Offices Space Market Report Austin | Q4 2020
Office space market report |Q4 2020
Austin office space is feeling the effects of COVID-19. Interestingly enough, lease rates are not correcting as expected. During the last quarter of 2020, Austin vacancies rose 2%. Current vacancy is now close to 17%.
Sublease market for office space
Subleases are increasing into 2021. This has been caused by COVID-19 effects pushing businesses out of business and further consolidations due to working at home. Full Service lease rates are remaining flat. Pre-leasing is moving down significantly above 30% for the Austin office space market. You can cross compare with previous market news updates on our website.
Normalization predictions?
We predict some normalization potential into the summer of 2021. This is all predicated on Geo-political movements and the COVID vaccine distribution.
Vacancy overview for the market
You can view office lease rates with our tracking chart for sub-markets. As stated earlier, average vacancy is near 17%. The NE and South sub-market has the highest vacancy rates at 40% and 32% for Class A office space. As a tenant , we would guide you towards those sub-markets for the best lease rates.
Shire Commercial has helped clients find suitable office solutions since 2004. We also provide recommendations for space planners, although most of the time the landlord’s team has planners they like to use. For your next Law office, contact Shire Commercial!
Google signs Austin office lease
Google signs Austin Office Lease | Summary from Austin American Statesman
Google signed a recent office lease for a 35 story building in Downtown Austin. Their newest office lease will be located in East Austin which is a mixed use development called Saltillo. Saltillo is currently under construction and the new lease is for 150,000SF of office space. In addition to this new lease Google shall occupy the property located at W Cesar Chavez and Nueces.
Google along with other tech companies are keeping Austin in their sites for expansions. Tech companies such as Apple, Oracle, Facebook and Indeed have taken homes in the Austin area as well.
Of course a lease with 35 stories is a major office transaction which represents more growth for the City of Austin moving forward.
Googles Saltillo Buildings Schedule
Saltillo is scheduled for delivery to Google in the Summer of 2020 Saltillo is a mixed use development which will have 800 multifamily units along with a Whole Foods Market grocery, retail space. Restaurants will include Hopdoddy’s and a Chuy’s Tex-Mex restaurant.
Employee wise this could represent over 700 employees for Google and Austin.
The building on Block 185 is slated of occupancy in Q2 2022. This is the 4th and last parcel that is being redeveloped. Saltillo is part of the former Thomas C Green Water Treatment Plant.
Amenities will include un-obstructed views of the lake and the City skyline.
LEED Certified Building
Summary article from Tierra Grande – October 2013 issue.
LEED CERTIFIED BUILDING – Using Green Architecture
Is LEED certified building construction the standard for new development? There was a perception that a green building with LEED certified standards were too expensive to develop in the past . Typically the LEED building or green building costs about 1.5 times the normal cost of a non green building. It takes approximately 3 to 5 years to recoup the costs to construct a green building.
Initially, there was a lot of apprehension for the development of LEED certified buildings until Hines Development out of Houston, Texas decided to announce they would develop all of their projects as green or LEED certified buildings from now on. Once a major developer like Hines took the lead, the rest of the developers started to follow. Hines and JP Morgan Asset Management announced the construction of a 415,000 square foot “Net-Zero” building.
NET ZERO OFFICE SPACE
Net Zero is defined as an commercial real estate property that will create as much energy as it consumes. Net Zero office buildings use on site fuel cells using solar thermal energy that will generate more electricity than the building will use during the year. This energy management system takes the surplus electricity which is then fed back into the grid and credited against the office spaces and building energy charges.
Commercial real estate particularly the office and retail sectors are adopting the LEED certified or green type buildings. Despite the higher costs, owners and tenants are reaping rewards the rewards in the form of lower vacancies, attracting young talent and higher resale values of the commercial real estate property in the future.
SUSTAINABLE BUILDING
Estimated return on investment for the fuel cells from Hines is approximately five to six years. The office building to be built in California will also qualify for financial incentives offered by the California Public Utility Commission. The office property will also incorporate a number of energy management system design features such as under floor air distribution, efficient water chilled usage, triple pane windows and state of the art controls in place.
Once the Net Zero office project is completed, Hines plans to implement what is learned from their project in San Diego to existing office buildings and adapting LEED certified building standards.