Apartment newswatch: Brad's prediction

UT Shuttle communities are next year's bargains.

Beginning next August we're going to see deep discounting on Riverside Drive and Far West Boulevard. It will be subtle at first but as May 2007 approaches, the bottom is going to fall out of pricing on those areas. What's happening is this: condo and apartment developers are going NUTS in West Campus and more projects continue to be announced. We're looking at mainly 3 and 4 bedroom units in upscale, expensive developments. The price won't deter the students though; it actually exacerbates the problem because students start packing them in two to a bedroom. Couple this trend with UT's firm resistance to growing its student population and UT shuttle communities are sure to face leaner times.

The first units to be affected will be 1 and 2BR units on Far West and Riverside, while the larger units with individual leases on each bedroom will be the last to feel the pinch. Hardest hit will be 1BR's on Far West - - - twenty year old units with no washer/dryer connections. I think we will see not only reduced rents but first month free specials by 2007. Or if the remainder of the Austin market stays strong, you'll see a few properties stop marketing to students at all, and perhaps even a few disappearing UT shuttle routes.

Thoughts?