Market Trends
Positive absorption results in dwindling vacancy
Strong demand for Austin office space was constant throughout 2017. According to the Bureau of Labor Statistics, the unemployment rate in the Austin Metropolitan Area dropped over the past year by 0.4% from 3.3% in October 2016 to 2.9% in October 2017. Both the United States and Texas unemployment rates have reduced to now current averages of 4.1% for the USA as a whole and 3.9% for the State of Texas. Over 22,000 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 Year End 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 net absorption of nearly 750,000 square feet of office space at the end of 2017. With over 4.5 million square feet of new Austin-area office space currently in development and almost 500,000 SF of office space delivered recently, 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 area to the dismay of many small business owners. The current asking rates are now $1.45/SF higher on average 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 decreased to 8.1% over the past quarter. Class A office space in the Austin area had the highest vacancy of approximately 9.0%. Office space rental rates have increased substantially over the past 12 months to a now current average of $33.77/SF gross for office space throughout the Austin market. The now current rates have increased by $0.45/SF on average within recent months.
Additional Information: Austin Office Market Report – Year End 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 Year End 2017 Austin Office Market Report has been obtained from sources deemed reliable. While considered accurate, we make no guarantee, warranty, or representation about it.