Austin Office Market Q2 2017

Austin Office Market Update Q 2 2017

There are always differing opinions as wide as there are people in the CRE market , brokers, agents and owners. Austin has been on a very long run approximately 8 years and some say this cannot sustain itself and some say it will continue. Truthfully, nobody really knows the answer. If we take historical into account every long up-cycle has an eventual down cycle and vice versa that is the law of the universe.

So where is the Austin office market for Q2 2017? Currently, the news for the most demand seems to be Downtown Austin and the East Side. This sub-market is expected to be the leader as far as momentum however, lease rates are expected not to change too much. There are properties to be delivered in 2017 that will hold the lease rates in check unless the spaces are pre-leased at a fast rate then the formula would change.
Nine office buildings has been completed in Q2 2017 in Downtown Austin with an 80% pre-leased occupancy. Citywide leasing averages increased approx $0.28 cents per sf per yr to $34.02 as an average for the downtown Austin office market.

Among the best tech cities to live in, Austin still came in at number 1 against cities like San Francisco, New York, Boston and Seattle. As long as the media touts Austin as a number one city, the population growth will most likely continue regardless of growing traffic congestion and higher taxes and expensive housing relative to the rest of the state.

Suburban Office Market
The suburban market vacancy rates are a bit higher approx +3% and demand remains somewhat steady, however we are seeing a lot more sublease listings coming onto the market which shows consolidations, changes to locations preferences or slow-downs in Austin office demand. Class A Office space is still leasing at a flat to slight increases.

Austin TX Office Market | Q42016

Austin office properties for leaseAustin Office Market for Q4 2016

Here is an overview of the Austin Texas office market ending for 2016.  Austin’s office market maintained itself with a consistent performance for all of 2016.  Growth and expansion continue moving into 2017. Lease rates for the Austin office market hit an all time high at almost $35.00 per square foot. New construction of perhaps the tallest building in Austin have been discussed which will cover almost 2M square feet of space  Class A office spaces hit a new high as well with a $0.55 cent increase compared to the 3rd quarter of 2016.

Increasing Expenses for the Austin Office Market

Landlords for 2016 pushed leasing rates higher along with higher expenses , which play an important stimulus on the rising lease rates. Class A lease rates moved up $0.55 cents tp $38.85 per square foot.  Occupancy continued a positive move with Downtown Austin, Northwest Austin and the Southwest Austin sub-markets along with more development in each sub-market.

Vacancy for Office Properties

Year over year vacancy moved downward in 2016. Overall vacancy came in at just under 12% down from close to 15% in 2015. The near term forecast for office space is for continued demand.  Also the sub-markets mentioned in the above paragraph are still the hottest sub-markets for demand and look like they will continue. There are currently 21 office development projects on the ground in Austin which equates to over 2M square feet , there is optimism about the future and influx of a growing population.

 

Austin Office Market | Q3 2016

Austin Office Market Update for Q3 2016

Here’s the latest on the Austin office market for Q3 2016, looks like more of the same folks. New records are being set with supply and demand at opposite ends of the spectrum. Lower vacancies overall and higher rents are forecasted for the balance of this year.  Vacancy rates are not in the single digits for Austin area wide.  The 2 largest tenant leases were tech companies expanding their current occupancy. One of the major tech companies coming to Austin is Oracle with a 25 acre, 560,000SF campus with the Austin office market. Citywide lease rates are now at $34.00 per sf which is a new all-time high for the area. Lowest vacancies remain in Downtown Austin, Round Rock and Northwest Austin.

Population Growth Austin office market Q2 2016

Forecasts for Austin’s population growth are expected to double to 4M people by 2040. The Austin office market will be tied to the residential and job growth over the next 25 years.  23 Quarters of consecutive growth has now hit the office market in the area with the Northwest area of Austin being the most popular area for office occupancy. There are currently 21 office projects under construction across 7 different sub-markets equating to approx 2 M square feet of space.  The city still faces major challenges in infrastructure with transportation issues.

Austin Office Market |Q2 2016

Austin Office Market | Q2 2016

Austin’s office market has been up on the upswing since 2012. However,  Austin’s office market is now experiencing negative occupancy. The actual figures are approx -24,000SF of negative occupancy in Q2 2016.  Lease rates have had small changes for the most part in low vacancy sub-markets such as Downtown Austin.

Here is a quick review,  lease rates for offices in Austin did not move much , only up +.9% to $34.65 psf per yr. The largest move was in Class A office space in the downtown area are coming in at an increase at approximately 2.7% to a whopping $47.31 psf per yr. Suburban Class A office lease rates only moved up on average $0.03 cents per sf per yr to $35.74 psf per year.  Current vacancy is coming in overall at 12% which is up from the last quarter by 1% point.

Indicators for Q2 2016

Indicators are as follows:

Vacancy down, Occupancy down, New Construction down , Under Construction down

Offices for Sale Overview Q2 2016

The current trend for Austin offices for sale is showing an increase in sales asking prices of 8% , compared to last years asking prices there is a +31% increase in asking prices, coming in at averages of $237 per square foot.Austin office market Q2 2016

Austin office market 2016

Austin Office Market 2016 Report

  • Overall vacancy rates moving into 2016 hit below 10%
  • Average asking rates for office space hit $31.00+ per square foot
  • 75% of office demand is in Northwest and Southwest Austin
  •  New overall rate is record citywide

Austin Office Market Snapshot 2016

Austin’s office market recorded new records in 2015 for occupancy since 2011.  There has been a new influx of people and the subsequent demand has increased over the past 5 years in the Austin office market. Lease rates hit new records as well passing up the previous lease rate increase record in the first quarter of 2015. Vacancy is now at the lowest it has been since the dot.com surge . For Austin, this is the third quarter in which vacancies have gone below 10%.

North West Austin

Northwest Austin represented up to half of the demand for office space. Much of it was because of one tenant which took occupancy of 230,000 square feet of space.  After the Northwest office market , the Southwest market came in second with 2 large tenants covering most of the square footage taking 217,000 square feet of office space.  Downtown Austin has the lowest vacancy rates of all the sub-markets coming in at below 7% vacancy.  There is still quite a bit of new construction activity which has 12 buildings currently under construction.

Unemployment has shown a slight increase although still low below 4%. Population of Austin is still increasing, in the Round Rock area the population swelled to plus 800,000 which is a 61% increase of 2000.

  • 12 Office buildings under construction moving into 2016
  • Oracle plans to build a 560,000SF building
  • New construction square footage 1.9M
  • Lowest construction sub-market Southwest area
  • Pre-leasing activity high in the CBD area

 

Austin Retail News 2016

Austin Retail News Update 2016

Here is the most recent retail news on the Austin retail market as of January 2016,  a summary written by utilizing recent content from Impact News  Austin’s retail market keeps growing with high demand and low supply of inventory. From 2014 to 2015, inventory has decreased by approximately 300,000 sf citywide. Rates continue to climb and for the foreseeable future they will continue to do so near term. Occupancy rates are still hovering at 96% , leaving a slim 4 % vacancy rate within the Austin Texas area.

Retail news Austin Texas

Currently, there is not a lot of construction of new Austin retail space in the Austin area. Most deliveries are due to redevelopments of existing retail centers.  One of the newest retail centers is the Oaks at Lakeway which is comprised of 175,000SF of new retail space anchored by HEB in Lakeway, TX. The retail center opened last fall and many smaller tenants are moving into the project as it continues construction.

Next Retail Center On Tap?

The next large retail center on tap is the Rock Rose to be located at the Domain in NW Austin which will have 100,000sf of new retail that has a strong local tenant occupancy.