Flex Space – Cheaper Alternative to Leasing Austin Office Space

Flex space austin tx

If your looking to lease Austin office space or if your office lease renewal is coming up you may have noticed that office lease rates in Austin have skyrocketed.

Austin, Tx is one of the hottest cities in the country. More people want to live here and do business here. And because of that vacancy rates continue to drop and rental rates continue to rise.

Because of that many tenants are starting to look at flex space as a lower cost alternative to renting traditional office space.

What is Flex Space?

flex office space in austin

Flex space is a type of industrial space that can be used for office or warehouse use. They are typically single story buildings with an entrance and windows on the front and are found in small business parks or semi industrial areas. You see them built out as 100% office or a combination of office upfront and warehouse in the back.

How Much Does Flex Space Cost in Austin?

When combining ALL expenses flex space will cost about $15 to $20 sf per year depending on the property, location, and terms. Compared to the cheapest office space in Austin which will range from $21 to $25 sf.

Unlike most traditional office space, tenants that lease flex space will be responsible for paying their own electric, janitorial (if they want), and hvac maintenance and repairs.

You may see flex space base rental rates quoted monthly or yearly. In Austin average base lease rates for flex space range from $13 to $16 sf per year. If quoted monthly that would be $1.08 to $1.33 sf

Don’t forget that in addition to the base rate tenants are also responsible for the operating expenses (aka NNN), as well as electric and janitorial (if needed). The NNN’s will cover all of the buildings taxes, insurance, and common area maintenance costs. In Austin, NNN costs will range from $0.25 to $0.35 sf monthly, which is $3.00 to $4.20 sf yearly.

To budget for electricity costs I would budget for somewhere between $1.50 to $3.00 sf per year depending on your use and power needs.

Benefits of Flex Space Over Traditional Space

  • Lower overall monthly and yearly lease cost
  • Lower taxes
  • Have control over the cost and level of janitorial service
  • Don’t have to worry about after hours hvac charges since you manage and maintain the units
  • More usable space since there is not a common area
  • Have own bathroom
  • Have own entrance
  • Don’t have to spend time going up and down elevators
  • Have the ability to have office and warehouse
  • Easier to configure and build out than a traditional office space
  • Opportunities to put up signage on the building
  • Higher ceiling heights

Cons of Flex Space

  • Tenant is responsible for all the costs to maintain, repair, and replace (if needed) the HVAC units. This is negotiable however.
  • Have to clean and maintain repairs on bathroom
  • Parking might be a challenge since industrial space assumes more storage and less parking spaces
  • Usually found in more industrial areas or in Northeast and Southeast Austin.
  • Possible security issues since the space is on the ground floor.
  • You won’t have scenic views. Primarily window views of parking lot.
  • Few expansion options. Since most flex buildings are smaller than multi-story, multi-tenant buildings there will be less space that becomes available.

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