Investing? Austin office forecast 2016 Marcus & Millichap

​​AUSTIN - Strong demand for space and limited new inventory coming online in 2016 will facilitate another year of steep vacancy declines. 

Investors remain positive about the Austin office market, a trend that will continue through 2016.

Rising tenant demand is drawing high-net-worth individuals to the metro in search of value-add properties.

Assets built in the 1980s and 1990s with occupancies between 70 percent and 80 percent will garner multiple bids. These properties are prime for repositioning as rents are well below market in some instances. 

Well-located, quality assets are in high demand and elevated construction last year will satiate investors’ appetites as projects are leased up and brought to market. When available, these properties change hands at first-year returns in the low- to mid-6 percent range.

Corporate expansions are intensifying in Austin, propelling job creation and fostering demand for office space.​

Growth in the area’s technology industry is leading the charge as Apple, Google and other major technology firms make plans to increase staffing.

Apple will complete construction on a new phase of its northwest Austin campus this year, expanding to 1.1 million sf. It has pledged to create 3,600 positions over the next few years, nearly doubling its workforce in the region.

The growth of these large tech companies is attracting startups and incubators to the area. In addition, the development of the Dell Medical School and Dell Seton Medical Center at the University of Texas will drive advancement in the local health care community.

The combination of a talented tech workforce and the addition of a growing medical field will boost the health care IT industry, increasing the need for office and medical office space in the metro.