Since June, the southwest submarket's vacancy rate has nearly doubled to 14.4% while the average rental rate has dropped nearly $2 per sf to $25.18 per sf. In class A space, the changes are even more dramatic: a year-end vacancy rate of 15.7%, up from 8.1% at midyear and an average rent of $25.18 per sf from $29.21 per sf.
"The southwest is going to be the really interesting story this quarter," says John Childers, a Colliers Oxford Commercial broker. "You are seeing a lot of space being brought to the market."
Coming on line are Mira Vista, a 125,000-sf Live Oak Development project just off Bee Cave Road near MoPac Expressway; Travis Oaks, a 123,500-sf building along Southwest Parkway, compliments of Transwestern Commercial Services; and Rialto, the first of two planned 75,000-sf buildings from Stratus Properties near the intersection of Southwest Parkway and William Cannon Boulevard.
At Mira Vista, anchor tenant Carter & Burgess Inc., the Fort Worth-based engineering firm, begins to move in this week, leaving 52,200 sf to lease. Transwestern has yet to sign a tenant for Travis Oaks, but has one lease out, Doug Dwyer, a Transwestern senior vice president, says. "We're going to come back and we'll be fine," he says. "We may end up owning this building a little bit longer than we anticipated, but that's about it."
Also new to the market is 140,000 sf of sublease space at Las Cimas 3, part of a three-building development just off Capital of Texas Highway near Bee Cave Road. Dell had leased the 160,000-sf building, next door to the one that houses its executive offices, but doesn't need the space. David Sheldon and Chad Marsh, both of Endeavor Real Estate Group, are marketing the property. Vignette Corp. also has about 200,000 sf on the sublease market.
"It's definitely going to have an impact," Childers tells GlobeSt.com. "We expect our quarterly survey to indicate a downward trend in rental rates in the southwest market, but probably not to the extent that they are in the northwest market," he says.
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