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The Austin office market has been one of the healthiest in the country this cycle. Job growth, as well as absorption, remains strong, and developers seem to be well aware of Austin’s story. Nearly 4 million SF has been delivered in the Austin market over the past year, with about 5 million SF currently under construction. Vacancies are as low as they’ve been since the tech boom in the early 2000s, and there are very few big blocks of space on the market today. This has led companies like Google, Facebook, and Indeed to pre-commit to large spaces, often entire buildings in new developments, one to two years in advance. These big name companies are also heavy users of the growing amount of WeWork space around the city as well. Still, with all the new development, absorption is on pace with deliveries and vacancies are not expected to radically increase in the coming years. Healthy fundamentals have caused rents to grow at a record pace throughout the market. Rent prices have approached 8% annual growth at multiple points but have backed off more recently, registering about 4% over the past year. The tech industry is the wild card here—if the nation enters a tech-driven recession, the office market could suffer as businesses across the country cut IT spending.
View our infographic on the 2019 Q1: Austin Office Market + Commercial Real Estate report for a more in-depth look at the Austin market. Available for download here: AOS 2019 Q1 Infographic
Choosing whether to renew or relocate is a big business decision. AOS can create leverage with current and prospective landlords, making THEM compete for YOUR business. Our job is to get you the best terms possible.
View our 2018 Q4 + Year-End Review: Austin Market + Commercial Real Estate report for an update on the Austin market. Available for download here: AOS 2018 Q4 Infographic
View our 2018 Q3 Review: Austin Market + Commercial Real Estate report for an update on the Austin market. Available for download here: AOS 2018 Q3 Infographic
View our 2017 Q4 & Year End Review: Austin Market + Commercial Real Estate report for an update on the Austin market. Available for download here: AOS 2017 Q4 Infographic.
View our 2017 Q3 Review: Austin Market + Commercial Real Estate report for an overview of the state of the Austin commercial real estate market.
In Austin, we have seen tenants competing for the best spaces because finished spaces that are move-in ready are very limited. The other options in the market often need significant construction to create the open, creative aesthetic modern tenants are seeking. High construction prices and the long lease terms required by landlords for turnkey buildouts don’t match the needs of high growth tenants. Our strategies to mitigate these effects on our clients are to start the search process early, expand the search parameters to bring in more options, negotiate with multiple properties simultaneously, and to make sure our clients are ready to take swift action to close the transaction for their desired space. We can’t create options that are not there, but can guide our clients to quickly secure the option that best meets their individual needs.
We predict rates to continue to rise throughout 2017 and 2018 as demand stays strong and construction prices high. We suggest that our clients start their Austin office space search and negotiation very early to get the best results in this competitive environment.
If your office lease is expiring within the next 12 months, it is time to start actively making plans. Feel free to call us to discuss your unique situation over the phone and we can help you map out the appropriate timeline for your new office search or rent negotiation.