.

The report claims Texas' healthy job market, remote work flexibility, and its business-friendliness are the top reasons why the build-to-rent growth has soared so high.

Doug Ressler, senior analyst and manager of business intelligence at Yardi Matrix (Point2Homes' sister company), says affordability is another major factor.

"The biggest hurdle to buying a home for [build-to-rent] BTR residents is high mortgage rates, so BTR homes provide an affordability solution in today’s increasingly expensive housing market," Ressler says. "On average, renting a BTR unit is cheaper than buying a starter home. Recent reports indicate that renting can save one around $1,000 per month compared to buying. This is largely due to high mortgage rates and elevated home prices."

Ressler adds that the target markets – Millennials and Gen Z – are increasingly interested in new single-family home rentals to avoid the hurdle of paying high property taxes while still managing other debts like student loans. This also allows them to remain close to the city in a nearby suburb, rather than in rural areas.

"As urban areas become more congested and expensive, there’s a growing trend towards suburban living," Ressler said. "BTR properties in suburban areas offer more space and affordability while maintaining connectivity to urban centers."

Other Texas metros with skyrocketing single-family rental growth
Texas cities dominated the top 10 U.S. metros with the greatest build-to-rent growth rates. Dallas ranked No. 2 nationally with 8,470 new homes being built for rent in the metro.

Meanwhile, Houston and San Antonio ranked No. 5 and No. 8 respectively. Houston currently has 4,613 new single-family rental homes in the pipeline in 2025, while San Antonio is expected to build 2,994 units.

Phoenix, Arizona, topped the nation with the No. 1 highest new rental home construction rate. The Valley of the Sun is expected to complete 13,113 build-to-rent homes in 2025.

The top 10 U.S. metros building the most new rental homes in 2025 are:

No. 1 – Phoenix, Arizona
No. 2 – Dallas, Texas
No. 3 – Atlanta, Georgia
No. 4 – Charlotte, North Carolina
No. 5 – Houston, Texas
No. 6 – Austin, Texas
No. 7 – Orlando, Florida
No. 8 – San Antonio, Texas
No. 9 – Raleigh, North Carolina
No. 10 – Huntsville, Alabama

rentals construction real estate austin