Yesterday, I wrote about a 12-unit apartment building in the Zilker neighborhood that is in the process of "filtering up" That building is a vivid reminder that Austin used to tolerate a much more diverse mix of housing types than it does today. Once upon a time, it was actually possible to build small, new apartment buildings in our neighborhood interiors. But that rarely happen nowadays. Opticos, the consultant team heading the revision of Austin's Land Development Code, has noted Austin's housing market suffers from the "missing middle" (pdf). Our new development is concentrated at the market extremes: we get lots of single-family homes and lots of large apartment and condo buildings, but not a whole lot in between.
This fact should be obvious to anyone who is familiar with central Austin, but the data also bear this out. The City's demographer compiles a handy quarterly spreadsheet summarizing new multi-family projects. Using his spreadsheets, I counted the number of site plans approved for small (4 to 12-unit) multi-family developments within the urban core between the third quarter of 2011 and the second quarter of 2013 (the last quarter available).
It didn't take very long:
That's nine approved site plans over a two-year period, with a total of 78 units. (Nineteen of the units, by the way, are in Mueller.)
By contrast, during this same period, the City approved site plans for 26 large apartment/condo buildings within the urban core with a total of 6,641 units. (I'm somewhat arbitrarily defining "large" to mean "more than 100 units").
I'm certainly not suggesting that we are building too many large apartment buildings, because we're not. I do think the disparity, though, is compelling evidence that our existing land-use regulations have all but squelched small, infill apartment buildings.
If you are concerned about the high price of the new housing supply coming on line, you should be concerned. No one will ever build a large, central-Austin apartment building just to rent it out at cut-rate prices (at least not without a large subsidy). Even the mid-rise VMU projects on Lamar and Burnet carry a hefty cost per square foot. All that structured parking is expensive. The subsidized ground-floor retail is expensive. The on-site gyms are expensive. The swimming pools and amenity centers are expensive. Developers won't break ground on these large apartment complexes unless they're reasonably confident they can fetch the rents they need to make their project profitable.
Small apartment buildings can be built more quickly and cheaply. That doesn't guarantee they'll have lower rents -- landlords ultimately will charge what the market will bear -- but it does mean that they are feasible even when the rents won't support a new 300-unit complex on the busy street a few blocks away.
And, frankly, the going rent shouldn't be our only concern. Not everyone wants to live in a giant apartment complex on a busy street. Some people prefer a small, quite apartment building in the middle of a quiet neighborhood. That should be a viable option for more of the majority of Austinites who rent. But instead, if this trend holds, the small, infill apartment building will be an ever-dwindling percentage of the City's rental stock.
