AUSTIN: MOVING FORWARD

Transcription

1 AUSTIN: MOVING FORWARD Angelos Angelou 32 nd Annual Austin Forecast January 26 th,

2 TODAY S AGENDA o2016: The Year in Review oaustin s Economic Drivers ochallenges to Overcome o Forecast 2

3 THE YEAR IN REVIEW: TEXAS AT-A-GLANCE Population Growth 1.8% Employment Growth 1.4% Retail Growth -0.3% VC Funding 3.6% Number of Businesses 2.1% Average Wage 2.0% Unemployment 0.1% Housing Starts 2.6% Source: Bureau of Economic Analysis, Bureau of Labor Statistics, Austin Chamber of Commerce, Texas A&M Real Estate Center 3

4 THE YEAR IN REVIEW: TEXAS JOB GROWTH 4% 3% 2% 1% 0% Austin vs. Other Major MSAs 0.30% Houston 2.10% San Antonio 2.50% 3.30% 3.30% El Paso Austin Dallas Total Nonfarm Employment 12,004,100 Nonfarm Change in Employment 165,600 MINING, LOGGING, AND CONSTRUCTION MANUFACTURING INFORMATION OTHER SERVICES FINANCIAL ACTIVITIES PROFESSIONAL AND BUSINESSES SERVICES GOVERNMENT TRADE, TRANSPORTATION, AND UTILITIES LEISURE AND HOSPITALITY EDUCATION AND HEALTH SERVICES Source: Bureau of Labor Statistics, Dallas Fed -31,000-31,000 Texas Job Growth by Sector 800 7,600 14,800 Total Employment Change 2016: 165,600 34,900 33,700 35,200 49,000 51,600-50,000-30,000-10,000 10,000 30,000 50,000 70,000 4

5 THE YEAR IN REVIEW: AUSTIN-AT-A-GLANCE Population Growth 3.2% Employment Growth 3.3% Retail Growth 9.2% VC Funding -36% Business Growth 3.6% Average Wage 2.9% Unemployment 0.2% Housing Starts 16.8% Source: Bureau of Economic Analysis, Bureau of Labor Statistics 5

6 Millions THE YEAR IN REVIEW: AUSTIN MSA SALES TAX $500 $400 $300 $200 $100 $0 Local Sales & Use Tax MSA Receipts: $426.5 million 29% increase from 2012 $620 per household Bastrop Caldwell Hays Travis Williamson Sales Tax City of Austin Share of Revenue by Source Property Tax Utility Transfers Other 15% 19% 23% 43% Source: Texas Comptroller s Office 6

7 THE YEAR IN REVIEW: AUSTIN CRE 20% 15% 10% 5% 0% Commercial Real Estate Vacancy Office Industrial Retail 2016 Average Vacancy Rate Office Industrial Retail Austin 7.9% 4.8% 3.5% Vacancies consistently declining since 2009 $40 $30 $20 $10 $0 Lease Rates per SF Office Industrial Retail Increase in rents since 2011: Office: 31.6% Industrial: 37.9% Retail: 18.9% Source: CoStar 7

8 Billions THE YEAR IN REVIEW: AUSTIN HOUSING $15 Dollar Volume vs. Median Listing Price $300,000 $250, Median Price: $280,000 Record high for Austin MSA $10 $200,000 $5 $150,000 $100,000 Volume of sales surpassed $11 billion $50,000 $ Dollar Volume Median Price $0 Over 1,300 more home sales than previous year 20,000 15,000 Single Family Building Permits Building permits back to pre-crisis level 10,000 5,000 0 Source: Texas A&M Real Estate Center 8

9 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4 THE YEAR IN REVIEW: MULTIFAMILY Total Incoming Units 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Q Q % Change 15,800 45, % Austin Pipeline Summary Multifamily construction has exploded in Austin since 2010 Asking Rent: $1, % Increase YOY BUT: Growth in site plan submissions New construction has flattened Under Site Review Approved Site Plans Under Construction Source: Census Bureau, Texas A&M Real Estate Center, City of Austin 9

10 CHALLENGES: AFFORDABILITY (SINGLE FAMILY) Housing Starts Issued per 1,000 residents Housing starts shortage in last 9 years Should be building 15,100 homes per year Sales per 1,000 residents 2.6 times more housing sales than housing starts in 2016 Sales past 4 years are near the 20 year sales average Source: Texas A&M Real Estate Center 10

