Q2 2018 Austin Office Research & Forecast Report

Austin’s office market is fast, competitive and expensive

Boots On The Ground Commentary by David Bremer

Our “Boots on the Ground” viewpoint is the voice of our experts, who have broken down the market data and compared it to what they are seeing for themselves. This is their take on what the numbers actually mean for the Austin office market.

Austin’s current office market can be summed up in three words: fast, competitive and expensive. While absorption decreased and vacancy went up slightly in the second quarter, the market has been extremely busy in comparison to past summer slowdowns. Rates and operating expenses have continued to trend upward, primarily due to skyrocketing taxes. We are seeing competition for prime spaces in almost every submarket in the city. We are setting rental rate records in the CBD ($45+ operating expenses), Eastside properties continue to mimic the CBD’s upward rate trends (including the obligation to pay for parking at most new developments) and Class A suburban properties are commanding record rental rates as well. “Fast” can be a bit misleading, but tenants are being forced to move on properties very quickly in order to separate themselves from competition. Deal pace has simultaneously slowed down as Landlords take their time to negotiate and document the deal the way they want it.

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