Austin Office Market Holds Steady in 3Q22

The Austin office market had a stable third quarter of 2022, with elevated demand but rising vacancy rates. The average rental rate jumped to over $41.00/SF, while vacancy climbed to 18.0%. The Austin market continues to see unprecedented development, with a full construction pipeline and 1.3 million square feet of construction starts in the third quarter of 2022. Annualized investment volume has decreased steadily over the year and was down 62.0% in the third quarter of 2022 at $320.8 million. Year to date, investment volume in the Austin market totals $1.66 billion. Healthy market
fundamentals and economic expansion should carry the Austin office market through the end of the year.

Rental Rates and Vacancy Climb to New Heights In the third quarter of 2022, rental rates continued to climb, and the overall rate posted $41.27/SF at the end of the quarter. Overall rates in the Austin market have increased by 3.6% year over year as landlords keep pace with demand and inflation. Both direct rates and sublease rates increased in the third quarter of 2022 to $42.19/SF and $35.20/SF, respectively. The average price discount for sublease space stands at 16.5%. Vacancy accelerated to 18.0%, fueled by construction deliveries and sublease space added to the market in the third quarter of 2022. Vacancy is likely to increase further as additional space delivers by year-end. The Class A market, which consists of more than 50% of the region’s building stock, had moderate changes in vacancy and availability quarter over quarter. Vacancy in the asset class rose 130 basis points to 17.2%, while availability also increased 130 basis points to 27.5%. Absorption remained positive in the third quarter of 2022, with a healthy 434,932 square feet taken up by occupiers. Click to read more at