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Industrial Market Insight

Austin Q3 Market Stats

$13.48
Avg. Gross Rent
8.4%
Vacancy Rate
4M
SF Delivered
11.2M
SF Under Construction

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Everything is Bigger in Austin

Austin is hot. Anywhere you look, you see head-turning numbers. From record population growth, housing price growth, and job growth. Those topics are in the news almost daily but look no further than Austin’s industrial market regarding scorching development. This year alone, two major projects will push Austin over the 10 million square feet delivered of industrial space. Amazon’s 3.8 million square foot project is delivering this year, along with the Tesla Gigafactory at around 4.5 million SF slated to finish later in the year; Austin is putting up some real numbers for a city with a metro population of approximately 2 million. As a result, areas like Buda and Kyle have benefited tremendously from the industrial boom. Land in the suburban areas of Austin has become more and more desirable for industrial development. A lot of the Austin industrial development is taking place on the actual periphery of town, however. From Dripping Springs, through Manchaca, to Kyle and Buda, it is a whole new world of industrial space that did not exist just a few years ago. This suburban sprawl significantly departed from previous decades when site selectors were chasing cheap land only to find themselves with restrictions on every corner, from zoning regulations to tree preservation orders. Now, there is a myriad of land opportunities on the suburban fringe that allow for massive projects to be built on large lots with no site limitations.

The two projects mentioned at the top of the article, namely the Tesla Gigafactory and Amazon’s 3.8 million square foot project, are going up in one of these new suburban industrial hotspots. On a map, you will see how the two projects are located east of I-35, about twenty minutes apart. Also, note there is also a sizable lot available immediately adjacent to these two major developments for future development. It is unlikely anything will go into that empty lot before at least one or more of these developments have been completely built out. It is a sign of the times, though, as warehouse space is no longer scarce. The days of locating a project in a far-flung suburb, miles from major shopping centers are over. All these major companies want to be located at or near major population centers. The Austin metro area has hit that point where it has saturated all the suburbs with the best real estate and has proven itself a large enough market to attract world-class companies like Amazon and Tesla.

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

*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

Samsung Electronics Close to Finalizing $17 BLN Texas Chip Plant September 2021 Reuters Dalfen Industrial Acquires 146 Acres of Land for Austin Industrial Development September 2021 Cision Austin Industrial Space is Booming — and Gaining Momentum July 2021 ABJ As it Embarks on Nationwide Hiring Spree, Amazon Opens Huge Shipping Facility in Austin Area September 2021 ABJ

 

Austin Q4 2021 Industrial Development Pipeline

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