Open Menu

Austin

Industrial Market Insight

Austin Q4 Market Stats

$16.28
Avg. Gross Rent
4.4%
Vacancy Rate
2.3M
SF Delivered
16.1M
SF Under Construction

Download the Q4 2022 Austin Industrial Market Report

Sign up to get exclusive access to research and insights that detail the state of the real estate market in Austin.

E-Commerce Growth Drives Industrial Demand

Historically, the manufacturing and retail sectors have driven demand for industrial space. Though, more recently, e-commerce has fueled the industrial market largely due to the changing buying habits of consumers. Essentially, people are buying more and more things online and the need for high-quality industrial space is the direct response to the accelerated growth in e-commerce. Pre-pandemic, about 11% of all retail sales were online, during we saw it go well over 25%, and now things are currently settling in the 20% range. Experts predict within the next five years to seven years, we’ll be close to 35% of everything we buy will be online. This metric has been a driving force for industrial demand not only in the Austin market but markets nationwide.

Due to the increasing ways in which consumers can shop and receive online purchases, the traditional supply chain has had to readjust and has driven demand for industrial space to unseen levels. Experts found that e-commerce companies have accounted for 28.2% of all industrial absorption from 2016 through 2019, and that number increased even more to approximately 40% from 2020 through 2021 as Covid-19 shifted consumer shopping patterns. Additionally, businesses are striving to be as close as possible to the end user, which has made the Austin market a hotspot for industrial development. Due to tremendous population growth and e-commerce sales expected to grow 15% by the end of the year, we anticipate continued increase in space demand here in Austin.

Furthermore, as market conditions are anticipated to remain at historically tight levels, despite the plethora of new supply expected to deliver in 2023, e-commerce tenants will be pushed to focus on new Class A developments, which boast premium asking rates. E-commerce tenants are projected to continue to account for between 35-40% of industrial space demand as consumer shopping habits continue to trend upwards.

With e-commerce leading the demand in industrial space here in Austin and record-level construction underway totaling 16.1 msf, Austin has the potential to nearly double in size over the next five years. In essence, the expanded need for e-commerce space and overall industrial demand will continue to keep the pipeline flowing for several more years.

Austin Industrial Rental Rates

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

*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

Speculative Development Fuels Surge in Austin's Industrial Pipeline December 2022 CoStar Industrial Rents Continue to Climb at Robust Pace November 2022 Commercial Property Executive Optimistic Outlook Predicted for Industrial Sector December 2022 Commercial Property Executive Industrial Leasing Velocity in Texas Expected to Outshine California This Year January 2023 CoStar

 

Austin Q4 2022 Industrial Development Pipeline

Zoom/Click for More Details

 

VIEW THE FULL Q4 2022 PIPELINE HERE

Austin Submarket Map

 

Back to Top