Austin office market is on the road to recovery.
AUSTIN OFFICE VACANCY AT 14.2%
Four months into 2022, the overall vacancy is at 14.2%, up 20 basis points from last year. Availability is at 19.1%, down 70 basis points from April 2021 at 18.4%. The difference between this figure and the vacancy rate reflects expected future move-outs. The Austin office market has recorded 3.1 million sq. ft. of leasing activity, comprised of both new leases and renewals, while net absorption (move-ins minus move-outs) is at positive 1 million sq. ft., up a record-breaking ten-fold year-over-year. The amount of square feet delivered to the Austin office market from January through April (1.1 million sq. ft.) has outpaced net absorption—representing the demand for office space—for the third consecutive period since 2019.
TEN-FOLD INCREASE IN NET ABSORPTION
Even with the increase in vacancy, net absorption (move-ins minus move-outs) was up ten times the amount this time last year at 110,000 sq. ft. Significant 2022 move-ins include Cloudflare, moving into 124,393 sq. ft. in Foundry II, an office building at 1600 E. Fourth St. in the East submarket; Splunk taking 52,717 sq. ft. at 2043 S. Lamar Blvd. in Bouldin Creek in the South submarket; Capital Factory moving into 46,662 sq. ft. at 701 Brazos St. in Austin Centre in Downtown Austin, and Tricentis occupying 42,019 sq. ft. at 5301 Southwest Parkway in Uplands Corporate Center in the Southwest submarket. In addition, due partly to the new construction added to the market, average asking full-service rent in the Austin office market metro is at $31.36 per sq. ft., up by $2.27 or 7.8%from this time last year.
NEW 48-STORY OFFICE TOWER SCHEDULED FOR DOWNTOWN AUSTIN
Lincoln Property Co. and Phoenix Property Co. are breaking ground on The Republic, an 833,000-sq.-ft. office tower at 401 W. Fourth St. The building will have a 50,000-sq.-ft. amenity level on the 19th floor and will also include a 20,000-sq.-ft. ground-level public plaza. Construction is planned to begin in Q2 2022.
Director of Research
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