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Industrial Market Insight

Austin Q1 2024 Market Stats

$17.60
Avg. Gross Rent
7.2%
Vacancy Rate
1.3M
SF Delivered
17.3M
SF Under Construction

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Limited Availability of Smaller Industrial Properties in Austin

The Austin market is experiencing a boom in construction for large industrial developments, overlooking the demand for smaller industrial properties. The availability of smaller flex space has decreased, creating a challenge for tenants looking for space to support the operations of their small- to mid-sized businesses. Despite the stock of U.S. industrial property growing fastest in over three decades, shortages of smaller industrial spaces continue to persist.

According to CoStar, the flex space vacancy rate in Austin exceeds 10,000 square feet and stands at 9.4% with 1,714,342 vacant square feet. This rate is significantly higher than the vacancy rate for spaces ranging between 1,000 and 10,000 square feet, which is at 4.5% with 58,751 vacant square feet. The same trend is observed in availability. The availability rate for flex space in Austin over 10,000 SF is 13.7% with 2,497,214 available square feet. In contrast, the availability rate for spaces between 1,000 and 10,000 square feet is 5.5% with 72,116 square feet available. The gap in availability rates between smaller and larger industrial properties is currently the widest CoStar has ever recorded.

Acquiring and entitling a parcel of land big enough to build a large industrial property is nearly as extensive as doing so for a small parcel of land. Therefore, investors and industrial developers prefer to spend their time and resources developing large facilities to maximize their efforts. Thus, developers refuse to subdivide their space and lease to smaller tenants.

This quarter we saw zero deliveries for properties under 10,000 square feet. The low supply and low availability of small and mid-size industrial space should result in stronger rent growth for the sector. The Market Asking Rent PSF of flex space in Austin between 1,000 and 10,000 square feet for Q1 2024 is $19.27, $0.94 more than it is for flex space over 10,000 square feet. According to CoStar analytics, this amount has been increasing for the past 10 years and is predicted to continue to increase.

Austin Industrial Rental Rates

2023 Q314.6020.9017.75

Quarter Warehouse Flex Total
2018 Q1 9.72 13.11 11.42
2018 Q2 9.30 12.10 10.7
2018 Q3 8.05 13.19 10.62
2018 Q4 9.41 13.54 11.48
2019 Q1 9.40 14.48 11.84
2019 Q2 9.34 13.50 11.42
2019 Q3 9.51 13.84 11.68
2019 Q4 9.88 13.33 11.61
2020 Q1 10.14 14.48 12.31
2020 Q2 10.51 14.92 12.72
2020 Q3 9.10 14.89 11.99
2020 Q4 9.34 14.19 11.77
2021 Q1 9.34 16.00 12.67
2021 Q2 10.27 18.60 14.14
2021 Q3 10.27 16.68 13.48
2021 Q4 11.48 15.84 13.66
2022 Q1 12.08 16.43 14.26
2022 Q2 11.80 17.21 14.50
2022 Q3 12.65 17.62 15.15
2022 Q4 12.95 16.28 14.62
2023 Q1 13.14 17.83 15.49
2023 Q2 13.76 19.39 16.56
2023 Q4 13.79 18.96 16.38
2024 Q1 14.83 20.38 17.60

*Research information is sourced from CoStar data compiled through ECR from custom reports using existing, non-owner occupied properties above 10,000 SF.

Austin in the News

Lower Industrial Availability in Austin’s Urban Core Underscores Muted Development March 2024 CoStar Emerging Hotspots: Three Austin Suburbs Drive Demand February 2024 CoStar ‘Forecast Is Looking Positive’: Austin’s Industrial Sector Is Signaling Growth, Opportunity For Investors February 2024 Bisnow Texas Leads Country in Semiconductor Manufacturing, Gov. Greg Abbott Says March 2024 ABJ

 

Austin Q4 2023 Industrial Development Pipeline

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VIEW THE FULL Q4 2023 PIPELINE HERE

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