Our read
Qualitative judgments on a five-point scale, not licensed index values. Ranked #14 of 49 markets we cover.
The case for
- Technology wealth density is exceptional, and the long-run demographic story remains intact.
The case against
- Deliveries have overwhelmed absorption and rents have fallen.
- Assets bought at peak basis are still working through it.
Our stanceNot buying. We would rather be early to the recovery than early to the correction.
The figures that matter
- Multifamily in commercial zoning
- Allowed by right Tex. Loc. Gov. Code 218.101, effective September 1, 2025 · Texas Legislature No rezoning, variance or discretionary approval may be required.
- Minimum density a city must allow
- 36 units/acre Tex. Loc. Gov. Code 218.102(a)(1)(A) · Texas Legislature Or the highest residential density in the municipality, whichever is greater.
- Maximum parking a city may require
- 1 space per unit Tex. Loc. Gov. Code 218.102(a)(2) · Texas Legislature A multilevel parking structure may not be required at all.
- Building permits 2025, Travis County
- 15,059 2025, all residential · U.S. Census Bureau About 2.21 percent of stock on our arithmetic.
- Population change, Williamson County
- +23.6% +143,768 residents April 1, 2020 to July 1, 2025 · U.S. Census Bureau A larger absolute gain than Travis County recorded.
- Unemployment rate
- 4.0% July 2026, preliminary · U.S. Bureau of Labor Statistics
Where we would and would not transact
Texas made multifamily allowed by right on commercial land, without a hearing
On September 1, 2025 the calculation behind every land basis in this metro changed, and it changed by statute rather than by anything Austin did.
Chapter 218 of the Texas Local Government Code was added by the 2025 legislature. Section 218.101(a) provides that "a municipality shall allow mixed-use residential use and development or multifamily residential use and development in a zoning classification that allows office, commercial, retail, warehouse, or mixed-use use or development as an allowed use under the classification." Subsection (b) closes the procedural route around it: a municipality "may not require the change of a zoning district or land use classification or regulation or an approval of an amendment, exception, or variance," and the statute then enumerates what it means, including a "special exception, zoning variance, site development variance, subdivision variance, conditional use approval, special use permit, comprehensive plan amendment, or other discretionary approval."3
A note on the citation, because it matters for anyone checking this. The change arrived as Senate Bill 840 and is widely discussed under that name, but a bill is a moment and a chapter is the law. We quote the codified Chapter 218, which the Texas Legislative Council publishes as current through the 89th Legislature's second called session of 2025, and which records the chapter as added by Acts 2025, 89th Legislature, Regular Session, Chapter 778.3
The chapter does not merely permit the use. Section 218.102(a) sets floors a municipality may not regulate below. Density may not be limited to less than the greater of the highest residential density allowed anywhere in the municipality or "36 units per acre." Building height may not be limited below the greater of the height that would apply to a commercial building on the same site or "45 feet." A setback or buffer may not exceed the lesser of the commercial requirement or twenty-five feet. A city may not require "more than one parking space per dwelling unit," may not require a multilevel parking structure at all, may not restrict floor area ratio, and may not force a multifamily development outside a mixed-use zone to include nonresidential uses.3
Then subsection (b) removes the discretion. Where a proposed development meets those regulations, the municipal authority "shall administratively approve the permit or other authorization" and "may not require further action by the governing body of the municipality." There is no council vote to lose, and no neighborhood process to survive. For a market whose entitlement risk has historically been a meaningful part of a developer's cost of capital, that is a structural change rather than an incremental one.3
Austin is squarely inside it. Section 218.002 applies the chapter to "a municipality with a population greater than 150,000 that is wholly or partly located in a county with a population greater than 300,000," and Travis County alone holds 1,389,670 residents. We flag the threshold explicitly because a widely repeated summary of this law gives it as sixty thousand and four hundred and twenty thousand. Those were the numbers in the introduced version of the bill. The codified section says 150,000 and 300,000, and the codified section is what a city is bound by.32
- Multifamily must be allowed in office, commercial, retail and warehouse zoning.
- No rezoning, variance, special use permit or other discretionary approval may be required.
- At least 36 units per acre, at least 45 feet, no more than one parking space per unit, no floor area ratio cap.
