Developers in Austin report that the city’s supply of new condominiums is slowing after several years of rapid growth. Recent years have seen thousands of luxury units built in downtown’s 78701 zip code, with projects such as Urbanspace’s Modern Austin Residences, Pearlstone Partners’ Vesper, and Reger Holdings’ Linden contributing to the increase. The area now has more than 11,000 residents, a per capita income over $137,000, and median home values above $700,000.
Despite these figures, developers say the pace of new condo construction is dropping. Chris Zaiontz of Pearlstone Partners said that supply will be limited for at least two years due to current market conditions. About 260 unsold units remain across the Modern, Vesper and Linden buildings. Zaiontz attributed the slowdown to high interest rates and difficult financing environments: “He blamed high interest rates and wary capital markets, which have made financing projects nearly impossible.” Kevin Burns from Urbanspace estimated that it may be 2029 before another round of condo towers is completed.
In response to this pause in condo development, apartment buildings are increasing in number downtown but are also experiencing challenges. Vacancy rates have stayed above 10 percent since 2021 and reached nearly 15 percent during the summer. In the past four years alone, more than 3,000 rental units were added downtown—a rise of about 77 percent in inventory—while projects like Waterline by Lincoln Property Company and Kairoi Residential are expected to add hundreds more luxury apartments next year.
Developers anticipate that this lull will not last indefinitely. Burns said a decrease in interest rates could quickly shift condos back into a seller’s market within about eighteen months. Zaiontz stated that Pearlstone owns two undeveloped sites downtown intended for future development once financing improves.
Looking further ahead, industry insiders highlight the South Central Waterfront area—including the former Austin American-Statesman site—as a potential center for future high-rise development. Companies such as Endeavor Real Estate Group, Related Companies and Hunt Companies have planned towers south of Lady Bird Lake.
Despite fewer cranes on the skyline for now, developer sentiment remains positive about Austin’s core real estate 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
