Q3 2015 Austin Office Market Research & Forecast Report
Citywide positive net absorption reaches all time high in the nation’s fastest growing city.
Among the 50 largest U.S. cities, Austin is the #1 fastest growing city based on population growth between July 2013 and July 2014 according to Forbes. Austin grew at 2.9% over the year, beating out other major cities by a long shot. Tenants moving into new office space during Q3 2015 amount to a positive net absorption of 871,272 square feet, the highest positive net absorption ever recorded.
Class A rental rates in Austin’s CBD increased by 7.5% over the quarter - a sign that despite the seemingly endless new construction, the demand for office space in the CBD is not slowing down.
Four buildings totaling 463,502 square feet delivered in the third quarter, and just under two million square feet of office space is currently under construction. Of that two million, 1,002,050 square feet is scheduled to deliver in Q4 2015. Projects delivered in Q3 include Rollingwood Center Buildings 1 & 2 in southwest Austin.
The citywide average rental rate increased slightly by 0.46% from $30.16 per SF to $30.30 per SF over the quarter. The average CBD Class A rental rate increased dramatically by 7.5% over the quarter from $41.50 to $44.60. Suburban submarkets also saw an increase in rental rates as the average Class A suburban rental rate increased from $33.43 per square foot to $33.85 per square foot over the quarter.
According to the Texas Workforce Commission, Texas’ unemployment rate of 4.4% is among the lowest that the state has ever seen. In the state’s capital city, unemployment was at a mere 2.8% at the end of the third quarter 2015, 100 basis points lower than it was last year.
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