austin industrial marketbeat 1q 2018 · 2018-06-12 · furthermore, austin’s housing market...
TRANSCRIPT
cushmanwakefield.com
AustinIndustrial Q1 2018
MARKETBEAT
Economic Indicators
Market Indicators (Overall, All Classes)
Overall Net Absorption/Overall Asking Rent4-QTR TRAILING AVERAGE
Overall Vacancy
Q1 2017 Q1 201812-Month
Forecast
Austin Employment 1,022k 1,058k
Austin Unemployment 3.5% 2.7%
U.S. Unemployment 4.7% 4.1%
Q1 2017 Q1 201812-Month
Forecast
Vacancy 9.5% 9.2%
Net Absorption (sf) -209k 88k
Under Construction (sf) 593k 1.4M
Average Asking Rent* $9.27 $10.08
*Rental rates reflect net asking $psf/year
EconomyThe first quarter of 2018 marked yet another quarter that the Austin unemployment rate ranked as one of the lowest amongst the 50 largest metropolitan areas, coming in at 2.7%. The local Austin unemployment rate also remained ahead of both the Texas rate of 4% and the national rate of 4.1%. Additionally, the rate of job growth in the Austin MSA continued to impress. According to the U.S. Bureau of Labor Statistics, Austin has added more than 35,000 new jobs in the past 12 months. Many of these new jobs can be attributed to more and more companies relocating or expanding to Austin from other areas, including many Silicon Valley tech companies that are finding the Austin market rich in talent.
Market OverviewThe Austin industrial market posted back-to-back quarters of positive absorption to kick-off 2018 by recording over +88,000 square feet (sf) of overall absorption during the first quarter. Vacancy rates for all industrial product types increased 40 basis points from Q4 2017 to an overall rate of 9.2%. Warehouse vacancy also increased, to 8.6%, while office service (flex) product remained steady from the prior quarter at 9.7%. The average net rental rate for all property types for Q1 2018 was $10.24 per square foot (psf). Warehouse/Distribution rates increased once again as higher priced, newer product bumped average asking rates up to $8.21 psf, while Office service (flex) property types continue to outperform other industrial types, with an overall average rental rate of $13.37 psf.
OutlookWith nearly 1.5 million square feet (msf) of new industrial product delivered to the market in 2017 and another 1.4 msf currently under construction, Austin should have enough excess space to fill demand for the near future. Despite this increase of new inventory hitting the market, the long-term outlook for the industrial market remains upbeat. Leasing activity remains strong and growth in Austin continues at a torrid pace. With more and more businesses making their way to the region and expanding their business footprints, the sustained economic growth should ultimately lead to a demand for both warehouse/distribution and flex space.
2%
5%
7%
10%
12%
15%
17%
20%
2012 2013 2014 2015 2016 2017 Q1 18
AUSTIN INDUSTRIAL
Historical Average = 10%
$5
$6
$7
$8
$9
$10
$11
-100
100
300
500
2013 2014 2015 2016 2017 Q1 18
Net Absorption, SF (thousands) Asking Rent, $ PSF
MARKETBEAT
About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm with 45,000 employees in more than 70 countries helping occupiers and investors optimize the value of their real estate. Cushman & Wakefield is among the largest commercial real estateservices firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
Copyright © 2018 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiplesources considered to be reliable. The information may contain errors or omissions and is presented without any warranty orrepresentations as to its accuracy.
AustinIndustrial Q1 2018
Key Lease Transactions Q1 2018
PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET
Heritage Crossing 5 107,780 Goodwill Direct Round Rock
Parmer 7.3 83,470 Hyliion Direct Far Northwest
Corridor Park Building 7 57,600 Uplift Desk Direct Round Rock
Vista Park 7 57,500 XPO Last Mile Direct Round Rock
Key Sales Transactions Q1 2018
PROPERTY SF SELLER/BUYER PRICE / $PSF SUBMARKET
Global Business Park, Tuscany Distribution Center, & Metric Center A & B 459,585 ATCAP Partners / Dalfen America Corp Undisclosed Northeast & North Central
1307 Smith Road 133,000 GPT Austin Owner LLC / 1307 Smith Westward LTD Undisclosed Northeast
8319 N. Lamar Blvd 55,000 PP-BVD, Inc. / Endeavor RE Group Undisclosed North Central
SUBMARKET INVENTORYOVERALL
VACANCY RATE
YTD NET OVERALL
ABSORPTIONUNDER CNSTR
DIRECT WEIGHTED
AVG.
