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Industrial Market Insight

Austin Q2 Market Stats

$14.50
Avg. Gross Rent
3.5%
Vacancy Rate
2.03M
SF Delivered
10.7M
SF Under Construction

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The Demand for Construction Workers is on the Rise

Demand is soaring for Industrial product type in Austin. This quarter, vacancy is at 3.15% and there was 2,027,308 square feet of new industrial space delivered to the market. Developers are taking advantage of the increased demand by building speculative industrial projects. Hays County had the most product delivered with nearly 1,000,000 square feet, the largest of which is building 3 of the new Plum Creek Industrial Center. Building 3 is completely leased to Simwon, an automotive body manufacturing company with ties to Tesla.

Austin has nearly 11,000,000 square feet of industrial and flex space under construction with an additional 32,000,000 proposed. Georgetown has the most product under construction with 10,704,092 square feet underway and another 6,791,132 square feet proposed. 

One question remaining is, who will build all of this space? Employment in the construction industry this quarter took a tumble losing 8% or 1,500 jobs. Major projects like Samsung’s $17,000,000,000 project in Taylor are seeking out construction workers. Samsung is working with HT Group to hire the needed 6,500 workers to build their 6,000,000 square foot plant. Currently, they are hiring 170 new employees with opportunities in almost every facet of their construction team. 

Demand is growing in Austin due to a few factors, including the collaborative market available here. Companies like Tesla, Amazon, and Samsung all entice major suppliers to absorb large swaths of manufacturing and warehouse space throughout the Austin area. Also, the city is enticing industrial development with a plethora of incentives such as the chapter 313 tax breaks. This tax break allows a qualifying company to implement an appraised value limitation to their city taxes. This limitation will last ten years and can save companies that qualify millions over that time.  Companies that could qualify include Manufacturing, R&D, Clean Energy, Renewable Energy, Nuclear Energy, Computer Data Centers, and “Texas Priority Projects”. These companies must also provide at least 35 new high-paying jobs (salaries at least 110% of the county average). Samsung is also working with Taylor ISD to teach high school students the skills needed to build a career with Samsung. If this plan is adopted by the students, the salaries provided would double to average household income of the Taylor area.

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

*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

Austin Booms Among Hottest Markets for Industrial Construction in New Report July 2022 Culture Map Population Growth, Industrial Activity Explodes Along Central Texas’ I-35 Corridor June 2022 REBusiness Online Strong Flow in Texas Pipelines for Industrial Development July 2022 The Real Deal The E-Commerce Revolution has Created a Surge in Spec Development of Industrial Space August 2022 Area Development

 

Austin Q2 2022 Industrial Development Pipeline

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VIEW THE FULL Q2 2022 PIPELINE HERE

Austin Submarket Map

 

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