Austin has been leading the charge in office development, based on percentage of stock, in the country halfway through this year. One beacon of progress is The Republic, a towering 48-story edifice stretching along 4th Street. This mighty structure adds a staggering 800,000+ square feet of office space to Austin’s inventory, contributing to the overall 1.5 million square feet of new construction started this year – the largest in any market nationwide.
However, challenges lurk amidst these impressive figures. While office related job creation is outpacing other markets in the country and office usage is at an all-time high, there are looming concerns of potential oversupply. The office vacancy rate is on a steadily rising trend, indicating keen market risks.
Meanwhile, Houston has shown strong market performance in sales within the Southern markets. Following closely behind Washington, D.C, Houston has realized a total of $629 million in closed office deals. Despite trailing D.C in volume, Austin stands out within the region regarding sale prices, with office properties trading at a whopping average of $320/square foot.
This exploration reveals both the acceleration and potential challenges in the Central Texas office development marketplace. Understanding this is crucial for investors, brokers, and related stakeholders navigating the dynamic Texas real estate landscape.