Austin has become a mecca for cool culture, emerging technology, millennials, breakfast tacos, artisanal coffee and pretty much everything else. Forbes has ranked Austin the best place to live for the 3rd year in a row and make no mistake–we agree with them. Not only is it an excellent spot to reside, businesses are flocking from all parts of the country and world to get in on the action.
Which has made the hunt for Austin office space that much more of a challenge in 2019. Luckily it’s a challenge we readily accept, but unfortunately many executives and founders looking to land in the perfect office space, at the right price, in the right location, quickly AND easily…may not be ready for what Austin has in store for them.
PREMIUM RENTAL RATES
With the average CBD base rent prices fluctuating between $42-$52 per SF, it’s not uncommon for first-timers to have a bit of sticker-shock when it comes time to go shopping for Austin office space. Remember on top of the base rent you’ll most likely be adding on NNN’s and Operating Expenses to get your final number. Depending on the term of your lease you’ll also have to consider yearly tax increases and other potential cost changes.
There’s hundreds of people moving to Austin every single day. On top of that we are seeing some of the largest companies in the US and World putting up flags in our great city. Walmart, Facebook, Apple, Google are taking up entire buildings before they’re even built, which isn’t leaving nearly as many options for the smaller tenants who may only need to occupy 1-5,000 SF for a couple years.
LIMITED INVENTORY AND LONGER SEARCH PERIODS
As vacancy rates continue to dip between 5 – 3% for all Class A Commercial space within the city, the inventory is much less diversified and can make it more difficult with tenants with specific requirements to find the space they need quickly. This may require tenants to complete significant remodel or improvements to a space before even moving in.
As you could probably imagine, Landlords have a bit of an upper hand in this market. Austin has become a hotbed for early-stage, high-growth startups which can often make a landlord uncomfortable and nervous renting their space to an unproven business. Your ability to provide sound financials can make or break a lease negotiation. Be sure to have your finances in order and put your best foot forward when it comes to proposals so your dream office doesn’t stay a dream. This is when having an experienced broker in your corner can make all the difference.
EMERGING NEIGHBORHOOD OPPORTUNITIES
But here’s the silver lining– a few of us remember when Lustre Pearl was the only bar on Rainey Street and rush hour traffic was really a thing. Fast-forward to today, where The Eastside is welcoming a Whole Foods and Target, the Domain now feels pretty close to downtown and St.Elmo is becoming a new hotspot for millenials to toss back a few craft brews after a long week. While the CBD is an obvious choice, as the city continues to expand, new neighborhoods and opportunities zones are presenting some interesting opportunities for businesses both big and small. Regulations are intended to stimulate job creation and economic expansion in these areas can mean unique and exciting opportunities for business owners.