Austin Vacancy Hits Nine-Year High; Rent Pared $1 Per SF

AUSTIN-The shock of the sudden falling out of the Austin office real estate market may have worn off and owners are adjusting their prices to where the market is, and that’s lower. The citywide average rental rate dropped a full $1 per sf to $25.15 per sf at the end of the third quarter, according to a market status report from Colliers Oxford Commercial Inc. in Austin.

The overall vacancy rate rose to 16.1%, the highest level in nine years, according to the report released Thursday. That’s an increase from 14.7% at the end of the second quarter, Vacancy rates rose in each submarket except the southeast market. Vacant sublease space accounted for 2.1 million sf of the total 4.5 million sf awaiting tenants. That’s up from 1.9 million sf in the second quarter. The direct vacancy rate citywide is 8.5%.

The market fell so fast that building owners had a hard time catching up to it, Charles Heimsath, of Capitol Research, tells GlobeSt.com. “It was just hard for your mind to grasp that it took 10 years to go from 75% occupancy to 95% occupancy,” he says, “and six months to go from 95 to 85%. If you’re in the market, it’s hard to get your mind around that concept.”