First phase of 1,400-unit apartment project breaks ground in Pflugerville
Shonda Novak, Austin American-Statesman
Updated 5 min read
The Merle at Howard, shown in this rendering, has broken ground and ultimately is expected to add 1,400 apartment units to Pflugerville.
Even with a surge of supply and slower demand for apartments in Central Texas, some developers are going full speed ahead on rental projects, including a big new one in Pflugerville, just north of Austin.
The first phase of the new Pflugerville community, called the Merle at Howard, will add just over 440 apartment units. That will be followed by two more phases that will bring the total to about 1,400 apartments and townhomes. All units on the site — 60 acres at 2500 East Howard Lane in northeastern Travis County — will be rentals.
The developers are High Street Residential, Trammell Crow Company's housing subsidiary and a subsidiary of the CBRE Group, along with partner CBRE Investment Management on behalf of a fund it manages. CBRE Investment Management is a global real assets investment management firm with $147.6 billion in assets under management.
The developers have not disclosed the cost for the Merle.
Its first phase will be built on 17 acres. It will have 444 units in 15 apartment buildings and five townhome buildings, Marie Archibald, a vice president in Austin with High Street Residential, said in a news release. The first units are expected to be ready for residents in the fall of 2025, she said.
Rents will be competitive with other projects in the area, Archibald said.
Amenities will include a clubhouse with a work-from-home space; a fitness center; a virtual golf lounge; a pool and cabanas; and a dog park and pet washing stations. There also will be charging stations for electric vehicles and 141 private garages available for rent.
Also planned are pickleball courts, basketball courts, a playscape and jogging trails.
The clubhouse planned for the Merle at Howard is going to include a work-from-home space.
The next two phases will allow for construction of up to 956 additional units, High Street officials said. The second phase likely begin in early 2025, although a timeline is not yet final, Archibald said in an email.
The Merle will be about 3 miles from Interstate 35, 3 miles from Texas 130 and just over 7 miles from the Domain, the large mixed-use development in North Austin known as the city's second downtown.
The Merle also will be less than a mile from the famed Dessau Dance Hall, where such icons as Hank Williams, Elvis Presley, Merle Haggard and many other musicians once played. The late Merle Haggard was the inspiration for the rental project's name.
The Austin area is growing in all directions, and the Northeast Austin and Pflugerville areas are no exception. That part of the region is home to some of the world’s largest employers, Archibald said. They include Dell Technologies, Apple, Samsung Austin Semiconductor, IBM, NXP Semiconductors, Applied Materials, National Instruments and Advanced Micro Devices.
“These large, high-paying employers, coupled with the area’s affordability and easy access to the Parmer Corridor, the Domain and (the Texas 130 tollway) have earned Pflugerville a spot on the map as a top destination for new households in the Austin metro," Archibald said.
High Street Residential expects future residents at the Merle "will be moving both from in and outside of Texas," Archibald said.
Amenities at the Merle at Howard will include a pool, shown in this rendering, along with a clubhouse, a fitness center, a virtual golf lounge and a dog park and pet wash stations.
Market shifting to favor the renter, experts say
Archibald and local housing experts say there are a large number of apartment units that are due to wrap up construction over the next 12 to 24 months around Austin, particularly in the northeastern part of the Austin area. In the region as a whole, supply is exceeding demand, and that is expected to drive apartment rents and occupancies lower, experts say.
"As the supply of apartment units increases, we expect to see a normalization in lease-up speeds, which had greatly accelerated during the pandemic," Archibald said.
At a Sept. 6 conference in Austin, Jordan Brooks, a senior analyst with ALN Apartment Data, which tracks the multifamily market, said the northeastern Austin/Pflugerville area is expected to be able to absorb the added supply it is seeing.
"It’s true that demand has not kept up with supply in that submarket this year, but I would propose that the story has been more on the supply side," Jordan said in an email. "Apartment demand has actually been more robust for that area so far this year than it was to this point in the calendar last year. The difference has been a steep increase in the number of new units brought to market this year."
The timing of the new supply's arrival also plays an important role, Jordan said.
Construction has started on the Merle apartments on Howard Lane in Pflugerville. The project will be built in three phases, eventually bringing 1,400 apartments on 60 acres in Pflugerville.
"The bulk of new units in the Pflugerville region have started leasing in the last few months, so that timing will skew the supply-to-demand ratio a bit until those properties have had time to lease up," Jordan said.
Earlier this year, Charles Heimsath, a real estate consultant who has tracked the Austin-area apartment market for several decades, said he expected renters to see some price relief this year as the pace of job growth slows and the new supply of apartment units exceeds demand.
His latest survey showed the apartment occupancy rate declined to 91.5% in June from 93.9% in June 2022. Rents averaged $1,713 a month as of this June compared with $1,702 in June 2022, Heimsath's survey found.
Across the five-county Austin region as a whole, leasing activity slowed dramatically in the second half of last year, Heimsath's data show.
Last year, 11,707 apartment units were leased on a net basis (that is, taking into account move-ins and move-outs). That's a drop of almost 43% from the number of units that were leased on a net basis in 2021 (20,492 units), Heimsath's figures show.
Despite the decline, that 11,707 number marked the second-highest year of net leasing activity, Heimsath said.
"Slower job growth is the main reason for the drop-off in absorption (of rentals) in the second half of the year," Heimsath said. "Job growth is continuing, but at a slower pace due primarily to layoffs in the tech sector." Experts have said the pace of people moving here into apartments has slowed as well.
As a result, Heimsath predicted several months ago that rents, on average, will drop by at least 5% by the end of the year, which could mean gross rents settle at an estimated $1,628 a month.
"For the first time in many years, landlords will be willing to work with their existing tenants as lease renewals come up." Heimsath said.
