May 1, 2023 - Real Estate

Luxury apartments grow even more luxe

Data: RentCafe; Chart: Tory Lysik/Axios Visuals
Data: RentCafe; Chart: Tory Lysik/Axios Visuals

Apartment developers looking to attract high-income renters say they’re thinking beyond gyms and pools when it comes to amenities.

Why it matters: The push comes as many would-be homebuyers rent longer, incentivizing properties to compete for a growing cohort of high-income renters.

By the numbers: The number of high-rolling Austin-area renters earning $150,000 or more annually nearly tripled between 2016 and 2021, per U.S. Census Bureau data.

  • The 154% increase was higher than the national average of 87.5%.
  • Meanwhile, the number of renter-occupied households overall in the Austin area increased by 19.4% during that same period.

Yes, but: Austin's growing cohort of high-income renters — and its millionaires — are squeezing out long-time residents.

State of play: Lavish amenities at luxury buildings around Austin now include fire pits, rooftop bars, towel service, pet spas, electric vehicle chargers and valet services.

  • Austin's incoming Sixth and Guadalupe 66-story mixed-use tower, which at 875 feet will be Austin's tallest tower, will offer 349 apartments and 24 penthouses available for rent.
  • Perks go beyond a gym and pool — although it has both, of course. Residents can also access a podcast studio and a dog park with a washing station.

What they're saying: Gensler Austin's Ed Muth, the principal-in-charge of the Sixth and Guadalupe tower, tells Axios that experience-driven amenities like those at the new tower are paramount, such as indoor and outdoor spaces for entertaining or lounging.

  • There's also a desire for recreational spaces like golf simulators, racquetball courts and movie screening rooms. Plus, bike storage and EV charging stations.
  • "Today’s luxury renters are looking for the 'condo-style' experience that draws inspiration from the design elements found in luxury homes, such as high-end built-in cabinets, furniture and storage and refined interior palettes," Muth adds.

The intrigue: Meanwhile, Compass realtor Matt Holm tells Axios he's seen an uptick in high-income renters in recent years, who are looking for flexible leases and often furnished luxury amenities.

  • "I started noticing that about three years ago," Holm says. "Companies are still moving to Austin for a variety of reasons, so I think that trend is going to continue."

The bottom line: High listing prices and mortgage rates make home buying less desirable, Chris Salviati, senior economist at Apartment List, tells Axios.

  • "A lot of folks in that high-income band, who in the past would have owned homes, are now continuing to rent — whether that's for lifestyle reasons or because they are feeling like it's not a good time to buy," he says.

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