5.0% Full Service Limited Service Austin, TX South Region National€¦ · TOP SEVEN CAP RATE...

7.5% 8.5%

8.0% 8.9%

7.9% 8.6%

3.0%

5.0%

7.0%

9.0%

11.0%

Full Service Limited Service

Austin, TX South Region National

$185

$95

$156

$102

$163

$108

$0

$50

$100

$150

$200



80.5%

71.8%

74.2%

69.7%

73.5%

70.9%

40%

50%

60%

70%

80%

90%



•

•

•

•

•

7.5

% 8.5

%

8.1

% 8.8

%

7.9

%

8.5

%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%



$1

79

$9

0

$1

51

$1

00

$1

57

$1

04

$0

$50

$100

$150

$200



78

.5%

69

.8%

73

.3%

69

.0%

73

.4%

70

.8%

40%

50%

60%

70%

80%

90%



7.5

% 8.5

%

8.1

% 8.9

%

7.9

%

8.5

%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%



$1

73

$8

8

$1

48

$9

7

$1

53

$1

03

$0

$50

$100

$150

$200



78

.5%

69

.5%

72

.8%

68

.3%

72

.9%

70

.5%

40%

50%

60%

70%

80%

90%



Austin, TX | Lodging

Integra Realty Resources – Austin Randy A. Williams, MAI, SR/WA, FRICS

Senior Managing Director 11675 Jollyville Road, Suite 205

Austin, TX 78759 Phone: 512-459-3440 x15

[email protected]

2015 Mid-Year

Lodging Snapshot

Market Commentary Many property sectors in the Austin area are thriving – the lodging sector included. As the capital of Texas, a center for business and industry, and with its vibrant music and cultural scene, Austin consistently generates demand for hotels. Occupancy among both full-service and limited-service hotel properties increased over the past year and is expected to continue in this direction throughout 2015. Similarly, average daily rates increased slightly and will likely continue this trend over the next year.

Overall cap rates were fairly steady over the past several quarters with a small increase among limited-service properties. Discount rates also increased slightly in the limited-service category but are anticipated to remain flat or increase very little in the second half of 2015 among all types of hotel properties. The Austin area is a hot spot for new hotel development with more than 3,500 new hotel rooms slated over the next 12 months.

Legend

■ Full Service Lodging ■ Limited Service Lodging

7.5%8.2% 8.0%

8.5%9.0%

8.6%

0%

2%

4%

6%

8%

10%

Market Regional National

GOING IN CAP RATE (%)

10.0% 10.1% 9.8%10.5% 10.6%

10.2%

0%

2%

4%

6%

8%

10%

12%


DISCOUNT RATE (%)

$173

$144 $150

$87$95 $101

$0

$50

$100

$150

$200


LODGING RATE ($/ROOM)

78.3%71.2% 71.9%69.0% 67.2% 69.0%

0%

20%

40%

60%

80%

100%


OCCUPANCY RATE (%)

TOP SEVEN CAP RATE FACTORS

Local economy, job growth, unemployment

Supply/demand

Interest rates

Property income growth

Risk premium of private real estate

Availability of financing

National economic conditions/GDP growth

AVERAGE ANNUAL CHANGE IN VALUE

Time

Full Service

Lodging

Limited Service

Lodging

Previous 36 Months Increase 4%+ Increase 4%+


Future 12 Months Increase 4%+ Increase 4%+




Senior Managing Director 11675 Jollyville Road, Suite 205

Austin, TX 78759 Phone: 512-459-3440 x15

[email protected]

2015 Mid-Year

Market Commentary (continued) A $350 million, 47-story Fairmont Hotel, located east of the Austin Convention Center with more than 1,000 rooms, is set to be completed in 2017. With an estimated opening date of late 2016, a 160-room Hotel ZaZa with 216 luxury apartments above the hotel, is under construction in Downtown Austin. Several new mixed-use developments featuring hotel space have been added recently, such as the 134-room Hotel Indigo and a 164-room Holiday Inn Express. Other new hotel developments include the Austin Westin Downtown and Hotel Van Zandt. The improving economy, business expansion, and its status as a popular cultural destination will continue to drive the expansion of the lodging sector in the Austin area.

About IRR Integra Realty Resources (IRR) is the largest independent commercial real estate valuation and consulting firm in North America, with over 200 MAI-designated members of the of the Appraisal Institute among over 900 professionals based in our 66 offices throughout the United States and the Caribbean. Founded in 1999, the firm specializes in real estate appraisals, feasibility and market studies, expert testimony, and related property consulting services across all local and national markets. Our valuation and counseling services span all commercial property types and locations, from individual properties to large portfolio assignments. For more information, visit www.irr.com or blog.irr.com.

