Year Ends With 2.7M SF Of Office Space In Austin Pipeline
Austin is on track to match last year's office market performance, with about 1M SF of net absorption and 2.7M SF of new space in the works going into 2018.
Vacancies in Austin’s office market hit a 16-year low in 2017, with 1M SF of positive net absorption boosted by strong growth in the tech sector.
The Q4 report out of CBRE notes vacancy rates held steady at 8.8%, a low that had not been seen since Q2 2001. A third of all leases signed last quarter were tech firms. Another 29% went to finance and business services.
Downtown accounted for about half of the office market’s net absorption last year, according to CBRE’s numbers. That was followed by activity in the Northwest and Southwest sectors.
That office market performance is similar to numbers released last year at this time by Colliers International. Colliers labeled 2016 as the beginning of the leveling off of the Austin office market, barring the expansion of a major player such as Amazon, Google or Facebook.
Developers kicked off an additional 600K SF of construction last year, including the new SXSW headquarters, in the last quarter. That brings the total construction of new office space in the pipeline to 2.7M SF.
Two major office building deliveries are expected in Q1: Oracle’s East Side campus at The Waterfront on Lakeshore Drive and the opening of Shoal Creek Walk in Austin’s Market District, anchored by Cirrus Logic. Those two projects, combined, will deliver another 700K SF of office space to the market.