Market Trends
High absorption rates leads to low vacancy
High demand for Austin office space endures through 2017. According to the Bureau of Labor Statistics, the unemployment rate in the Austin Metropolitan Area rose slightly over the past year by 0.3% from 2.9% in April 2016 to 3.2% in April 2017. The United States currently has an unemployment average of 4.3% and The State of Texas is at 4.8%. Over 28,000 new jobs were created in the Greater Austin area over the past 12 months.
With Austin office space being in continuous demand, the tight leasing market makes great office space deals hard to find. This 2nd Quarter 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 absorbed over 1 million square feet of office space in the 2nd quarter of 2017. With over 2.2 million square feet of new Austin-area office space currently in development and over 700,000 SF of office space delivered in this past quarter, developers are doing their best to keep up with continuous requests by growing and relocating tenants. The trend of growing rental rates has continued throughout the Austin, TX metro to the dismay of many small business owners. The current asking rates are now over 7% higher than they were at this time last year.
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. Market rental rates have continued to rise significantly faster than the annual rent escalations found in many commercial leases. This has been an existing trend for the past several years and it is expected to remain as the growth continues. It is important to plan for future business expansion needs though and not limit your long-term options.
Vacancy and Rental Rates
Rental rates continue to rise through 2017 as demand remains high for Austin office space. The market-wide office space vacancy rate has dropped significantly to 7.3% over the past quarter. If you exclude office space that is listed for sublease, the direct market vacancy rate is 6.8%. Office space rental rates have increased substantially over the past 12 months to a now current average of $36.72/SF gross for office space throughout the Austin market. This reflects an increase of $2.63/SF from an average $34.09/SF gross twelve months ago.
Additional Information: Austin Office Market Report Q2 2017
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 Austin Office Market Report Q2 2017 has been obtained from Xceligent, Inc., a source deemed reliable. While considered accurate, we make no guarantee, warranty, or representation about it.