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As of mid-May, overall vacancy is at 9.5%, up from this time last year at 9.0%, due in part to the 643,000 sq. ft. of vacant space delivered to the market so far in 2020—40% of the total 1.6 million sq. ft. completed.
Vacancy at 9.5%. As of mid-May, overall vacancy is at 9.5%, up from this time last year at 9.0%, due in part to the 643,000 sq. ft. of vacant space delivered to the market so far in 2020—40% of the total 1.6 million sq. ft. completed. Of the 7.2 million sq. ft. currently under construction, 54% of that space is available for lease. The vacancy rate for Class A properties is at 10.6%, up from 7.8% this time last year. The Austin office market has recorded net absorption (moveins minus move-outs) at 1.2 million sq. ft., up significantly from 539,000 sq. ft. in mid-May 2019. The asking price for office properties is currently at an average annual rate of $39.02 per sq. ft., up from this time last year at $35.81 per sq. ft., due primarily to the new product added to the market.
Major technological hub.In the last ten years, the arrivals and subsequent growth of mega tech companies such as Apple, Amazon, Google, and Facebook, have driven the growth in Austin. These companies have gone from occupying 1 million sq. ft. to 8 million sq. ft. over the last decade. Now, the coronavirus pandemic, combined with the recent oil price war has these and other national companies holding off on hiring and taking a wait-and-see approach toward downsizing people, as part of their overall cost-cutting measures in what is expected to be a significant economic disruption in Austin.
Austin economic indicators. The Federal Reserve Bank of Dallas reported that the Austin economy slowed in March as the impacts of the coronavirus (COVID-19) began to surface. The Austin Business-Cycle Index grew well below trend. Jobs declined, the unemployment rate increased and initial unemployment claims surged. Real estate activity in the metro slowed, home sales prices increased and building permits fell.
Director of Research
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