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Perryman sees continued rosy future for downtown housing

Thursday, March 6, 2008 by Austin Monitor

Noted Texas economist Ray Perryman released a report on Wednesday on the state of the market for housing in downtown Austin. While some have speculated that there is insufficient demand for the growing number of high-rise condominiums downtown, Perryman predicted the marketplace would not suffer a crash caused by an excess of supply.


“If eight-tenths of one percent of the people who live in Austin today chose to live downtown, you would fill up every single unit that’s here, that is under construction, and that is planned at the moment,” Perryman said. “This housing market will fundamentally support the type of properties that are being developed downtown. The critical thing is that it’s a great environment in which to live. It’s an environment in which prices are not only going to increase with the market in the future, but actually accelerate beyond that. It’s a market that is not being over-built.”


While the real estate market has suffered some setbacks nationally because of problems in the sub-prime mortgage industry, Perryman said, “The sub-prime mortgage issue doesn’t really affect the people who are likely to be buying these downtown projects, because they tend to be in a different price point.” Perryman also said it was normal for some condo projects to be converted to apartments during changing economic conditions, but predicted some of those may revert back to condominium developments as the economy improves.


The developers of The Austonian, a 56-story condo tower currently under construction downtown, commissioned the report from The Perryman Group. The developers decided to do additional research because of downward trends in the national housing market. “We wanted to investigate for ourselves,” said Strategic Marketing Director Terry Mitchell, “because what we were experiencing in Austin was quite a bit different than in other markets.”

Also on Wednesday, the Austin Chamber of Commerce unveiled plans to continue its “Opportunity Austin” economic development program. Since the program was launched in 2003, the region has added more than 104,000 new jobs and increased total payroll by $4.5 billion. But “Opportunity Austin” Chairman Gary Farmer told a group of business leaders and elected officials gathered at the Four Seasons Hotel Wednesday morning that the business community could not afford to rest on its laurels.


“The business of economic development is never-ending. There really is no goal line. The competition on a global stage is intense,” he said.


The new campaign, dubbed “Opportunity Austin 2.0”, will focus on economic development in the sectors of creative media, green industries, attracting more corporate headquarters, health care, and the convergence of technologies in diverse high-tech fields such as nanotechnology and medicine. “We don’t want to get too far behind. We’ve got to be vigilant about our efforts and work hard each and every day.”


Farmer said leaders of the campaign have set a goal of creating or recruiting 117,000 new jobs during its second phase. They’re also seeking funding from local businesses for the project, which they estimate will cost about $21 million. “That’s a tall number, but if you think about it…compared to what most of our competitors are doing, it’s on the low side,” he said. “Most of the communities that we ordinarily compete with have five-year programs that are in the $25 million to $30 million range. Kansas City raised $60 million for a five-year program. We want to have enough resources to get the job done, but we want to be very careful with other people’s money.”

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