Q1 2016 Austin Office Market Research Report
Austin’s office market slows after a year of rapid expansion
Three buildings totaling 321,024 square feet delivered in the first quarter. Projects that delivered in Q1 include the fully leased NorthShore building in the CBD, Research Park Plaza V in the Northwest submarket, and Domain I in the North/Domain submarket. Domain I has yet to sign a tenant. In the East submarket, there is over 350,000 square feet of proposed new construction with average rates in the low 30s.
The citywide average rental rate increased by 0.5% from $31.12 per square foot to $31.27 per square foot over the quarter. Class A rental rates in Austin’s CBD decreased by 1.1% over the quarter to $44.64 per square foot from $45.14 per square foot in Q4. Overall suburban Class A rental rates increased from $33.46 per square foot to $33.98 per square foot over the quarter.
Texas added 2,100 nonfarm jobs in February, expanding the state’s employment for the 11th consecutive month. Austin’s unemployment rate remains the second lowest in the state behind Amarillo. Since Q1 2015, Austin’s unemployment rate has dropped from 3.5% to 3.1%.Texas has seen an upward trend in the education and health services industry for 37 consecutive months. Seven out of eleven major industries saw growth in the first quarter across the state.
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