Apartment living above stores at The Domain has proven popular.

More than 500 new apartments are coming to The Domain development in North Austin.

The multifamily component will be delivered in two phases. The 315-unit phase one, under construction now, should be delivered by May 2012. Phase two, which will break ground in January 2012, will consist of 228 units and should be delivered by the third quarter of 2012.

The second phase will also contain 14,000 square feet of retail, according to Austin-based Endeavor Real Estate Group, one of the partners in the project.

Whole Foods Market Inc. recently broke ground on a store in The Domain, which is set to open in early 2013. 

Phase one’s multifamily component is sited on the north side of a new 9-acre park that is set to begin construction in January. The project’s two buildings will be four stories and will be wrapped around a parking garage. The project will also include a pool and other fitness-related amenities. Bike lanes have been installed on all roads throughout the developed portion of the 57-acre Domain project.

The latest component is a joint venture between Endeavor, Columbus Realty Partners Ltd. of Dallas and RREEF, the real estate investment management business of Deutsche Bank’s asset management division.

Ben Bufkin — who is responsible for development activity and underwriting at The Domain, a mixed-use redevelopment of a former IBM campus — said the latest activity is in line with the development’s original mission.

“Everything that’s coming is consistent to having a Domain that’s in line with all of Austin,” Bufkin said. 

Bufkin wouldn’t say how much the project is costing, but he said it is being paid for with equity and debt financing from JPMorgan Chase & Co.

Securing necessary financing for well-placed multifamily projects has been achievable amid an otherwise challenged commercial real estate market, as investors are starting to recognize increased opportunity in that sector.

“Developers are also able to lure third-party equity investors with equity returns at levels comparable to the days before 2008,” said Tom Godson, principal at CNL Commercial Real Estate in Dallas.

Many development deals are yielding twice the equity returns on the typical capital structure, he said. That structure consists of construction financing of 70 percent to 75 percent of costs and an equity component of 25 percent. 

North Austin appears to offer opportunity for developers. Apartment hunters there are finding fewer vacancies, experts in that submarket said.

Many people are becoming priced out by the resulting increasing rents, said Chip Parker, a managing director at Apartment Experts North Austin, a 25-year-old apartment locator company.

And although Parker is “excited about any development,” it isn’t coming soon enough for him. “The problem with all the new developments is that none of it is going to come online before the spring.”