NET RENT(MF)
DIRECT WEIGHTED
AVG.
NET RENT(OS)
DIRECT WEIGHTED
AVG.
NET RENT(W/D)
Central 18,900 0% 0 0 N/A N/A N/A
Far Northwest 1,787,939 13.3% -57,075 178,440 N/A $14.71 $9.30
North Central 6,240,906 11.6% -10,506 0 $10.78 $13.80 $8.75
Northeast 11,420,670 9.3% -30,979 0 N/A $13.20 $7.20
South Central 1,734,969 2.5% 1,608 107,453 N/A $14.08 $8.80
Southeast 10,875,123 10.7% 176,908 249,911 N/A $12.88 $7.20
Southwest 278,270 7.3% 932 0 N/A $13.55 $7.80
Round Rock 8,090,684 7.3% 46,425 889,263 N/A $11.40 $8.45
AUSTIN TOTALS 41,563,750 9.2% 88,415 1,425,067 $10.78 $13.37 $8.21*Rental rates reflect asking $psf/year MF = Manufacturing OS = Office Service/Flex W/D = Warehouse/Distribution
Cushman & Wakefield200 W Cesar Chavez StSuite 250Austin, TX 78701cushmanwakefield.com
For more information, contact:Jeff GravesAssociate Director, ResearchTel: +1 512 474 [email protected]
cushmanwakefield.com
AustinIndustrial Q4 2017
MARKETBEAT
Economic Indicators
Market Indicators (Overall, All Classes)
Overall Net Absorption/Overall Asking Rent4-QTR TRAILING AVERAGE
Overall Vacancy
Q4 2016 Q4 201712-Month
Forecast
Austin Employment 1,014k 1,037k
Austin Unemployment 3.4% 2.8%
U.S. Unemployment 4.7% 4.1%
Q4 2016 Q4 201712-Month
Forecast
Vacancy 6.4% 8.8%
Net Absorption (SF) 116k 334k
Under Construction (SF) 841k 950k
Average Asking Rent* $9.71 $9.24
*Rental rates reflect net asking $psf/year
EconomyThe Austin market wrapped up 2017 much like it began – with job growth continuing to outpace national averages and an unemployment rate that remains one of the lowest in the country, coming in at a record low of 2.8% versus the national average of 4.1%. Fortune 500 companies including Facebook, Google, Indeed, Expedia and others proved they were bullish on the future of Austin by signing massive office leases in 2017. Furthermore, Austin’s housing market continues to sizzle at a
record pace. According to the Austin Board of Realtors, home sales in Austin jumped 2.2% from 2016, while the median home price increased 4.3% within the same time period.
Market OverviewThe Austin industrial market bounced back with positive absorption to close out 2017 by recording nearly +334,000 square feet (SF) of overall absorption during the third quarter of 2017. Vacancy rates for all industrial product types decreased 70 basis points from Q3 2017 to an overall rate of 8.8%. Warehouse vacancy also decreased, to 7.8%, while office service (flex) product dipped 140 basis points from the previous quarter to 9.8%. The average net rental rate for all property types for Q4 2017 was $9.24 per square foot (PSF). Warehouse/Distribution rates rose slightly to $6.86 PSF, while Office service (flex) property types continue to outperform other industrial types, with an overall average rental rate of $12.55 PSF.
