Austin office market is heating up this summer

​​​​AUSTIN – The ​​Central Texas office market is showing little signs of cooling off in the second quarter.

New leases and expansions generated 705,014 sf of positive net absorption​. Newly completed Class A properties accounted for the majority of
the gain. ​

In all, five new office buildings totaling more than 430,000 sf were added to the market in the second quarter bumping the
year-to-date total to nearly 602,000 sf of new space. Currently, there is over 1.8 million sf of office lease space under construction, most of which has already been pre-leased.​

However, developers can’t seem to deliver space fast enough as demand
continues to outpace new supply. The citywide vacancy
rate tightened from 9.1 percent last quarter to 8.6 percent at the end of the
second quarter; that’s lower than 9.6 percent recorded at the same time a year ago.

At the end of the second quarter, the citywide
average rental rate reached $34.09 per sf, a 4.2 percent increase from last year. At the top of the market, Class A buildings in
the central business district command an average quoted rental rate of nearly $50
per sf.

​According to the Texas Workforce Commission,
the Austin-Round Rock metro area added 38,400 new jobs over the
past 12 months ending June, an annual growth
rate of 4 percent. The city has an unemployment rate of 3.3 percent, comparing favorably
to the Texas rate of 4.8 percent and the U.S. rate of 5.1 percent.