Austin Office Market Q2 2018

Austin Office Market Q2 2018

Austin’s office market for Q2 2018 remained flat for the first half of the year compared with 2017. Although, occupancy has not changed much the vacancy rates have moved upwards  overall at around 10%.  We are seeing a slowing of occupancy taking place and more sub-leasing activity, this tends to be a sign of a consolidation or a slowing of activity.  Vacancy rates can be skewed however due to new deliveries of inventory which encompasses 6 new office building properties being delivered.  Also new construction shall provide an additional 800,000SF of office space coming on the market.

Austin Office Market Operational Costs

In addition to increasing lease rates, operational costs are on the increase as well. Overall operational costs have increased $0.44 cents per square foot to an average over $10 per square foot per year for office properties.  NNN asking rates increased overall $0.41 cents per square foot from the 1st quarter to the 2nd quarter of 2018.  Annual gross rates overall are at a historical high of $35.84 per square foot per year. Job grown has expanded at 3% annualized in Q2 2018.  Asking rents comparisons over the past 3 years are as follows:

2015 $31.81  

2016 $34.83

2017 $34.39

2018 $35.84