Trade volume was way up at the close of 2024 and hit a pause as the dust settled, making sense of what the latest is telling us. We saw properties like Sail Tower (a premier class A building) go for $649/SF while Bridgepoint Square sold for $72/SF.
Leasing saw significant deals, with the top 8 lease sizes coming through direct leases. Wise was the lone tech deal of note, snagged 60,682 SF of office space at Domain Tower 2.
The Domain also saw significant movement on the sublease front as BigCommerce Holdings signed a sublease agreement with Expedia at Domain 11.
You can also get designer coffee, as Coach launched a coffee shop with designer coffee merch. Nothing compliments an $8 latte like a $40 hat.
Q4 2024 saw seven major office asset sales. Lakewood on The Park was the only Class B asset to trade hands, selling at $108.33/SF.
While there is a wide spread in price per square foot, one thing is clear: investors are willing to play the long game and work with tenants to get deals done in the short term. Other trends to watch: direct and sublease are trending downwards for the first time. This is a positive sign: Net Absorption was 480,994 SF over Q4.
The varying price per square foot indicates how much work these new owners will have to put into each project to see an ROI eventually. Marbella Interests, who purchased Bridgepoint Square, likely won’t see an ROI on their $31.5 million in this generation of ownership. Across the board, these investors must pump additional capital into their projects to enhance their chances of attracting top-notch tenants.
Following the money, we decided to interview several design and architecture experts to understand better what these investors are doing with their Tenant Improvement (TI) dollars.
Speaking with experts like Andrea Corn at Nuvu Designers, owners are “buying complexes with 1,500-2,000 SF ready-to-move-in spaces.” There’s a strong preference for elevated finishes, decorative lighting, and an emphasis on the urban core. Andrea says a little goes a long way, with decorative backsplashes and pendant lighting in the entry as great ways for owners to enhance their curb appeal.
Tenants are also craving a more nature-centric experience. Steve Levy with Levy Dykema noted an uptick in bringing fresher air inside thanks to more intelligent HVAC systems and a sustainable landscape. Levy’s latest project at Uplands was the perfect case study of how owners incorporate what’s naturally available.
It’s not just newly acquired buildings that need some TLC. Laura Evans with Abel Design shared with us how Bergstrom Tech Center is upgrading lighting within spaces to cut electric bills and improve the overall feel of the space. This, along with new tenant amenities like a market cafe, seems to be paying off. Bergstrom Tech saw two of the top 8 leases in Q4 get signed.
While deals are being completed, the ball remains in the tenant’s hands. Landlords are increasingly likely to convert more extensive floor plans into smaller spaces to attract growing tenants.
While the short-term challenges persist, Austin’s favorable economic outlook provides promise for the future. Our full Q4 2024 office report can be found here.