As 2017 comes to a close, the Austin office market once again registered an active year of over 1.0 million sq. ft. of positive net absorption.
The development cycle has remained fiery as developers kicked off an additional 600,000 sq. ft. of new construction, closing out the year with approximately 2.7 million sq. ft. of new office space.
Vacancy held steady this quarter at 8.8% , a low not seen since Q2 2001.
Operational costs in Austin rose $0.86 per sq. ft. in the past 180 days , climbing to a citywide annual average of $9.57 per sq. ft. In order to offset the increasing operational costs, landlords have been pressed to again lower NNN asking rates to a citywide average of $24.82 per sq. ft., down from $25.22 per sq. ft. in Q3 2017 and $26.12 per sq. ft. in Q2 2017.
Despite the decreasing NNN asking rate, the citywide average FS Gross rate rose $0.07 per sq. ft. from Q3 2017 to $34.39 per sq. ft.
In October 2017, Austin’s unemployment fell to 2.6%, the lowest level since the late 1990s.