It's no secret that Austin, Tx is HOT! Whether you are buying a home, buying commercial real estate, or leasing Austin office space we are in one of the hottest markets we have ever seen. This is great news for existing investors & building owners that currently own property in Austin as they are getting some nice returns.
However, if you are a new tenant, an existing tenant with a lease expiring soon, or new investor who is contemplating buying or leasing commercial real estate in Austin expect to pay lease and purchase rates that are much higher than what we have seen in a long time.
So, all that being said what can you do about it? The techniques used to buy and lease office space are different in a Tenant/Buyers market vs a Landlord/sellers market.
Below are a few tips to consider as you plan your next commercial office lease or purchase:
- Start early – Austin office lease and purchase rates are not going to go down anytime soon so don't wait around hoping they will. Start the search or negotiation process AT LEAST 12 months before your lease expires or before your ideal purchase date. There are more details to buying and leasing than you think!
- Don't delay making decisions – I'm not saying make hasty or bad decisions. You want to make the best financial and office space decisions possible however if you find a space that works well don't tell your broker you will think about it for the next 3-4 weeks. If you do it's very likely that the space will get leased or purchased and then you end up having to start your process all over again.
- Don't get stuck on lease rates – Office space in downtown Austin is expensive so if your company has to be downtown just get used to it. There are other things to negotiate on other than JUST lease rates. Just because you heard someone else got a lower lease rate than you that DOES NOT mean they got a better over all deal. Maybe that company did not receive any tenant improvements or paid for those themselves? You lease rate might be a little higher however you may have gotten $30 sf to make your space look sweet!
- Don't waste time negotiating things that are not negotiable – We are not in the same market that we were 5-7 years ago. Gone are the days of 6-12 months free rent, etc…. Don't waste time low balling landlords or sellers. For one they won't take you seriously and you will also lose precious time that could cause you to lose the property to another tenant or buyer. Your commercial broker can give you guidance on this.
- Get preapproval letters – If you are buying get preapproval letters from your bank or lender BEFORE you start searching for space. This will save time later on AND when you make an offer on property with a preapproval letter you look more credible.
- Gather your financials together now – Don't wait until the last minute to get your financials together. It's best to submit all offers to lease or purchase with financials. Landlords take your offers more seriously……AND you save time in the long run.
- Listen to your commercial real estate agent – If you have an experienced commercial broker they know the market, landlords, and negotiation tactics much better than you do. Find one that you trust AND listen to them.
These are just a few tips to consider when leasing or buying Austin office space in a HOT market. If you have any questions don't hesitate to contact us via email or call 512-861-0525