Disclaimer While the great majority of data and content contained herein is proprietary to IRR, this publication includes data provided by third parties, and while the available data is presumed to be accurate, no representation or warranty is made regarding the accuracy of the information contained in this publication. This publication does not render legal, accounting, appraisal, counseling, investment or other professional advice. Should such services or other expert assistance be needed, it is recommended that the services of a competent person or firm, having access to the details of the situation, be employed.

AUSTIN 12 MONTH FORECASTS

Categories Full Service Lodging Limited Service Lodging

Going In Cap Rate Remain Steady - no change Remain Steady - no change

Discount Rate Remain Steady - no change Remain Steady - no change

Lodging Rate Change (%) 4.00% 3.50%

Expense Change (%) 3.00% 2.75%

Construction (Rooms)

Years to Balance In Balance In Balance

3,500

http://www.irr.com/



Senior Managing Director 11675, Jollyville Road, Suite 205

Austin, TX 78759 Phone: 512-459-3440 x15

[email protected]

2015 ANNUAL

Lodging Snapshot

Market Commentary As the capital of Texas, a center for business and industry, and host to a vibrant cultural scene, Austin consistently generates demand for hotels. Occupancy among both full-service and limited-service hotel properties increased in 2014 and is expected to continue in this direction in 2015, which should see an upward push of daily average rates. Overall cap rates were fairly steady over the past year but will likely increase in 2015.

Discount rates have increased slightly and are anticipated to continue increasing slightly or remain flat as 2015 begins. The downtown Austin area is a hotspot for new hotel development, with more than 3,000 new hotel rooms slated for 2015. A $350 million, 47-story Fairmont Hotel will be located east of the Austin Convention Center and will include more than 1,000 rooms. With an estimated completion of Spring 2015, the JW Marriott Hotel will have 1,012 rooms along with convention space.

Legend

■ Full Service Lodging ■ Limited Service Lodging

7.5%

8.3% 8.1%8.3%

9.2%8.8%

0%

2%

4%

6%

8%

10%


GOING IN CAP RATE (%)

10.0% 10.3% 9.9%10.3%10.8%

10.4%

0%

2%

4%

6%

8%

10%

12%


DISCOUNT RATE (%)

$172

$144 $146

$86 $91 $97

$0

$50

$100

$150

$200


LODGING RATE ($/ROOM)

78.0%

69.1% 71.0%68.0% 66.1% 68.6%

0%

20%

40%

60%

80%

100%


OCCUPANCY RATE (%)

TOP SEVEN CAP RATE FACTORS

Local economy, job growth, unemployment

Supply/demand

Interest rates

Property income growth

Risk premium of private real estate

Availability of financing

National economic conditions/GDP growth

AVERAGE ANNUAL CHANGE IN VALUE

Time

Full Service

Lodging

Limited Service

Lodging







Senior Managing Director 11675, Jollyville Road, Suite 205

Austin, TX 78759 Phone: 512-459-3440 x15

[email protected]

2015 ANNUAL

Market Commentary (continued) Also set to open over the coming year is Hotel Van Zandt with 326 rooms and the 366-room Westin Austin Downtown. Several mixed-use developments featuring hotel space are also planned, such as a project that will include a 134-room Hotel Indigo and a 164-room Holiday Inn Express. The improving economy, the expansion of business, and its status as a popular cultural destination will continue to drive the expansion of the lodging sector in the Austin area.

About IRR Integra Realty Resources (IRR) is the largest independent commercial real estate valuation and consulting firm in North America, with over 200 MAI-designated members of the of the Appraisal Institute among over 900 professionals based in our 66 offices throughout the United States and the Caribbean. Founded in 1999, the firm specializes in real estate appraisals, feasibility and market studies, expert testimony, and related property consulting services across all local and national markets. Our valuation and counseling services span all commercial property types and locations, from individual properties to large portfolio assignments. For more information, visit www.irr.com or blog.irr.com.

Disclaimer While the great majority of data and content contained herein is proprietary to IRR, this publication includes data provided by third parties, and while the available data is presumed to be accurate, no representation or warranty is made regarding the accuracy of the information contained in this publication. This publication does not render legal, accounting, appraisal, counseling, investment or other professional advice. Should such services or other expert assistance be needed, it is recommended that the services of a competent person or firm, having access to the details of the situation, be employed.

AUSTIN 12 MONTH FORECASTS

Categories Full Service Lodging Limited Service Lodging

Going In Cap Rate Increase 1-24 bps Increase 1-24 bps

Discount Rate Remain Steady - no change Increase 1-24 bps

Lodging Rate Change (%) 3.75% 3.50%

Expense Change (%) 3.00% 2.75%

Construction (Rooms)

Years to Balance In Balance In Balance

3,208

http://www.irr.com/

5.0% Full Service Limited Service Austin, TX South Region National€¦ · TOP SEVEN CAP RATE...

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