- A conforming permit must be approved administratively, with no further action by the council.
There is no council vote to lose and no neighborhood process to survive. Entitlement risk, which was part of the cost of building here, has largely been legislated away.
A statute this broad invites overstatement, so it is worth being precise about its limits. Two sections define them.
Section 218.101(c) carves out land rather than uses, which makes the exclusions mappable. The by-right requirement does not apply to a zoning classification that allows heavy industrial use, to land "within 1,000 feet of an existing heavy industrial use or development site," to land "within 3,000 feet of an airport or military base," or to "an area designated by a municipality as a clear zone or accident potential zone." In a metro built around a central airport, that last pair of exclusions describes real acreage, and it is the one place in Austin where a commercially zoned parcel is not automatically a competing multifamily site.3
Section 218.003 preserves a list of municipal powers that a reader should not assume were swept away. A city keeps its short-term rental regulations, its water quality protection rules including those under Chapter 366 of the Health and Safety Code, its stormwater mitigation requirements, its building codes, its sewer and water access requirements, and its regulations relating to historic preservation and local historic districts. It may also still operate a density bonus or other voluntary program on terms more generous than the chapter requires.3
In Austin specifically, the water quality and stormwater carve-outs are not incidental. They are the regulatory instruments this city has historically used most heavily over the aquifer recharge zone, and they survive intact. An investor should read the chapter as removing the discretionary layer of zoning approval, not as removing environmental review.
The rest of Texas land use law is unchanged. As we set out in the Dallas-Fort Worth guide, Section 214.902 of the Local Government Code permits municipal rent control only where the governing body finds a housing emergency due to a disaster and the governor approves the ordinance, which is not a live constraint in this market. Chapter 218 works on supply, not on price.3
- Excluded: heavy industrial zoning, 1,000 feet of a heavy industrial site, 3,000 feet of an airport or military base, accident potential zones.
- Preserved: water quality, stormwater, building codes, historic preservation, short-term rental rules.
- The chapter governs what may be built, not what may be charged.
The exclusions are geographic, which means they are underwritable. Within three thousand feet of the airport, a commercial parcel is still just a commercial parcel.
The conversion subchapter is the part a buyer of office product should read
Sources 3 Texas Legislature
Subchapter C of the chapter is narrower, less discussed, and for a certain kind of buyer it is the most valuable text in Texas property law right now.
Section 218.202 applies it to a building being used for office, retail or warehouse purposes that is proposed to be converted to residential occupancy "for at least 65 percent of the building and at least 65 percent of each floor of the building that is fit for occupancy," and that "was constructed at least five years before the proposed date to start the conversion." Both tests are objective and checkable before an offer.3
Where they are met, Section 218.203 removes an unusually specific list of costs. A municipality may not require a traffic impact analysis or any other study of traffic effects. It may not require improvements or a fee to mitigate traffic. It may not require "the provision of additional parking spaces, other than the parking spaces that already exist on the site," which for a suburban office building with a surface lot is a very large concession. It may not require utility work "except as necessary to provide the minimum capacity needed to serve the proposed converted building." And it may not impose design requirements more restrictive than the International Building Code as adopted locally, expressly including rules about the exterior, the windows, the internal environment, or interior apartment dimensions.3
Section 218.204 then provides that a municipality "may not impose an impact fee" on land where a building has been converted. Traffic studies, parking construction, utility oversizing, design review and impact fees are, between them, a large share of what has historically made office conversion arithmetic fail. Texas has removed all five for a defined class of building.3
We record this as an opportunity and a risk in the same breath, because it is both. It is a genuine acquisition thesis for aging suburban office in this metro. It is also the reason our stance on existing multifamily here is cautious: the same provisions that make a conversion pencil for one buyer put more competing units into the same submarket as everyone else.
- Applies to office, retail or warehouse buildings at least five years old.
- At least 65 percent of the building and of each occupiable floor must convert.
- No traffic study, no traffic mitigation fee, no additional parking, no design rules beyond the building code.
- No impact fee on converted land.
Traffic studies, parking, utility oversizing, design review and impact fees are most of why office conversions fail on paper. Texas removed all five for buildings over five years old.
