Austin’s fast-growing, high-tech manufacturing sector continues to draw strong interest from investors.

Over halfway through 2022, there has been 7.4 million sq. ft. of net absorption—including the completion of the Tesla Gigafactory at 4.5 million sq. ft. and Amazon Sat6 at 767,000 sq. ft. for a combined 5.3 million sq. ft.—to the Austin industrial market. In addition, 4.8 million sq. ft. of leasing activity comprised of new leases and renewals took place during the same period. 105 properties 10,000 sq. ft and larger are under construction, tallying 13.8 million sq. ft. with a 60% availability rate. 23.3 million sq. ft. has been added to the Austin Industrial market in the past five years, a 26.3% increase in total inventory, registering at 112 million sq. ft. as of July 2022.

As of May 2022, vacancies are at a low 3.9%. As a result, landlords have pushed the NNN average asking monthly rents up 4.8% to $1.01 per sq. ft.—a significant amount—from last year’s $0.96 per sq. ft. Austin’s job market continues to be on fire. For the third consecutive year, a study by The Wall Street Journal and Moody’s Analytics awards Austin the country’s strongest job market among major metro areas, driven by the tech industry.

Tech manufacturing and increased demand for goods and housing are making Austin an attractive market for speculative developers, leading to unprecedented construction activity. Preleasing activity from retail and wholesale firms can be credited partly to Austin’s 2.7% average annual population growth since 2010. Based on current projections, the number of residents is expected to double to 4.3 million by 2050. The increasing presence of chipmakers such as Samsung, NXP, and Applied Materials is drawing strong interest from investors looking to capitalize on this escalating demand. In addition, Titan Development expects to accommodate tech companies and their suppliers with their 2.5 million sq. ft. Hutto Mega TechCenter. It is expected to break ground in late 2022 and will be near Samsung’s proposed $17 billion plant in Taylor.

Leta Wauson
Director of Research
[email protected]
tel 713 275 9618