Austin Office Market's Rental Rates Hit Historic HighAustin Office Market's Rental Rates Hit Historic Highhttps://www.recenter.tamu.edu/news/newstalk-texas/?Item=98892015-08-07T14:12:00Z2015-08-07T00:00:00Z

AUSTIN (Cushman & Wakefield) – Despite the 4.7 million sf of office space that’s either under construction or just delivered, rental rates have reached a new high water mark in the local market.

That’s a key finding in the second quarter market report from Cushman & Wakefield/Oxford Commercial (CWOC).

The overall office vacancy rate declined to 9.7 percent, compared with 10.2 percent at the end of the second quarter of last year. The average full-service asking rate increased to $32.83 per sf, up 12.4 percent from this time last year. The central business district had the greatest gains, growing to $47.80 per sf, up 10.6 percent from the end of the second quarter last year.

Asking rental rates are the highest rate CWOC has recorded since it started tracking the stats in the early 1990s. The climb is attributed to 1.08 million sf being absorbed during the first half of 2015, soaring 61.9 percent since the end of 2014. The 1.08 million figure year compares with 667,901 sf absorbed in the first half of last year.

Large and big-name technology companies are accounting for much of the demand. Major leases completed during the second quarter including Apple’s 217,490-sf lease at Capital Ridge, SolarWinds’ 117,866-sf lease in the Summit at Lantana and Oracle’s 64,227-sf lease at 7700 Parmer. Those tech firms join Indeed and Google, which leased large chunks of space in the first quarter.

Unlike the first quarter’s major construction completions, vacancy still exists in two of the three new buildings to hit the block: 3700 San Clemente remains 62 percent vacant while Encino Trace’s first building has 25 percent of its space left.

The CWOC report projects record-low vacancy rates will continue, along with historically high rents for the remainder of 2015.

Austin-Round Rock
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