Q4 2017 | Austin Office | Research & Forecast Report

Austin’s office market closes the year with a strong finish

The final quarter of 2017 was a strong finish for Austin’s office market. Year-end 2017 net absorption was close to 900,000 SF and rates continued their upward trend. The ease of finding quality space at market rates continues to be dependent on the specific submarket you target and the size of the space.

The North/Domain submarket is still one of the hottest office submarkets in the nation. The vast majority of new buildings have been leased in whole prior to delivery. There are three large class A buildings in the pipeline (totaling close to 1 million SF) and another building is expected to break ground in early 2018. In the next 18 months, we will, for the first time, see a 50,000-170,000 SF block of second generation space become available in the Domain. Finding space for a small to medium user in the Domain has been difficult and we don’t expect that to change.

Northwest and Southwest Austin continue to offer some of the best values available in the market. There are plenty of opportunities for small to medium users, while large blocks of space are difficult to come by due to a lack of new construction. There is a noticeable difference in both demand and final deal structures on those buildings that can offer even minimal walkability to coffee and food options. Rates are holding firm but we’re seeing Landlords begin to make larger concessions (higher improvement allowances, rent abatement, etc.) to attract users.

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