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Asking rents continue to climb. The Austin office market vacancy rate increased marginally to 8.4% nearing the end of the third quarter, with year-to-date net absorption at 1.6 million sq. ft. and deliveries at 2.3 million sq. ft. Construction activity remains elevated, with the amount of space under construction at 4.5 million sq. ft., including 2. million sq. ft. (55.8%) of that space already spoken for. The quoted overall average full-service rent is at $34.79 per sq. ft., up slightly from $34.75 at this time last month.
Investment sales down year-to-date through August. According to Real Capital Analytics, investment sales of office properties in the Austin area totaled $1.0 billion, down -17.6% from one year ago. Private capital has been the most active buyer type for 2018, comprising 44.0% of Austin’s total sales volume, followed by institutional buyers at 42.0%, and cross-border investors represented 10.0%. A recent significant transaction, The Luzzatto Co. purchased Austin Oaks office center; a 12 building, 445,322-sq.-ft. office complex at 3420 Executive Center Dr. in northwest Austin. Spire Realty Group sold the properties at 90.0% occupancy.
Is the social media giant the secret tenant at Domain 12? Word on the street is that Facebook is the Fortune 100 firm behind the recent major lease totaling 320,000 sq. ft., covering 17 floors at the Domain 12 office tower in Austin. TIER REIT is developing the building at 3110 Esperanza Crossing that is scheduled for delivery in December 2019. Facebook currently leases over 100,000 sq. ft. in the neighboring Domain 8 building.
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