Austin Market Update: Office Vacancy Contracts—Again

Despite a rapidly expanding office stock, Austin’s vacancy rate has been decreasing for two consecutive months, hitting 16.4 percent in June, according to CommercialEdge data. The rate came closer to the national average of 15.6 percent, just 80 basis points below the figure.

Austin’s vacancy rate was down 30 basis points since May and up 710 basis points year-over-year. The metro’ booming office market added a whopping 3.9 percent of new stock in 2020, while nearly 2 million square feet of office—across 11 developments—was delivered in the first half of 2021. As we move into the second half of the year, the metro’s vacancy saw a 440-basis-point increase since January.

Indeed Tower, the city’s tallest office building, came online in late May. By mid-June, developer Trammell Crow Co. reached a definite agreement with California-based Kilroy Realty Corp. to sell the trophy asset for $580 million. At the time of the sale, the freshly delivered property was 57 percent occupied.

When compared to similar markets, Austin fared better than Dallas (18.5 percent) and Phoenix (18 percent), but trailed Charlotte (12.3 percent). Atlanta’s vacancy hit 20 percent in June and was one of the highest among Sun Belt cities.

The Austin East submarket bore the highest vacancy rate in the metro, reaching 31.8 percent. Austin Northwest and Northeast had elevated vacancies as well, at 22 and 19.6 percent, respectively, while Downtown also surpassed the metro’s average by 190 basis points. Austin North was the submarket with the lowest vacancy, reaching 5.4 percent.

CommercialEdge covers 8M+ property records in the United States. View the latest CommercialEdge national monthly office report here.