Thanks primarily to increased job creation (39,800 over the past year) and an unemployment rate of 3.1% (down from 3.5% in Feb 2015) Austin, Tx had over 250,000 sf of office space leased in Q1 2016. As a result the Austin office citywide vacancy rate fell to around 9%. In downtown Austin vacancy rates are about 6.2%
What Does This Mean to You as a Tenant?
It means that you will be paying more per sf for office space. If your lease is about to expire expect to pay more per sf than you did 3-5 years ago.
- Citywide average asking office lease rates (all classes) range from $31 to $33 sf gross
- Downtown Austin office lease rates range from $47 to $50 sf
- Suburban Class A office lease rates range from $35 to $40 sf
- Class B office space lease rates range from $25 to $30 sf.
- Value office space (typically class C) with the lowest lease rates ranges from $18 to $25 sf. These are typically found in Northeast or Southeast Austin.
Bottom line is that office lease rates in Austin are higher than they have been in 10 years so get ready. Lease concessions such as tenant improvement allowances are still possible however you will have to trade lease term for dollars. If you are a startup or a company seeking lease terms of 2 years or less it will take longer than you think to find the right space as most landlords are pushing to sign leases of at least 3-5 years.
Make sure to give yourself plenty of time to find space and negotiate the best deal possible. You will be glad that you did. If you need help finding and leasing office space in Austin don’t hesitate to give us a call. 512-861-0525