Media Credit: Eliot Meyer Louis Valdez renovates a loft, a unit of The Bungalows, on Tuesday. The units are being converted into condominiums by The Sutton Company.

Media Credit: Eliot Meyer A view of the exterior of The Bungalows. Many apartment complexes in the University area are being bought and converted into condominiums.

Living off campus around the University could become more expensive in the near future as selected student housing units are converted from apartments to condominiums for sale, a realtor warned today.

"There are several hundred student housing units under conversion," said Chris Stutzman, managing director of Multifamily Services for Transwestern Austin, a real estate agency.

Transwestern represented a landlord who sold the Windsong Apartments to the Sutton Company for conversion.

Renovations and conversions of student apartments into high-end apartments and condominiums could force students to outlying areas of Austin as rents escalate around the University, he said.

"It's a dynamic market scene," Stutzman said.

A new report issued by an industry research firm showed average rents in Austin increased by $14 to an average of $780 during the past three months.

The "Trend Report" by Austin Investor Interests, an investment research group, also stated that more than 3,000 units in the Austin area have been taken off the market by redevelopment and conversion efforts.

More than 1,500 of those units were built in the 1960s and 1970s and are located in the central and southeast areas of the city where many student housing complexes are found and rents are higher than average, according to the report. The units will be redeveloped into "high-end rentals," which are expected to cost more than 50 percent more to rent.

Preparation for renovation varies greatly among apartment complexes, Stutzman said. In many cases, older apartments have to be gutted down to the sheetrock to be made ready for sale, but sometimes they only need a new coat of paint and new appliances, he said.

The report warns new construction in the city is outpacing the reduction in units because of apartment conversions and renovations. The rate of population growth in the city will have to increase to keep the market tight, or there could be oversupply. Such oversupply would force rents down, but nowhere as low as where they had been, as more affordable apartments have been replaced with more high-end units.

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