While operators in Austin’s luxury apartment product were already feeling the pinch in the latter half of 2019, the COVID-19 pandemic caused quite a setback in recent months. Apartment rents were cut by 4.9% in Class A stock in the year-ending May, pulling Austin’s overall rent change into negative territory. Class B units recorded flat rates, while Class C stock saw growth of 1.8%. Even prior to COVID-19, annual rent change in Austin’s top-tier product trailed the Class B and C showings by a wide margin. Austin’s Class A performance tends to be an early indicator of where the Class B and C space will head, despite the relatively small overlap in those renter bases. This trend tends to mirror that of the West Coast markets, further exemplifying that Austin does in fact behave similarly to coastal California markets in more than just a few ways. Moving through 2020, Austin’s performance will likely continue to slow, although the market’s job base is closely tied to a few recession-resistant sectors that may provide some cushion.
