Industrial investors keeping an eye on Austin

​​​AUSTIN – ​​Tech manufacturing
is buoying local industrial demand, and developers are remaining active in both
the warehouse and flex arenas, says Marcus & Millichap in its recent report. 

Area employers are expected to add 25,000 positions in 2018. That 2.4 percent growth is slightly down from 2017’s 2.7 percent growth. 

Vacancy is expected to dip to 6.4 percent this year, down 50 basis points from year-end. Last year, vacancy rate jumped 300 basis points as the market did not significantly absorb new space until fourth quarter. Industrial assets remain attractive despite the late start on positive absorption, the report said.

Robust absorption at the end of 2017 suggests demand is sufficient to absorb the 1.8 million sf of industrial space in the pipeline this year. 

Marcus & Millichap expects rent growth to ease from last year’s pace, growing at a 5.3 percent rate compared with a 6.6 percent growth rate. Average asking rents are projected to finish 2018 at $10.60 per sf.

According to the report, investors who typically target office assets are likely to explore deals in the industrial sector due to limited office availability.