Austin needed some good news in 2020, and it came in a big way about two weeks ago when Tesla announced they are coming to town with a new Gigafactory automotive assembly plant. Tesla will build their upcoming Cybertruck, and the existing lineup of Model Ys, Model 3s, and Semi vehicles. The site for Tesla’s new factory is the unincorporated Del Valley area of East Austin. The Gigafactory site consists of 2,100+ acres with approximately 2 miles of Colorado River frontage. Tesla has the unique ability to transform this former mining site into a sustainable factory with the added bonus of recreational development in the form of hiking and biking trails along with a boardwalk, while simultaneously giving a giga-boost to the local economy. The boost comes in the form of jobs, jobs, jobs…with Elon Musk having committed to hiring up to 5,000 workers with salaries starting at $31K and salaries averaging $47K, and many of these jobs not requiring a 4-year degree. This is not just good news, it is great news, as these jobs are needed in today’s COVID environment!
So how does this impact Central Texas Multi-Family Markets? As the market fundamentals of supply and demand would suggest…things just heated up!! According to the Austin Business Journal (ABJ), “homebuilders, office and industrial users and retail developers will rapidly flock to the area, which has an abundance of land and pent-up demand from the existing Del Valley residents.” In the same article by ABJ, they go on to say that there are already 947 proposed apartment units with 247 units currently in construction within 5 miles. Go out 10 miles and there are 15,929 apartment units proposed with 12,355 apartment units under construction. This is an area of Austin that has seen growth with Circuit of the Americas racetrack being built nearby in 2012, but nothing like the area growth that will be seen over the next few years. As Tesla develops their Gigafactory, real estate developers will meet the need of the area with billions of dollars in investment through new retail, housing, and other commercial properties to support the demand of growth. All of this growth will necessitate the need for convenient, safe and comfortable housing for both from the construction workers as they build, as well as for the employees who work at these new employment centers.
The Austinite in me loves to see our local economy continue to grow, and as much as we want to keep Austin a secret…the word is out, as we are continuously ranked as the #1 best place to live, according to U.S. News & World Report. Despite these great accolades, one thing that needs to be mentioned about why Austin continues to grow, and why companies like Tesla, Dell, Google, Apple, Facebook, Indeed and other tech firms come to Austin is the business-friendly state of Texas, and our local leaders in Austin. Tesla received millions of dollars in tax incentives, with over $64M in economic incentives. Austin Chamber of Commerce along with the local government leaders understand the long-term impact this will have on our residents, and the future tax revenue this will bring to the local area. This matters when looking at the strength of multi-family markets, as without these economic drivers of income, employment and population growth would suffer from deteriorating markets. Tesla matters to the multi-family markets as they are another company that has placed their chips on Austinites to carry their brand and quality of product into the future.
One final note is that while Tesla announced their Gigafactory two weeks ago, they’re wasting no time in moving dirt and posting jobs on their website. Let’s continue making Austin Weird, and welcome Tesla to Austin!