If you’re looking for cheap office spaces for rent, don’t go looking in Texas or at least not in the Lone Star state’s capital city. Recent data released by the real estate research firm, Cushman and Wakefield/Oxford Commercial (CWOC), found that office rental rates in Austin have reached historic heights, according to the Austin community newspaper CommunityImpact.com.
The cost of renting office space rose by 13.2% year-over-year in July, August, and September, according to the data analyzed. In the third financial quarter of 2015, the average price of office space was $33.02 per square foot, which was an increase of almost $4 from the same time last year ($29.17). The best of the best space was a great deal higher than that even. Class A office space in Austin’s downtown central business district rose by 11.5% from last year to $48.07 per square foot.
“There’s a very high level of demand by office tenants to locate and grow in Austin, and the office sector continues to feel it,” said Rick Whiteley, CWOC partner, in a statement. “Developers continue to respond with lots of new product, and tenants continue to absorb the new supply.”
The demand is clearly evident when you consider the fact that there was even more new office real estate development this year than last. About 1.8 million new square feet of such property has become available in 2015 so far, compared to 1.7 million all of last year.
Logically, the vacancy rates in the city correspond with these numbers. Only about 9% of Austin-area office space is currently vacant overall, according to the CWOC numbers.
“With these increases, testing the waters in the local market for any company becomes that much riskier,” says Alex Restrepo, Administrative Manager, OfficeList.com. “Here is where the concept of executive office suites provides a risk free solution, by avoiding long term commitments on leases and also providing great accommodations in some of the most prestigious locations around.”
The one place there is some opportunity for companies looking for vacant office space is in the city’s southeast sector. The office vacancy rates there are the highest in the city at 22.3%, with the central sector coming in second at 16%.
“There’s an interesting split right now amongst tenants,” said Mark Greiner, CWOC co-founder and partner, in a statement. “Some view their real estate as an extension of their recruiting efforts—wanting top notch space in premium locations. Others are trying hard to maximize the bang for their buck. An offshoot of Austin’s growth is that there’s a complete spectrum of opportunity.”