Market Trends
Vacancy remains stable amid ample new development
Demand remains high for Austin office space into 2018. According to the Bureau of Labor Statistics, the unemployment rate in the Austin Metropolitan Area dropped over the past year by 0.5% from 3.5% in February 2017 to 3.0% in February 2018. Both the United States and Texas unemployment rates have reduced to now current averages of 3.9%. The Austin area’s labor force is now 85,727 jobs greater than it was 12 months ago.
With Austin office space being in continuous demand, the tight leasing market is making great office space deals harder to find. This 1st Quarter 2018 Austin Office Market Report newsletter is distributed as a means of informing our clients and commercial tenants about ways to save time and money during the office leasing process.
The Austin office space market had positive absorption of almost 128 thousand square feet of office space so far this year. With nearly 3.3 million square feet of new office space currently under construction and over 156 thousand SF of office space delivered within recent months, developers are doing their best to keep up with continuous requests by growing and relocating tenants. Since vacancy has remained fairly stable and absorption continues to be positive, it is not a surprise that the current asking rates have continued to rise steadily over the past several years.
If you are seeking Austin office space for lease, it may be in your best interest to sign the longest lease term that you are comfortable with. With rental rates rising faster than the annual rent escalations historically found in most commercial leases, many Landlords are now seeking higher rent bumps to help bridge the gap. This has become increasingly popular and the traditional 3% or $0.50/SF annual escalations are starting to be hard to find. It is important to plan for future business expansion needs though and not limit your long-term options.
Vacancy and Rental Rates
Rental rates have risen to a now current market-wide average of $38.65/SF. The total vacancy average for the Austin office space market is now 10.7%. The vacancy amount has gone down slightly and remains a strong contributor to all of the new commercial developments taking place. Demand has been strong enough in the Austin office market that most of the new commercial space under construction is at least 50% pre-leased.
Additional Information: Austin Office Market Report – Q1 2018
If you are interested in rental rates for a certain location or are seeking Austin office space for lease, please contact us with your requirement.
Information in this First Quarter 2018 Austin Office Market Report has been obtained from sources deemed reliable. While considered accurate, we make no guarantee, warranty, or representation about it.