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Market Report

Austin Office Investment Forecast

2020 Outlook

Top-Tier Office Space Prioritized by Both Tenants and Investors; Expanding Supply Bears on Tight Market

Exhaustive pipeline to create some headwinds for well-performing market. Completions will increase total inventory by 4.8 percent this year, the highest margin in the nation. The pipeline will bring an annual delivery volume exceeding 4 million square feet for the first time since 2015, when 4.2 million square feet was finalized. In that year absorption maintained pace at 4.3 million square feet, and in the years following lease-up has remained in line with deliveries. Strong demand drivers buoyed by the flourishing technology sector bode well for another strong year of absorption in 2020. Although, tenants relocating to newly built, larger footprints may weigh on vacancy until the smaller spaces they leave behind are backfilled. Amazon pre-leased 250,000 square feet being added to The Domain, and Google signed a 150,000-square-foot lease at the Plaza Saltillo project due for completion later this year. Corporations are targeting the highest-quality space, to boost their appeal to skilled workers amid a historically tight labor market.

 

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