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Industrial Market Insight

Austin Q4 Market Stats

14.19
Avg. Gross Rent
6.9%
Vacancy Rate
1.1M
Under Construction
700k
Deliveries

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The Lone Star State Draws Relocations

Despite COVID-19 still being very present, many companies have used this opportunity to relocate their headquarters to Texas or open another office. Some of the more notable companies that have relocated their HQ to the Lone Star State include Oracle, Digital Realty Trust, HP, and 8VC. Michael Dell recently stated that “It’s a friendly place for business and I think that’s attracted more and more businesses over time. Based on conversations that I’ve had, I would not be surprised if there are quite a few more leading global companies that move to Texas in 2021.” This news looks bright going forward for Texas, and even better for Austin, which has led the charge. In 2020, Austin-based companies raised 2.26 billion dollars in funding, even during a pandemic year, almost breaking a record 2019 of 2.3 billion dollars. Austin came in 8th nationally when it comes to venture investments in local startups.

In Texas, and Austin specifically, there is a common thread of Californians relocating to Texas for economic reasons. One of the biggest reasons is the absence of a state income tax. No state income or corporate tax coupled with friendly business laws and a lower cost of living has caused a mass exodus from the Golden State. According to consulting firm The Boyd Co., based in New Jersey, “Businesses generally save 20% on overall costs by making the move from California to Texas, said John Boyd Jr., principal at site selection.” Dubbed Silicon Hills for its scenic views on the west side of Austin and the abundance of tech companies located in it. Many companies relocating to Silicon Hills are doing it for their employees’ sakes. According to Darell Mervau, CEO of FileTrail, “My employees were constantly saying, ‘Look, my commute is horrible, and my rent is astronomical for what I’m getting,’” he said. “And to be perfectly honest, I also told them, ‘I’m not going to pay you $400,000 a year so you can buy a house in Silicon Valley.’ “So, we were really looking at improving their lives and moving somewhere where they could start accumulating assets.”

Austin looks to come out of 2020 and head into 2021 with a bright outlook. As Austin attracts top talent from around the world, it can be expected for Austin’s business community to see a lot of growth. According to Zillow “No housing market will be hotter than Austin’s in 2021.”

Austin Industrial Rental Rates

Quarter Flex Warehouse 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

*Research information is sourced from CoStar data compiled through ECR from custom reports using existing, non-owner occupied properties above 20,000 SF.

Austin in the News

Austin is the Hottest Market in the Country April 2021 The New York Times Austin Sizzles as Country's Hottest Commercial Real Estate Market for 2021 March 2021 Culture Map Google Outlines Real Estate Plans in Texas; Austin the Biggest Winner March 2021 ABJ CrowdStreet Brings Headquarters to Austin March 2021 CPE

 

Austin Q1 2021 Industrial Development Pipeline

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