Commercial Real Estate News / General CRE / 2022 Office Space Report: Austin

2022 Office Space Report: Austin

Published: 07-15-22 Category: General CRE

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

Austin is a growing financial, healthcare, and research hub in the United States and is home to many Fortune 500 companies, a strong economy, and a growing population.

The city is also home to many non-profit organizations, government buildings, and medical facilities.

In Austin, Texas, the average cost per square foot for office rent for Class A properties sat at $35.47 in Quarter 1 of 2022.

Austin vacancy rates for office buildings decreased to 19.7% in 2022.

It is one of the most popular office development markets in the U.S., and there are many reasons why Austin is such an attractive city for business: it’s centrally located, easy to navigate by car and public transit, has lots of amenities like restaurants and parks, and has an educated workforce.

Austin Office Space Highlights

This Austin office space report shows that Austin is an attractive, growing, and affordable market.

Some highlights include:

Austin experienced record-high average asking rates in Q1 of 2022.
Asking rates in downtown Austin for Class A properties is $53.34 per square foot.
First-year asking rates were above $50 a square foot.

A growing number of small businesses are looking for office space in downtown Austin.

With the city’s high quality of life, low cost of living, thriving tech sector, and ample available space, downtown is a great place for entrepreneurs to launch their businesses.

The Pacing of Office Space Rents in Austin

Nationally, the office vacancy rate hovers at 15.4%, and the average listing costs $33.08 a square foot. In Austin, TX:

4.49% change in asking rent price for office space in YOY average.
Asking rents averaged $42.69 per square foot.
10.80% office vacancy rate was reported in 2020.

While rents are higher than the national average, vacancy rates are low.

Long-Term Changes in Rent

Austin, Texas is one of the nation’s most popular hubs for startups and technology.

With a thriving tech community and world-class universities, Austin offers an ideal environment for entrepreneurs.

Rent growth in Austin has been strong over the last decade due to its relatively affordable cost of living, high quality of life, and rapidly expanding technology industry.

Short-Term Changes in Rent

With a strong economy, expanding technology industry, and favorable tax incentives, rents are expected to increase in the coming years.

Considering the current economic climate, many startups in the technology industry are looking for office space in Austin.

There are two main factors influencing office rent prices in Austin. The first is supply and demand.

Over the last five years, Austin has seen a huge influx of tech startups and companies relocating to the city.

As a result, there has been significantly more demand for office spaces in the area. This has put pressure on office rents across the board.

The second factor is the COVID-19 pandemic that caused many businesses and organizations to relocate their offices and operations to Austin.

This is due to the city’s high quality of life, low cost of living, and limited COVID-19 regulations.

These benefits make it a popular choice for office space after the pandemic.

Office Space Sales in Austin

According to the research for our Austin office space report, business development in Austin is driving changes in the market.

Here are a few examples of how market conditions are driving growth.

Notable Acquisitions So Far

AEW Capital Management acquired Centro South and North for a total of $152 million.

The properties are located in East Austin. Combined, the complex offers more than 330,000 square feet.

Notable Sales So Far

Trammell Crow Co. sold a 2.9-acre site to Kilroy Realty Corp for $580 million.

The Los Angeles-based investors plan to build 493,000 square feet of Class A office space on the property.

Market Forecast for the Rest of 2022

While Austin’s office vacancy rate is less than the national average, it will still increase slightly in 2022 as more properties are built.

This will be due to a growing economy and the opening of new office space. Vacancy rates will remain low, and asking rents will continue to rise.

Austin is experiencing strong growth in its technology sector, which will help to keep vacancy rates low.

The numbers illustrate rising demand for quality office space as more companies continue to expand into the market.

General Investor Activity: Where is the most money flowing?

The amount of investment in Austin’s office market has been significant over the last few years.

It is projected that the amount of investment will increase as investors continue to view Austin as a strong market for office space development.

Austin’s office market is expected to continue thriving. As the technology industry continues to grow, it will create more demand for office space in this market.

Takeaways for Office Space Investors

Austin may be one of the country’s fastest-growing markets for office space, making it attractive to investors of all kinds.

While the market will continue growing, investors will benefit from receiving a premium rental rate due to its popularity.

The market for office space development in Austin, Texas is strong. With a growing economy and strong demand for office space, demand for new office developments will increase.

The area’s cost of living is relatively affordable and there are a number of companies moving into the city to grow within its central location.

This Austin office space report shows that Austin’s office market is attractive to investors due to its strong growth potential over time.

Its strong economy will continue creating demand for new projects as more offices are built in the near future.

And the city’s location is central to many major cities, such as Houston, Dallas, and San Antonio.