11 THE YEAR IN REVIEW: AUSTIN JOB GROWTH Manufacturing Other Services Information Financial Activities Government Education and Health Construction Trade, Trans, and Utilities Leisure and Hospitality Professional/Bus Services -3,100 Job Growth by Sector 1,100 1,300 1,900 2,600 Total Employment Change 2016: 31,100 4,500 5,000 5,200 5,400-4,000-2, ,000 4,000 6,000 8,000 7, , , ,000 50,000 0 Information Other Services Manufacturing Financial Activities Source: Bureau of Labor Statistics Total Employment Mining, Logging, and Construction Education and Health Services Leisure and Hospitality Professional Trade, and Businesses Transportation, Services and Utilities Government High Tech Jobs Computer Manufacturing Semiconductor Manufacturing 2016 Growth -2.5% -3.0% Technical Services 3.6% 11

12 AUSTIN S ECONOMIC DRIVERS 12

13 ECONOMIC DRIVERS: ENTREPRENEURSHIP 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4 $300 $250 $200 $150 VC Funding vs. Number of Deals VC Funding down 36% after big 2014 and 2015 Through Q3 2016: 74 deals $ million 23 $100 $50 $0 Investment ($M) Deals BUT across VC stages: Median sums invested remained high Valuations are up or staying at pace with previous years Source: Austin Chamber of Commerce, PWC, Pitchbook 13

14 ECONOMIC DRIVERS: THE TECH SECTOR 44% 2011 Tech Employment 14% 29% 13% High Tech Manufacturing Computer & Supplies Wholesalers High Tech Information & IT Tech Related Professional Services Tech employment has increased by 28% since 2011 Represents over 22% of total employment growth in the same period 51% 2016 Tech Employment 22% 12% 15% High Tech Manufacturing Computer & Supplies Wholesalers High Tech Information & IT Tech Related Professional Services Average salary for these positions is over $84,000 Tech related professional services is fastest growing component within the tech sector Source: Bureau of Labor Statistics 14

15 ECONOMIC DRIVERS: THE FESTIVAL ECONOMY Annual Economic Impact COTA SXSW ACL FEST $1 billion $320 million $220 million Attendance 486, , ,000 Years Active Source: AngelouEconomics, Greyhill Advisors 15

16 CHALLENGES TO OVERCOME 16

17 CHALLENGES: RAINY DAY FUND? Austin MSA Market Value Percent Change Austin MSA market value grew by 39% since 2011 Bastrop $6.2B $7.6B 22.1% Caldwell $2.4B $2.8B 14.7% Hays $14.0B $18.6B 32.6% Travis $116.5B $164.5B 41.2% Williamson $39.0B $53.9B 38.0% Travis county s market value grew the most over this period Growth in Market Value: $100,300 per household Travis county s market value grew the most over this period Total $178.2B $247.3B 38.8% Source: Texas Comptrollers Office 17

18 ,000 1,500 1, CHALLENGES: TRAFFIC CONGESTION Highest Traffic in U.S. by Commuter Stress Index (CSI) L.A. SF Bay Area Honolulu Riverside San Jose Seattle Austin Annual Congestion Cost per Commuter Honolulu Austin Riverside San Jose Seattle SF Bay Area L.A. Austin has 7 th worst traffic in U.S. A 30 minute trip during light traffic takes 43 minutes during peak periods BUT: Low annual congestion cost per commuter (US Rank: 20 th ) Austin: lower fuel costs and shorter actual commutes Total number of vehicles registered in Austin MSA: 95,000 less cars in 2015 Source: Texas A&M Transportation Institute 18

19 30% 25% 20% 15% 10% 5% 0% -5% CHALLENGES: JOB GROWTH & QUALITY Employment & Wage Growth ( ) Personal Income Increase for New Jobs Professional/Bus Services Trade, Trans, and Utilities Education and Health Government Financial Activities Leisure and Hospitality Construction Manufacturing Other Services Information $201 $155 $128 $120 $77 $72 $63 $50 $361 $0 $200 $400 Millions $473 Median Salary: $42,000 Most new jobs occur within high paying industries Source: Bureau of Labor Statistics Share of Job Creation Wage Change Despite being the second highest paying industry, information makes up the lowest volume of net new wages 19

