With its highly educated workforce and low cost of living, Austin was named by CNN Money magazine as one of America’s best places for business. So it’s no surprise that companies like Apple, Amazon, Google, Facebook, Twitter, and Netflix call Austin home.
Commercial property opportunities abound in and around Austin, Texas, making it a popular location for business owners and investors.
The second half of 2022 has seen Austin, Texas, industrial real estate turn out record-setting numbers. Here’s why.
Austin’s Booming Industrial Real Estate
Over four million square feet of new building projects started in Q2, including the largest speculative industrial project in Austin’s history.
Kyle/35 Logistics Park is expected to deliver over 1.2 million square feet of industrial real estate in five different buildings.
The vacancy rates have eased to 3.8 percent in the Austin metropolitan industrial market, as Q1 2022 broke the seven-year run of vigorous industrial leasing activity outstripping new construction.
During Q2 2022, 2.1 million square feet of office space was completed, bringing the year-over-year total to 6.7 million square feet, with 92% of that space spoken up.
Has the rise in vacancies affected average prices for industrial real estate? Read on!
Austin Industrial Area Real Estate Costs
E-commerce, combined with high-quality industrial properties, has led to rental increases in the Austin-Roundrock metro area.
The average monthly rent for the Austin industrial metropolis is $1.02 per square foot. A YOY Increase From $0.97.
- Flexible office space costs an average of $1.45 per square foot (PSF).
- Manufacturing rates are currently at 1.17 PSF.
- Warehouse/distributor space costs $0.88 per square foot.
Austin’s southeast ($1.44 PSFs) and northwest ($1.41 PSFs) submarkets currently have the highest monthly average prices.
Austin Leasing and Purchasing Activity
During the last three months, purchases in Austin were overshadowed by the previous year’s sales.
- Q1 was $350.7 million; sales for Q2 were $93.3 million—a 75 percent decline from Q1.
- Institutional investors led the way in buying industrial real estate, with 70 percent of buyers identified as institutional investors and 30 percent as private investors.
- Most of the Austin-area industrial real-estate buyers were either REITs or listed companies.
Over 1.8 million sq. ft. of leasing activities, which include new lease signings and renewals, occurred throughout the second quarter. These brought the total number of square feet to 3.8 million feet squared.
Austin’s Industrial Real Estate Development
Industrial real estate comprises most warehouse and distribution spaces currently under development or construction.
- By Q2 2022, 10 million square feet of industrial space is currently under development, with 55 percent of that space available for lease.
- New project openings rose to 91, a significant increase from the 54 openings during Q2 2021.
- Warehouse/distribution spaces constitute 90 percent of the total area under construction.
- Flexible spaces account for 9% of the total area while manufacturing accounts for 1%.
Many local commercial brokers expect Austin’s industrial property market to remain strong throughout the rest of 2022.
Looking Forward to Austin’s Industrial Real Estate Market
Austin’s commercial real estate market is expected to continue to grow. With abundant commercial land in Austin, there are multiple expansion opportunities. This is due to the area’s high level of economic activity and its continuing expansion by the electronics industry, transportation and warehousing, and construction industries.
Industrial real estate needs include those for Tesla and Samsung suppliers, which are currently under contract but still need to be finalized. Nevertheless, both companies are ramping up production.
short url:
