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Austin Office Shifting to Subleasing

Austin Office Shifting to Subleasing

Q3 2020 Austin Office Outlook

Two quarters after COVID-19 shook the world, we are now beginning to see a trend emerge in the commercial office space that is breaking records. While residents begin to migrate to suburban areas offering them cheaper rent, more space, and the feeling of safety from densely populated cities, office leasing has seen a new trend take shape in the fallout of the pandemic. The recent pandemic has made Austin even more of a destination than before. A recent survey shows that more than 50% of people in New York, Seattle, San Francisco, and Boston would move if work from home became permanent. (Redfin).

According to other surveys and search activity, Austin is one of top destinations for those seeking new places to live. (

While home prices are on the rise, we are not seeing the same with office buildings. Companies were dealt a large and quick blow when the news of shutdowns began to break, leaving many companies gasping for air. Quick to adapt, most companies moved to work from home, abandoning their office spaces in booming metro areas, many of those offices newly minted or in the pipeline. Before the news that forever reshaped the world began to saturate the news waves, companies were feverishly moving into rapidly growing cities, seemingly at an unstoppable pace. COVID-19 put a stop to that. In Q3, 2020 Austin saw a net absorption rate of -1,406,392 SF among offices, more than double the previous quarter, which also posted a negative net absorption rate of -673,608 SF.

Subleasing office spaces has become the new norm in the post-COVID-19 era. Every day now, companies are listing their office space for sublet across the nation. In the first half of the year 2020, Austin saw a 24.8% increase in office subleasing. (GlobeSt) This, along with many soon to be completed construction projects and pressure to downsize office space, has created an environment in Austin where, for the first time since 2011, office rent grew more slowly than the national average.(Austin Business Journal) Meanwhile, with the rumblings of incoming large companies such as TikTok, and construction underway at Tesla’s new Gigafactory, the future of office space still stays hopeful in Austin. Many businesses have relocated to Austin in recent years, with expectations that they will come out of COVID-19 stronger and faster than those in other markets.

As the burden of COVID-19 lessens, one can expect Austin to continue its path as a quickly growing city ripe for companies to relocate.

Download Q3 2020 Office Austin Market Report


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