New leases for Austin office space down, plus more findings from real estate report

The shift to hybrid work brought about by the pandemic is reshaping real estate trends in Austin, where office space has been a major component of many new downtown tower development projects, according to the CoStar Group firm.

The finding was included in a recent analysis of office space market patterns across the country. The company found that:

• The total amount of office sublet space available in Austin is 5,591,105 square feet, an all-time high for the metropolitan area. As a share of inventory, it represents 4.3 percent, one of the highest ratios among major U.S. markets.
• There has been an increase in signed sublet space, with more than 355,000 square feet signed in the second quarter of 2023. That represented a 175 percent increase from the 129,000 square feet signed in the first quarter of this year. CoStar Group said that the availability of high-quality sublet space in prime locations has been attractive to tenants looking to upgrade or open a new office.
• New leasing volumes continue to decline. In the fourth quarter of 2021, new leases signed totaled over 2.5 million square feet. In the second quarter of 2023, it amounted to 1.7 million square feet, reflecting a 32 percent decline during the period.