20 CHALLENGES: RENT AFFORDABILITY Rent as a Percentage of Income Raleigh Houston Seattle Denver Austin San Francisco 30.9 Chicago Austin has relatively high housing costs as a percentage of income, similar to that of San Francisco Cost of Rent as a Share of Income <15% 25% 11% 15-20% 20-25% 13% 25-30% 30-35% 35-40% 9% 14% 40-50% 7% >50% 9% 12% Source: Census Bureau 25% of Austinites spend more than 50% of their income on housing Rule of thumb: 30% of income 50% of Austinites do not meet this threshold 20

21 CHALLENGES: SINGLE FAMILY AFFORDABILITY 10.0% Average Wage Growth vs. Average Home Price Growth 8.0% 7.8% 7.1% 7.8% 6.0% 4.0% 4.8% 4.2% 6.0% 2.0% 0.0% 2.7% 2.4% 1.8% 1.3% 1.7% 2.8% 3.8% 0.3% -2.0% -1.1% -2.7% -4.0% Average Price Average Wage 21

22 CHALLENGES: CRE AFFORDABILITY Office $40.00 $ % $ % $ % 10.0% $ % $0.00 Austin Dallas Houston 0.0% Lease Rate Vacancy Rate $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 Industrial $ % Austin Dallas Houston 8.0% 6.0% 4.0% 2.0% 0.0% $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $ % $20.93 Retail Austin Dallas Houston 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Lease Rate Vacancy Rate Lease Rate Vacancy Rate Source: Austin Chamber of Commerce 22

23 Economic Forecast 23

24 Millions TEXAS POPULATION Population (millions) (475,300) (476,100)

25 TEXAS JOB GROWTH Jobs Gained/Lost Manufacturing -5,964 8,000 Information Construction -5,000 4,000 Other Services 7,536 7,500 Financial Activities 15,000 20,000 Government Education and Health Leisure and Hospitality Professional/Bus Services Trade, Trans, and Utilities Total Jobs 2017: 208,200 (1.7%) 2018: 242,500 (2.0%) 29,327 29,200 35,000 46,500 48,000 43,000 40,000 40,000 42,000 45,000-10, ,000 20,000 30,000 40,000 50,000 60,

26 AUSTIN POPULATION Millions 2 2 Population (millions) (52,000) 2.12 (55,000)

27 AUSTIN RETAIL $50.00 Retail Sales (billions) 12.0% $45.00 $40.00 $35.00 $30.00 $31.07 $33.56 $35.80 $39.10 $41.50 $ % 10.0% 9.0% $ % $ % $15.00 $ % $ % $ % Retail Sales Growth Rate 27

28 AUSTIN REAL ESTATE ABSORPTION Office 3.1 Million SF Retail 2.4 Million SF Industrial 4.2 Million SF Single Family 26,000 Units Multi-Family 24,500 Units 28

29 AUSTIN JOB GROWTH Manufacturing Information Construction Other Services Financial Activities Government Education and Health Leisure and Hospitality Professional/Bus Services Trade, Trans, and Utilities Jobs Gained/Lost 1,000 1,000 1,100 1,300 1,791 1,800 1,400 1,800 4,209 4,000 4,000 4,800 Total Jobs 2017: 29,400 (3.0%) 2018: 34,500 (3.4%) 5,000 5,264 6,000 6,400 6,800 6,200-1, ,000 2,000 3,000 4,000 5,000 6,000 7,000 8,

30 KEY TAKE AWAYS The economy is cooling off don t panic The Austin area is poised to be the fastest growing metro in the US until 2040 Buy a house now! as prices will continue to rise The best way to predict the future is to create it: Policies to support housing affordability Policies to attract high-paying jobs Policies to reduce traffic congestion Keep Austin & Texas open for business through consistent public policy 30

31 THANK YOU! Questions? AngelouEconomics, an industry leader in site location, strategic planning, and economic research for more than 20 years! angeloueconomics.com Phone: If you would like a copy of this presentation, please Anthony Michael at: AMichael@angeloueconomics.com 31