Austin offices remaining vacant, and expensive

The Austin office market remains soft and highly priced, with vacancy rates increasing 6.6 percentage points to 27.8 percent, which is the highest jump among major U.S. office markets, according to a recent study from Commercial Edge. Office construction in the city has slowed, with only 3.4 million square feet currently underway – equal to 3.6 percent of total stock – and Austin has maintained its position as a leader in office sale prices. Local office properties are trading at an average of $379 per square foot, the highest among top U.S. markets, surpassing Los Angeles. While office vacancy is a persistent problem downtown and elsewhere in the city, housing and development experts don’t see the available space as ready for conversion to badly needed housing supply. Nationally, vacancy rates have risen to 19.5 percent with 68.5 million square feet of office space under construction. Though Austin has slowed its office development, Miami has overtaken Austin in development activity, with 3.9 percent of its office stock under construction. Despite the local slowdown, Austin’s office prices remain a standout, signaling continued investor interest in the market despite broader sector challenges.