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Austin Office Lease Rates
The Austin Office market continues to experience signs of wear under the strain of the slowing economy; however we have begun to see signs of stabilization as rental rates have pretty much remained the same as they were last quarter. We continue to see more office space return to the market in the form of subleases and downsizing as there is currently over 700k sf of office sublease space in the Austin market, however this has been occurring at a slower rate.
While there are still a lot of businesses being more cautious with growth strategies others are taking advantage of the opportunity to cut leasing costs and grow their operations making them more fit, lean, and ready for the market to rebound.
Vacancy - The total Austin office vacancy rate is 15.3%. Other Austin Office Vacancy rates: Class A properties - 21%, Class B properties - 13.2%, Class C - 6.8%, Downtown Austin Office - 11.8%, Suburban office market - 16%
Rental Rates - The average quoted asking rental rate for available Austin office space, all classes, is $25.39 per-square-foot per year. Other quoted averages: Class A Office - $27.93, Class B - $23.19, Class C - 18.46, Downtown Austin - $31.57, Suburban Office - $24.41. Most landlords appear to be holding firm on their quoted rental rates, however are offering more concessions in the form of free rent and tenant improvements, which can be misleading to Tenants. Tenants must focus on effective rental rates and not on what the landlords are quoting, since when you factor in all lease concessions such as free rent and tenant improvements, the overall effective rate tends to be lower.
Subleases - Right now there is over 700,000 SF of Austin office sublease space in the market and over 1 Million total SF of sublease space when you include the industrial market. It's unfortunate to see that many companies close their doors however for others it means this is a great time to save money on office space. If you are a company that is seeking flexibility, shorter lease terms and low cost office space then you could possibly find office space 20-50% below market lease rates, however the discount depends on how marketable the space is and how much time is left on the lease.
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Average Austin Office
Lease Rates
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Class A
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Class B
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Class C
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Downtown Austin
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$32 SF
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$25 SF
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$17 SF
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Northwest Austin
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$29 SF
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$25 SF
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$19 SF
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North Central Austin
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N/A
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$22
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$16
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Northeast Austin
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$17
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$15
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$14
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Southwest Austin
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$29
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$23
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$19
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South Austin
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$29
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$19
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$17
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If you would like to know more about the current Austin office market conditions please don't hesitate to contact us
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