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With Sublease Glut, Builders Put Down Tools

AUSTIN-McShane Corp. has rethought its delivery strategy of building projects in light of Austin's sublease space glut. Work has halted at Riata Gateway while two Braker Pointe projects will now have staggered deliveries.

By Tim Green | Updated on July 04, 2001

AUSTIN-The office construction boom is abating, with builders stopping work on several projects around Austin. About 3 million sf of new office space had been scheduled to come to market in 2002. That’s fine when the overall occupancy rate is 97%. But when the sublease market lowers that number to 14.5%, it may time to put on the brakes.

“When you look at the timing of that and when it was planned to come online sometime in March of 2002 we were going to hit 22% to 23% vacancy,” says Mike Buls of Buls/Hodge Consulting, who compiles a sublease report. “The more they shut down, the less of a vacancy issue we’re going to have.”

McShane Corp. is halting work on its Riata Gateway project, a 150,000-sf, three-story building at 12007 Research Blvd., Graydon Laguarta, McShane’s vice president, tells GlobeSt.com. “What we’re calling it is a delayed delivery, based on the amount of sublease space that’s showing up out there within a stone’s throw of our project,” he says. “We felt like bringing it on in the fourth quarter of this year would be not to our advantage.”

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