IRR-Austin Mid-Year Viewpoint 2015 Local Market Report - Office
As the economy has continued to strengthen, the Austin office market has improved overall and continued to expand. Overall vacancy rates were steady over the past year and will likely continue this trend as 2015 progresses, even with the increase in office construction the Austin market is experiencing. An estimated nearly 2 million square feet of office space will be added over the next 12 months. Rental rates in both the Central Business District and suburban areas continue to climb, further indication of a strengthening office market.
Cap rates varied little over the previous quarter and will likely decline slightly during the second half of the year. Discount rates were also steady over the first part of 2015 and will likely remain relatively flat over the coming months. Within the Central Business District, several large projects were completed in the first quarter of 2015 including the 29-story Colorado Tower and the mixed-use Seaholm Power Plant redevelopment.
Within the southwest Austin submarket, Encino Trace Buildings 1 & 2 are nearing completion as well as the 7-story Capital Ridge building and a 5-story building at 3700 San Clemente. Suburban Austin is also experiencing an increase in office construction, with an estimated 3.5 million square feet of space in the planning stages in northeast Austin and nearly 1.3 million square feet proposed for the Round Rock/Georgetown area. The strengthening local economy, population growth, and increased construction should continue to drive the expansion of the Austin office market.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.