None of the above would matter much in a market that was not building. Austin is building at close to the top of our coverage, and the growth is running to the suburbs faster than to the core.
Travis County permitted 15,059 residential units in 2025 against a stock of 682,547, about 2.21 percent on our arithmetic. Hays County permitted 4,595 against 120,266 units, about 3.82 percent, just behind the 3.85 percent we measured in Pinal County in our Phoenix guide. Williamson County permitted 4,956, a lighter 1.70 percent of its stock.2
The population is arriving to match, but not where the metro name suggests. Travis County grew 7.7 percent since April 2020, adding 99,513 residents. Williamson County grew 23.6 percent, adding 143,768, which is a larger absolute gain than the core county recorded. Hays grew 26.3 percent, adding 63,326. The two suburban counties together added more than twice as many people as Travis.2
Williamson County also carries the strongest household finances in the metro: median household income of $111,340 against Travis at $99,611, and a poverty rate of 5.4 percent against 10.5 percent in Travis and 10.8 percent in Hays. That combination, the highest incomes and the lightest permit intensity of the three counties, is the most defensible position in this market.2
Travis retains the deepest renter base. It is 52.1 percent owner-occupied against 66.4 percent in Williamson and 64.1 percent in Hays, so 47.9 percent of Travis households rent. Rent takes about 21.0 percent of median household income there and monthly ownership with a mortgage costs $890 more than renting, which is a wide enough gap that the purchase option is not an immediate substitute in the way it is in Phoenix. The pressure on rents in Austin does not come from the buy decision. It comes from the number of competing keys.2
- Travis permitted 2.21 percent of stock, Hays 3.82 percent, Williamson 1.70 percent.
- Williamson and Hays together added more than twice as many residents as Travis.
- Williamson has the highest incomes, the lowest poverty and the lightest supply of the three.
The suburbs added more people than the core, and Hays County is permitting at nearly four percent of its entire stock in a single year.
The employment table here is the strongest in the series in one respect and carries a single, familiar weakness.
Over the twelve months to July 2026, on preliminary Bureau of Labor Statistics figures, this metro's table shows ten supersector rows rather than the usual eleven, because mining, logging and construction are reported combined. Eight of the ten rows added jobs, government was unchanged, and one declined. Professional and business services added 8,300 to reach 294,600. Total nonfarm employment was 1,421,700 and unemployment 4.0 percent.1
Mining, logging and construction grew 5.5 percent, adding 5,200 jobs, the fastest growth of any row in this table. As in Phoenix, that is the labor market corroborating the permit data rather than contradicting it, and it argues that deliveries continue past the current cycle. It is the clearest forward indicator available that the supply described above is not a paper pipeline.12
The hole is information, down 2,400 jobs or 4.9 percent, the only declining row in the table. Austin's national reputation rests substantially on that sector, and it is contracting here as it is in Seattle and Portland. At 48,500 jobs information is only about 3.4 percent of total nonfarm employment on our arithmetic, so the direct payroll effect is modest. Our concern is that it is the sector most associated with the rent levels achieved in the urban core, and the one an underwriting most often leans on implicitly.1
- Eight of ten rows added jobs; government was flat; information was the only decline.
- Mining, logging and construction grew 5.5 percent, the fastest row in the table.
- Information fell 4.9 percent and is about 3.4 percent of total nonfarm employment.
Information is falling in Austin, Seattle and Portland alike. It is a small share of payrolls and a large share of the story a pro forma tells itself.
Our position on Austin is that the statute changed the shape of the risk here rather than its size, and that most investors have not yet repriced for it.
