Austin Market Update: Texas Capital Attracts Top Players

Major leaguers such as Amazon, Samsung and Tesla are flocking to the market.

In December, Austin’s office vacancy rate hit 17.0 percent, down 30 basis points since November and up 550 basis points year-over-year, according to CommercialEdge data.

Austin’s rapid expansion has continued despite pandemic-induced headwinds. Construction activity is booming, while occupancy hasn’t been able to keep up: on a year-over-year basis, the metro recorded the largest vacancy gain among similar Sun Belt markets, followed by Atlanta and Charlotte, both increasing their rate by 370 basis points.

In December, Austin’s vacancy was lower than that of other Sun Belt cities, such as Dallas (17.6 percent), Atlanta (21.5 percent) and Houston (24.3 percent), but fell behind the national average of 15.5 percent, Phoenix (15.3 percent) and Charlotte (14.6 percent).

Among these markets, Austin had the highest asking rate, reaching $43.6 per square foot in the last month of the year. Most similar markets averaged roughly $30 per square foot.

The metro is one of the top markets for attracting investors with a number of major companies either relocating or announcing major expansions into the Texas capital.

Top players choose Austin

The year’s biggest announcements included Tesla’s headquarters relocation from California to Texas. The EV manufacturing giant’s new location in Austin is yet unknown, but it will most likely be in the vicinity of its 4 million-square-foot Giga Texas facility at 12733 Harold Green Road.

In November, Samsung also bet big on the metro, as it chose the Texas capital for the location of its new $17 billion semiconductor plant. Earlier that fall, Williamson County and the city of Taylor, Texas, began approving a series of tax incentives to woo the tech giant to a 1,200-acre site, situated 25 miles outside of central Austin.

In late 2021, Amazon inked a 332,865-square-foot, full-building lease at local developer Cousins Properties’ 18-story office project dubbed Domain 9. The e-commerce behemoth is set to move in the new space in three phases, starting early 2024. The company already has three other locations at The Domain.

CommercialEdge covers 8M+ property records in the United States. View the latest CommercialEdge national monthly office report here.

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