The State of Austin Office
Office rents are spiking impressively (like a good left-side hitter on a volleyball team), Endeavor managing principal Chad Marsh said at our recent Austin State of the Market event. He’s working three leases now that include 20% to 40% increases bringing them from the high $3 or low $4 range to nearly $6/SF. Endeavor has launched 1.1M SF of spec office in the last 12 months, and will kick off another building in three months.
Westmount Realty EVP/partner Steve Kanoff bought 537k SF Braker Center at 88% leased in March. Rents there were sub $10, but now are going up to $15 as it reconfigures the property from industrial to office.
Parkway managing director Mike Fransen (who grew up in southern Oregon) says Downtown core office rents are in the mid $20s and growing quickly, but operating expenses are even more staggering. Including parking, they can top $50 in the submarket. (Parking also increases our expenses, because we keep getting tickets.)
Cadence McShane VP/GM Srinath Pai Kasturi offered his investment advice: Start purchasing land on the 130 corridor before the next recession (we average one every six years, so you’re running out of time). Then develop mixed-use with a heavy focus on multifamily.
IndCor SVP Ryan Keathley criticized the City leadership for failing to fix traffic, one of Austin CRE’s biggest challenges today. (If you spend as much time in your car as you do in your office, you probably live in Austin.) He says new roads and rail aren’t enough; any transportation plan needs to include the improvement of IH 35.
Many thanks to our moderator Gracy Title SVP Bob Roberts (brown jacket) for wrangling our rowdy office and industrial panel. He called it a microcosm of Austin today: Two Longhorns and a bunch of outsiders.
We snapped our sponsor Clean Scapes’ Jeff Pulley with TBG’s Justin Lindabury. Clean Scapes is Central Texas’ leader in sustainable landscape construction and maintenance. You’ll recognize some of its big projects, including much of the Domain (it’s handling the 2, 7, and 11 renovations now), The Austonian, Hill Country Galleria, and Block 21 W Hotel.