It was the best of times until it was the worst of times for commercial real estate in downtown Austin. After years of dramatic and towering additions to Austin’s skyline, things are looking down for many developers and landlords of office high-rises.
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What will happen next?
Citywide, the office vacancy rate hit 18.7% in the fourth quarter, according to Aquila. But in the CBD, that rate climbed to 22.2%, and it’s been increasing steadily since the first quarter of 2023, when the vacancy rate in the CBD was just 15.6%.
“For the better part of the last decade, demand kept up with the steady office supply, pre-Covid,” said Ryan Bohls, regional managing director at Franklin Street, a brokerage firm that recently announced its entry into Texas and the Austin market. “New inventory is ill-timed with almost 2 million square feet [of office space] under construction and over 20% vacancy rate in the CBD alone.”
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