- May 5, 2022
-- Activity has picked up tremendously over the past quarter, with a continued emphasis on newer product in the city core. There has been a feeding frenzy for Class A product in the CBD, South Central and East areas of Austin, which has resulted in increasing rental rates in those areas. While much of this is due to out-of-town tech users entering or expanding in the market (Tiktok, Snapchat, Miro, etc.) Austin tech companies are also joining the mix. Subleases have garnered a ton of attention, and many have been subleased or are currently at documentation. We believe the primary reasons for this are (i) The ability to avoid a 9-12 month design and construction process, and (ii) Tremendous cost savings associated with construction and furniture vs. traditional spaces. We believe this success will lead to more traditional landlords either white boxing or spec'ing out tired spaces for marketability. This activity has also been the catalyst for multiple new downtown projects breaking ground, ranging from 100K to over 700K RSF. Most of these buildings won't deliver until 2024/2025 therefore conditions should remain somewhat favorable for Landlords in the short term.
Many suburban markets remained depressed resulting in higher vacancy and lower effective rates, but activity is picking up. At some point many companies will be forced to consider product alternative to the core, due to pricing, parking or availability, which will likely be the catalyst for a resurgence of ...Read more at https://bit.ly/Q1_2022_Austin_Office_MR