CBD vacancy exceeds 24%
AUSTIN, Texas —
According to a new report by Franklin Street, Austin’s Central Business District has hit a historic vacancy rate of more than 24% with 14.8 million square feet of inventory available. The increase in vacancies has primarily been driven by compressed space needs since 2020 and a sharp decline in venture capital deployment over the past 18 months. Additionally, large sub-leases by major tech companies have further softened the market. The vacancy rate presents ample opportunity for tenants to secure office space at discounted prices in Austin’s highly sought-after downtown.
“For the first time in two decades, there is ample opportunity for tenants within Austin’s Central Business District,” Alex Taghi, senior director, Leasing, for Franklin Street, said. “Tenants have never had more leverage driven by the sudden increase in supply and demand compression. With increased options comes the ability to upgrade to newer properties that are now more economically viable.”
Additional factors impacting the historic vacancy rate include:
- four new buildings adding over two million square feet being added to the supply over the past 18 months
- a negative absorption rate year to date of –168,000 square feet, pre-leasing of under 30% for new construction projects since 2020 compared to more than 80% pre-leased for projects built between 2013 and 2018
- flight to quality impacting legacy buildings as tenants increasingly seek out more modern assets that are highly amenitized.
“New deliveries, big block vacancies, and continued sublease availabilities have contributed to the most challenging time for office landlords we’ve witnessed in the Central Business District,” Ryan Bohls, regional managing director, Franklin Street, said. “Tenants have compressed their space needs post covid while venture capital deployment has also decreased sharply leading to a significant reduction in office demand.”
Austin’s Central Business District by the numbers:
- 11 vacancies exceed 50,000 contiguous square feet
- 1.9 million square feet under construction
- $67.13 average Class A rent
- 27.3% Class A vacancy
- 24% market-wide vacancy
- -168,000 square feet year to date absorption
The full report can be found here.
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About Franklin Street
Franklin Street is a fully integrated, national commercial real estate services firm headquartered in Tampa, Florida. We combine thoughtful planning with decisive action to deliver winning results to clients nationwide. Franklin Street’s seven lines of business include Capital Advisory, Insurance, Investment Sales, Property Management, Project Management and Tenant and Landlord Representation. Founded in 2006, Franklin Street has a network of industry-leading brokers and capital partners across the country to ensure exceptional client service. Learn more about Franklin Street.
