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Office Market Insight

Austin Q1 Market Stats

$44.78
Avg. Gross Rent
13.9%
Vacancy Rate
450K
SF Delivered
8.7M
SF Under Construction

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The Office Dynamic – CRE Evolution

As the United States & Texas begin to reach immunity to COVID-19 via vaccines and natural immunity, there is one certain thing…uncertainty is the office’s future right now. Developers, brokers, and investors across the nation speculate about what the office demand will look like in the summer of 2021 and on. While remote work is considered an overall success, aspects of being in the office have been lost, like company culture and team collaboration. In a survey from PricewaterhouseCoopers, 68% of executives responded that 3-5 days in the office each week is necessary to keep a strong company culture. While most executives seem to agree, employees do not. More than half of employees want to be remote at least three days a week, even after the pandemic recedes. These contrasts between executives and employees will set the tone for what the office will look like soon. When taking a closer look, newer employees require the most amount of in the office. 30% of new professionals (0-5 years’ experience) want no more than one day a week remote.

The stark contrasts between employees’ preferences and employers will be a significant contention point for the office’s future. Whether or not employees will return to the office in the same capacity as before is still unknown. The way employees return to work, how fast, and if at all will be prescriptive for Commercial Real Estate. All spectators will keep a close eye on this as it does not only affect the office. Multifamily and retail has shifted as well. A popular trend that has accelerated in recent years is mixed-use environments. As the workplace becomes more dynamic, we can expect this to reflect in future constructions. Many popular concepts of the workplace’s future look involve mixed-use projects with a combination of office, retail, and residential. The ability to fluidly go between the office, retail, and home will be a significant factor as many people are becoming enamored with the idea of the 20-minute neighborhood. Gensler has called this the “hybrid workplace model…We envision the post-pandemic workplace as an intimate social hub that takes all individuals into consideration.”

As we try and return to a pre-COVID era, the office will play an integral part in returning to a form of normalcy; however, what that looks like will be different from what we knew before. Only time will tell how much impact the work and office changes will have on Austonians and citizens’ lives everywhere.

Austin Sublease Activity

Quarter Class A Office Class B Office Class C Office Total
2016 Q2

864533

480796 60113 1405442
2016 Q3 899632 467834 38118 1405584
2016 Q4 856643 439641 34746 1331030
2017 Q1 909176 561556 25547 1496279
2017 Q2 952435 456450 28108 1436993
2017 Q3 850486 444043 45576 1340105
2017 Q4 1005713 480616 24850 1511179
2018 Q1 1114427 465834 22831 1603092
2018 Q2 1135173 703671 27356 1866200
2018 Q3 1158644 596011 62841 1817496
2018 Q4 1025760 685090 51813 1762663
2019 Q1 959386 616030 32816 1608232
2019 Q2 907874 659263 19732 1586869
2019 Q3 641646 632070 27772 1301488
2019 Q4 943674 657355 20145 1621174
2020 Q1 1293038 699123 20254 2012415
2020 Q2 1912374 808228 35809 2756411
2020 Q3 2295295 946767 44659 3286721
2020 Q4 3024439 1070789 48013 4143241
2021 Q1 2905258 1016242 59778 3985265

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 Development Pipeline

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Austin Submarket Map

 

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