Leading online commercial real estate investing marketplace CrowdStreet recently unveiled its 2022 list of best places to invest in real estate. The report dives into the top 20 private equity real estate investment markets, led by Austin, Texas.
Here's a closer look at why real estate investors should consider purchasing an investment property in Austin.
CrowdStreet evaluated multiple data points from leading industry sources to compile its list of the 20 best markets for real estate investors. These markets are in the best position to benefit from the continued strength in real estate. They should deliver above-average rent growth, strong absorption rates, recovering job growth, and strong median household income growth. These factors should drive continued real estate price appreciation in 2022 across these markets.
Austin led the way because it continues to benefit from strong population and job growth. That's because companies -- especially in the technology sector -- continue to relocate and expand in the city. For example, e-commerce behemoth Amazon recently announced plans to create another 2,000 corporate and tech jobs at its Austin Tech Hub. That's on top of the 3,000 jobs it has already brought to the city and the more than 1,000 jobs it currently has open. Meanwhile, electric vehicle giant Tesla recently relocated its headquarters to Austin and is building a $1.1 billion manufacturing plant that will eventually have 10,000 workers. Overall, economists expect Austin to add 50,000 additional jobs this year.
That's driving demand for housing. CrowdStreet ranked Austin as its third-favorite market for multifamily housing and its top market for build-to-rent single-family homes. It noted that the influx of people and the available land make Austin a great market for single-family home rentals.
Meanwhile, the corporate relocations and expansions are benefiting Austin's office market, which CrowdStreet ranked as the second-best in the country. For example, Amazon recently signed a 330,000 square-foot lease in Austin to occupy all the space of Domain 9, a new office building under development by Cousins Properties (CUZ 0.20%). Amazon already occupies three properties owned by the real estate investment trust (REIT) in the city.
Finally, the influx of people is also benefiting Austin's retail market. CrowdStreet ranked it as its second-best retail market in the country, driven in part by rising occupancy, which hit 95.9% in the fourth quarter.
How to invest in the Austin real estate market
There are many ways to invest in Austin real estate. Those with the financial means can consider directly purchasing a property in the city. You'd need to do a lot of due diligence to find the right property and hire the right company to manage the investment, but that would give you direct exposure to the city's growth potential.
A similar option is to invest in a syndicated real estate deal offered through an online marketplace like CrowdStreet. While you must be an accredited investor to participate in most of these deals, you don't have to invest as much as you would to purchase an entire property. For example, CrowdStreet currently has an office investment opportunity with a $25,000 minimum investment.
Meanwhile, other online marketplaces have offered Austin-specific real estate investment fund opportunities, some of which are open to non-accredited investors at much lower minimums. For example, Republic has provided two Austin-specific residential real estate investment opportunities in recent years with minimums as low as $500.
Another less direct approach is to invest in a REIT with meaningful exposure to the Austin market. For example, Austin is the second-largest market for office REITs Cousins Property Trust and Brandywine Realty Trust. It comprises 29% of Cousin's portfolio and 22% of Brandywine's income. That at least gives investors some exposure to the upside of Austin's office market.
Several residential REITs also own properties in Austin. For example, Austin is a top-five market for apartment REIT Mid-American Apartment Communities. The company is growing its presence in Austin; it invested $63 million to add 350 new apartments that residents will start occupying this year. Meanwhile, it's a top-20 market for single-family rental REIT American Homes 4 Rent. Finally, direct-to-consumer investing platform Fundrise has invested in both stabilized apartments and build-to-rent communities in the Austin area. These companies provide investors with some exposure to Austin's red-hot residential real estate market.
The best real estate investing location for 2022
Real estate is all about location, and there is none better than Austin for 2022. It's benefiting from a steady migration of companies and people due to its business-friendly policies, overall affordability, and warmer weather. Because of that, real estate investors should seriously consider investing in Austin this year.