There is no question that Austin office space for lease has gotten more expensive over the last few years. Class A rates in downtown are averaging $60 to $65 sf. Class A space in the suburbs is averaging $40 to $46 sf. Class B space all over town is averaging $28 to $35 sf depending on the age of the building and location.
So in a Landlord's market are Austin office leases still negotiable?
The short answer is YES if you know the market and know what you are doing.
What you have to keep in mind however is that negotiating the best deal on office leases is MORE than just about lease rates. You have to look at the deal as a whole as well as your current and future business needs.
For example besides lease rates you need to negotiate:
- Lease term and commencement dates
- Tenant improvement allowance enough to cover costs
- Test fit allowances
- Renewal options
- Expansion options
- Termination options if needed
- Who is responsible for repairs and maintenance (e.g. HVAC)
- Caps on expenses
- Security deposit
- Sublease and assignment rights
- The lease contract itself
Getting the Best Office Lease Deal in Austin
1. Get a commercial agent to help you.
You are not going to save anything (time or money) by trying to do this on your own. There are millions of square feet of office space in Austin. The landlords agent is not going to negotiate for you as they represent the landlord. You want to make sure that you have someone representing your best interests.
2. Get your financials in order
The landlords perception of the strength of your financials will determine whether they want to lease you space AND how much leverage you will have to negotiate concessions.
3. Find out the building owners motivations
Ask a TON of questions. Are they willing to give a lower rate or free rent? Are they offering a tenant improvement allowance? Is the building for sale? What will the rent structure look like and are they flexible on that?
4. Get educated on market conditions
This is where having an agent can be very helpful. What are comparable buildings quoting vs what deals they are actually doing?
5. Always go to market
No matter if you are leasing space for the first time or renewing an existing lease, ALWAYS go through the process as if you are leasing space for the first time. You must compare your existing space to other alternatives
6. Start the process of find space sooner than you think
It's taking much longer to find office space in Austin and negotiate the leases, especially if tenant improvements are necessary. If a permit is needed the City of Austin is taking 30-45 days to approve them! A good rule of thumb is to start searching for Austin office space at least 4-6 months before your ideal move in date or lease expiration date. If your space needs are much larger then at least 8-12 months.