Austin’s Tighter Race for Space
- Dec 27, 2018
As one of the fastest-growing metros in the country, Austin draws in technology companies and startups with its favorable tax environment, educated workforce and high quality of life. However, there’s more to Austin’s rapid job growth than its booming tech industry, as hospitality, trade and construction are also expanding rapidly. The market added 11,400 office-using jobs year-over-year through August, up 4.3 percent. The most significant growth came from professional and business services (9,900, up 5.6 percent). Information and financial services added a combined 1,500 new jobs.
Strong demand for office space is matched by a robust development pipeline, with the bulk of projects under construction already pre-leased to companies in search of large blocks of space in core submarkets. Almost 4.6 million square feet was underway as of September—which will add 7.3 percent to total stock once complete—and more than 1.4 million of that is slated for delivery by year-end. Downtown Austin is sought after by large companies looking to expand or consolidate in the metro. For example, Facebook will occupy more than 230,000 square feet at Third + Shoal, while Parsley Energy signed on for 302,000 square feet at 300 Colorado.
Investment activity has lost steam compared to previous years, totaling $426.5 million year-to-date through September, but the metro is in line with national trends. Investment sales have slipped about 10 percent due to the impact of rising interest rates and investors’ concerns about a slowdown in economic growth.