Developers in Austin report a slowdown in the city’s luxury condo construction after several years of rapid growth. The supply of new condos is expected to remain limited for at least the next two years, according to industry sources.
Thousands of high-end units have recently been completed in downtown Austin, particularly in the 78701 zip code. Notable projects include Urbanspace’s Modern Austin Residences, Pearlstone Partners’ Vesper, and Reger Holdings’ Linden. Downtown now has over 11,000 residents, with a per capita income above $137,000 and median home values exceeding $700,000.
Chris Zaiontz of Pearlstone Partners said there are about 260 unsold units remaining among these recent developments. He cited high interest rates and cautious capital markets as reasons for stalled financing on new projects. Kevin Burns from Urbanspace predicted that it may be 2029 before another significant wave of condo towers is delivered.
While apartments are being built to meet demand, this sector also faces challenges. Downtown apartment vacancies have remained above 10 percent since 2021 and reached nearly 15 percent this summer. Over the past four years, more than 3,000 rental units have been added downtown, increasing inventory by 77 percent. Next year, Lincoln Property and Kairoi Residential are set to deliver the Waterline project with 352 luxury apartments.
Developers believe this pause will be temporary. Burns suggested that lower interest rates could turn the market around within about 18 months. Zaiontz noted that Pearlstone is holding two downtown sites for future development when financial conditions improve.
Looking ahead, developers identify the South Central Waterfront—where the former Austin American-Statesman headquarters stood—as an area for future high-rise growth. Companies such as Endeavor, Related, and Hunt have plans for towers south of Lady Bird Lake.
Despite fewer cranes on the skyline for now, developers remain optimistic about downtown’s prospects.
“People are always going to live downtown,” Zaiontz told the outlet. “It has so much to offer, from the food and beverage scene to the entertainment scene. We’re very bullish on the continued success that downtown Austin has seen.”— Eric Weilbacher
