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Overall vacancy is at 9.4%, up from 8.8% at this time last year. Of the record-breaking 10.7 million sq. ft. currently under construction, about 42% of that space is available for lease.


Market Highlights

Construction booming in Austin. Overall vacancy is at 9.4%, up from 8.8% at this time last year. Of the record-breaking 10.7 million sq. ft. currently under construction, about 42% of that space is available for lease. The vacancy rate for Class A properties is at 10.1%, up from 8.5% this time last year. More office space has been moved out of so far in 2020 than has been moved into, resulting in overall negative net absorption. The asking price for office properties is currently at an average annual rate of $38.01 per sq. ft., up $2.84—8.1% from January 2018.

 

Expanding tech industry. Financial technology firm Q2 Holdings Inc. is expanding its headquarters in northwest Austin’s tech hub, preleasing an entire office building. Q2 is scheduled to occupy all 128,990 sq. ft. of four-story Aspen Lake Three, at 10355 Pecan Park Blvd. Construction is set to begin in the Spring of 2020. Due to its integral talent pool, unique lifestyle and commitment to business and real estate expansion, the Urban Land Institute Emerging Trends in Real Estate® 2020 forecast returned Austin to the #1 spot in the ranking of national markets to watch.

Robust job growth in fourth quarter. Austin’s unemployment rate dropped to 2.6% in December after remaining at 2.7% for five consecutive months. The unemployment rate for Texas increased to 3.5%, while the rate for the U.S. remained at 3.5%. Austin added jobs at a sharp pace of 5.7%, or a net 15,500 jobs, in fourth quarter 2019. Expansion was led by the construction sector, which added 3,700 net jobs. Leisure and hospitality added 4,200 jobs, followed by other services with 1,300 jobs. Professional and business services registered at 2,850 jobs. For the year 2019, job growth was a strong 3.5%, positive across all overall industry groups.

Leta Wauson
Director of Research
leta.wauson@naipartners.com
tel 713 275 9618

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