MARKET TRENDS
The Landlord’s Market Prevails
For those who live in and around Austin, TX, it is easy to see the rapid growth taking place as there are cranes across the skyline. As demand for Austin office space remains strong, the office market continues to tighten and great lease deals are becoming harder to find. This Austin Office Market Report newsletter is distributed as a means of informing our clients and commercial real estate tenants about ways to save time and money during the office leasing process.
The Austin office space market has experienced nearly 250,000 square feet of positive absorption this quarter. Due to the lack of supply and high demand, there is over 2.5 million square feet of new Austin office space currently in development. Most of this new Austin office space has a targeted completion date by year’s end with many already being 100% leased prior to delivery! An additional 1 million square feet of office space development is already in the works for 2016.
Due to the ever increasing demand, Austin office space for lease rental rates have been steadily increasing to new all-time highs. The current asking rates are approximately $3/sf higher now than they were at this time last year. This is mostly due to tech companies flocking to Austin in pursuit of quality talent and lower rental rates than those found in California, New York, and other major tech hubs.
If you are seeking Austin office space for lease, it is in your best interest sign the longest lease term which you are comfortable with, while making sure not to limit your potential growth plans. Market rental rates have been rising faster than the annual rent escalations found in a lease, this trend is expected to continue.
High demand for Austin office space continues through 2015 with the citywide office space vacancy rate remaining steady at approximately 10% from last quarter. Rental rates have continued to rise steadily though to an average of $28.92/sf for office space throughout the Austin market, up from $28.47/sf last quarter and $26.27/sf a year ago.
ADDITIONAL INFORMATION
If you are interested in rental rates for a certain location or are seeking Austin office space for lease or purchase, please contact us with your requirement.