Q3 2014 Austin Office Market Report
Q3 2014 Austin Office Market Research & Forecast Report
2.8M SF of construction paired with high occupancy rates prove Austin’s office market is hotter than ever in 3Q 2014.
Office vacancy rates decreased by 4.0% between quarters as new tenants lease space in Austin’s CBD. Citywide absorption reached 728,703 SF in the Q3 2014 compared to 99,000 in Q2 2014, making this by far the strongest quarter for Austin’s office market this year.
Although there were no deliveries in Q3 2014, nearly 2.9 million SF of office space is currently under construction. Some of these buildings include the Colorado Tower, already 95% preleased, IBC Bank Plaza, which is 90% preleased, and finally 311 Bowie Street where Whole Foods has preleased 40,000 SF of office space.
The citywide average rental rate increased 0.9% from $27.70 per SF to $28.20 per SF over the quarter and 6.2% from $26.56 per SF to $28.20 per SF over the year. The average CBD rental rate increased to $39.34 from $37.90 last quarter, and the average suburban rental rate increased slightly from $26.02 to $26.43.
According to the Texas Workforce Commission, the Texas economy and workers across all major industries continue to perform at a record pace. Austin’s unemployment rate fell to 3.9% from 4.9% over the year.
The continued construction paired with high demand for office space both inside the CBD and out, proves that Austin’s market is stronger than ever. Competition for downtown office space is at an all time high as we see a creative, well-educated workforce infiltrate the city and continue to drive occupancy rates up.