If your company is about to start the search for office space in Austin Tx the first thing you will probably want to know is how much it costs. Obviously, there are many factors that influence the total cost of renting office space that we will discuss later in this article, but below is a summary of the gross rental rates for each area of Austin.
2022 Average Austin Office Space Rent Cost
- $42.00 sf Avg All Classes
- $51.00 sf Class A
- $38.00 sf Class B
- $30.00 sf Class C
According to Austin Tenant Advisors, currently for 2022, the average cost per square foot to lease office space in Austin, Texas is $42 SF. The average class A rates are $51 SF. Average class B, $38. Average class C, $30 SF. Downtown Austin averages $59/SF. Click here to see average rates in Austin’s submarkets.
Factors that Influence the Cost of Renting Office Space
When comparing buildings, many businesses make the mistake of focusing only on base rental rates per square foot when leasing office space in Austin. There is a lot more to office lease cost than that! To get a full apples to apples comparison of each building and select the one that will cost you less money over the term of the lease contract it's important that you consider all the factors below to get a complete picture of the total cost to rent office space in Austin Tx.
BOMA (Building Owners and Managers Association) classifies office buildings as A, B, or C. This helps tenants and brokers compare properties to one another. It's a bit subjective as it varies from market to market however it helps determine market rents.
These will be the nicest, newest buildings in the best locations, with the most amenities, and with the highest average lease rates. They typically have a fitness center, a building conference room, the newest building technology and additional amenities. These buildings mainly attract image conscious companies in the financial industry, law firms, as well as high tech and software companies.
A little bit older and with fewer amenities than class A but well maintained. Typically, 10-20 years old but suitable for professional companies of all types.
These buildings are typically 20 years old or older and found in less desirable locations. They will have the cheapest office space cost, which makes them suitable for nonprofit companies, startups, or others looking for value oriented space in Austin, TX.
Office spaces are most likely to cost more in desirable locations, especially in areas that are in walking distance to restaurants, bars, and other forms of entertainment like downtown Austin (central business district) or the Domain.
Landlords with office properties always quote a base rent to tenants wanting to lease office space. This number is negotiable; however, in most cases, expect there to be annual increases of 3% to 5% depending on the property.
Operating expenses are variable, meaning they can go up or down. Historically, they have gone up in Austin, mostly because of tax increases. Tenants should always expect these to increase each year in office buildings.
All office space leases in Austin are NNN (Triple Net) leases, which means that in addition to the base rent, tenants also pay their share of the operating expenses that consist of taxes, insurance, and maintenance charges. These NNN's are the same for all tenants.
It's important for tenants to ask about the building's occupancy. Anything lower than 60% to 70% means the landlord may be willing to negotiate a lower base rate. Higher occupancy means the landlord has all of the leverage.
In a landlord's market, when there are few office space availabilities and a lot of activity, this can influence the cost of leasing office space.
Lease Term Length
Longer lease terms of 3-5 years or longer will typically give you a little more room to negotiate the overall deal. You may be able to get a lower starting base rate as well as a larger tenant improvement allowance. With shorter lease contracts, landlords are more likely to charge a premium on the base rent.
Tenant Improvement Allowances
The more tenant improvement allowance money a tenant receives during the negotiation process, the more it will have an effect on the rental rates. It might be that the only office listings you have to choose from need a completely new build-out, which means getting the allowance needed will require a higher rental rate. If you can find an ideal office space that does not need much improvement, you will have a better chance at negotiating a lower rental rate.
Parking costs are often overlooked by tenants when comparing buildings to one another. These need to be factored into the total cost of renting office space. If you lease suburban office space in Austin, you will most likely get free parking. You may incur a fee for reserved or covered parking. However, in downtown Austin, parking is not free. Expect to pay anywhere between $150 and $275 per month for each parking space needed.
Cost To Rent Office Space in Austin's Submarkets and Neighborhoods
Downtown Austin – $65 to $75 Sf
Office space has historically been occupied by governments, lobbyists, and lawyers, but in the last couple of years, tech and software companies have been piling in. In most cases, lease rates are going to be $65 to $75 sf, however there are a handful of older class C buildings that cost around $40 to $50 sf. Expect to pay for parking! Monthly parking fees typically run $150 to $275 per month per space for non-reserved parking.
Southwest Austin – $35 to $55 Sf
Doesn't have a lot of office space options however they are mainly class A. Lease rates typically run from $42 to $55 sf. The few class B office spaces that are available are quoting $35 to $40 sf.
West Austin – $38 to $55 Sf
primarily consists of medical office space and class B space. average lease rates are $38 to $55 sf
Northwest Austin – $38 to $55 Sf
has a lot of class B space with lease rates averaging $38 to $45 sf. A lot of new class A space has been built in the last few years also with quoted lease rates of $50 to $55 sf
Northeast Austin – $23 to $30 Sf
Here you will find the cheapest office space in Austin. Lots of nonprofit organizations, startups, and other companies on a budget lease space here. Lease rates typically run anywhere from $23 to $30 per square foot.