We would not acquire stabilized multifamily in the Travis County core at present. The reasoning is not about current occupancy or current rents. It is that Chapter 218 converted a large stock of office, retail and warehouse parcels into by-right multifamily sites at no less than thirty-six units to the acre, with one parking space per unit and no floor area ratio limit, in a county already permitting 2.21 percent of its stock annually. The land that competes with your asset expanded overnight, and it expanded without any process that would have given a warning.32
We would underwrite Round Rock and the Williamson County corridor. It carries the highest median household income in the metro at $111,340, the lowest poverty rate at 5.4 percent, and the lightest permit intensity of the three counties at about 1.70 percent of stock. Chapter 218 applies there too, so this is a relative judgment rather than a shelter, but the starting position is materially better.2
We would not buy in the Kyle and San Marcos corridor. Hays County is permitting about 3.82 percent of its entire housing stock in a single year, which is a rate of new competition we decline to underwrite against regardless of how fast the population is growing, and its 26.3 percent growth is running into that supply rather than ahead of it.2
The one place we would actively look is the conversion thesis in Subchapter C. An office, retail or warehouse building at least five years old, with a surface parking field that satisfies the parking requirement as it stands, in a submarket where rents support the conversion cost, is now buildable without a traffic study, without traffic mitigation, without added parking, without design review beyond the building code and without an impact fee. That is a narrow, checkable set of tests, and it is a genuinely different opportunity from anything else in this series. Investors comparing supply-led risk across our coverage should also read our Houston and Boise guides.3
The land that competes with a stabilized Austin asset expanded overnight, and it expanded without any public process that would have given an owner warning.
Employment by sector
Austin-Round Rock-San Marcos, TX Metropolitan Statistical Area. Figures are as published for July 2026, preliminary.
| Sector | Jobs | 12-month change |
|---|---|---|
| Total nonfarm | 1,421,700 | Pending |
| Civilian labor force | 1,568,800 | Pending |
| Professional and business services | 294,600 | +8,300 (+3.2%) |
| Mining, logging and construction | 99,100 | +5,200 (+5.5%) |
| Leisure and hospitality | 155,300 | +2,800 (+1.8%) |
| Education and health services | 172,100 | +2,500 (+1.5%) |
| Financial activities | 93,400 | +2,100 (+2.2%) |
| Trade, transportation and utilities | 214,000 | +1,700 (+0.8%) |
| Other services | 56,700 | +1,400 (+2.7%) |
| Manufacturing | 87,000 | +800 (+1.6%) |
| Government | 201,000 | 0 (0.0%) |
| Information | 48,500 | -2,400 (-4.9%) |
Source: U.S. Bureau of Labor Statistics, Economy at a Glance, Austin-Round Rock-San Marcos, TX. Retrieved September 3, 2026.
The demand base
Population, tenure, incomes and housing costs for the county. These are the figures that decide whether a renter household exists, and whether it could buy instead.
| Measure | Value | As of |
|---|---|---|
| Population, Travis County A gain of 99,513 residents. | 1,389,670 +7.7% since April 2020 | July 1, 2025 estimate |
| Population, Williamson County A gain of 143,768, larger in absolute terms than Travis. | 752,827 +23.6% since April 2020 | July 1, 2025 estimate |
| Population, Hays County A gain of 63,326 residents. | 304,390 +26.3% since April 2020 | July 1, 2025 estimate |
| Households, Travis County | 583,747 | ACS 2020-2024 |
| Housing units, Travis County | 682,547 | July 1, 2025 |
| Housing units, Hays County | 120,266 | July 1, 2025 |
| Owner-occupied rate, Travis County The remaining 47.9 percent rent, a deeper renter base than either suburban county. | 52.1% | ACS 2020-2024 |
| Median gross rent, Travis County About 21.0 percent of median household income on our arithmetic. | $1,744 | ACS 2020-2024 |
| Monthly owner cost with a mortgage, Travis County $890 above the median rent. | $2,634 | ACS 2020-2024 |
| Median household income, Travis County | $99,611 | ACS 2020-2024, in 2024 dollars |
| Median household income, Williamson County Above Travis County, on a poverty rate of 5.4 percent. | $111,340 | ACS 2020-2024, in 2024 dollars |
| Median home value, Travis County About 5.3 times median household income. | $523,000 | ACS 2020-2024 |
| Building permits 2025, Travis County About 2.21 percent of stock. | 15,059 | 2025, all residential |
| Building permits 2025, Hays County About 3.82 percent of stock, just behind Pinal County, Arizona. | 4,595 | 2025, all residential |
| Bachelor’s degree or higher, Travis County | 56.6% | ACS 2020-2024, age 25+ |
Source: U.S. Census Bureau, QuickFacts, Travis County, Williamson County and Hays County, Texas. Retrieved September 3, 2026.
