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Office Market Insight

Austin Q4 Market Stats

$43.04
Avg. Gross Rent
13.5%
Vacancy Rate
571k
Deliveries
7.9M
Under Consturction

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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 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

Austin In the News

Texas Ranked U-Haul's No. 2 'Growth State' for 2020 December 2020 Click2Houston New Study Salutes Austin as one of the Safest Big Cities in the U.S. December 2020 Culture Map Austin Lands Among 10 Most Popular Metros for Millennial Homebuyers December 2020 KVUE Oracle Joins Tesla Founder Elon Musk and Hewlett Packard in Moving from California to Texas December 2020 Daily Mail

 

Austin Q4 2020 Development Pipeline

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