OutlookWith nearly 1.5 million square feet (SF) of new industrial product delivered to the market in 2017 and another million square feet currently under construction, Austin should have enough excess space to fill demand for the near future. Despite this increase of new inventory hitting the market, the long-term outlook for the industrial market remains upbeat. Leasing activity remains strong and growth in Austin continues at a torrid pace. With more and more businesses making their way to the region and expanding their business footprints, the sustained economic growth should ultimately lead to a demand for both warehouse/distribution and flex space.
2%
5%
7%
10%
12%
15%
17%
20%
2012 2013 2014 2015 2016 2017 Q4
AUSTIN INDUSTRIAL
Historical Average = 10%
$5
$6
$7
$8
$9
$10
-100
100
300
500
2012 2013 2014 2015 2016 2017
Net Absorption, SF (thousands) Asking Rent, $ PSF
MARKETBEAT
About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm with 45,000 employees in more than 70 countries helping occupiers and investors optimize the value of their real estate. Cushman & Wakefield is among the largest commercial real estateservices firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
Copyright © 2018 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiplesources considered to be reliable. The information may contain errors or omissions and is presented without any warranty orrepresentations as to its accuracy.
AustinIndustrial Q4 2017
Key Lease Transactions 2017
PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET
Corridor Park 184,833 Wayne Fueling Systems Lease Round Rock
Vista Park 5 86,700 Flooring Services SW, LTD Lease Round Rock
Southpark Commerce Center 4 75,051 HD Supply Facilities Maint. Lease Southeast
Key Sales Transactions 2017
PROPERTY SF SELLER/BUYER PRICE / $PSF SUBMARKET
Southpark Commerce 1-3 470,886 Clarion Partners/Colony Capital $50,600,000 / $107 Southease
11000 Middle Fiskville Rd 332,345 Golfsmith/BH Properties $20,500,000 / $61 North Central
210 E. Saint Elmo Rd. 102,194 Veritiv Corp/Gramercy Property Trust $9,700,000 / $95 South Central
Cushman & Wakefield200 W. Cesar Chavez StSuite 250cushmanwakefield.com
For more information, contact:Jeff Graves, Sr. GIS & Research AnalystTel: +1 512 474 [email protected]
SUBMARKET INVENTORYOVERALL
VACANCY RATE
YTD NET OVERALL
ABSORPTIONUNDER CNSTR
DIRECT WEIGHTED
AVG.
NET RENT(MF)
DIRECT WEIGHTED
AVG.
NET RENT(OS)
DIRECT WEIGHTED
AVG.
NET RENT(W/D)
Central 18,900 0% 0 0 N/A N/A N/A
Far Northwest 1,787,939 8.0% 128,943 63,440 N/A $14.73 $6.34
North Central 6,123,472 12.9% -239,539 0 $8.40 $13.87 $6.86
Northeast 11,420,670 10.3% -68,136 0 N/A $13.90 $6.94
Northwest 0 0.0% 0 0 N/A N/A N/A
South Central 1,726,037 2.4% 30,668 107,453 N/A $13.92 $7.75
Southeast 10,016,478 8.4% 97,033 365,111 N/A $12.35 $7.28
Southwest 278,270 5.6% 6,460 0 N/A $13.41 $7.06
Round Rock 8,090,684 9.1% -6,325 414,413 N/A $11.52 $8.15
AUSTIN TOTALS 39,462,450 8.8% -50,896 950,417 $8.40 $12.55 $6.86*Rental rates reflect asking $psf/year MF = Manufacturing OS = Office Service/Flex W/D = Warehouse/Distribution
cushmanwakefield.com
AustinIndustrial Q3 2017
MARKETBEAT
Economic Indicators
Market Indicators (Overall, All Classes)
Overall Net Absorption/Overall Asking Rent4-QTR TRAILING AVERAGE
Overall Vacancy
Q3 2016 Q3 201712-Month
Forecast
Austin Employment 1,004k 1,022k
Austin Unemployment 3.3% 3.1%
U.S. Unemployment 4.9% 4.4%
Q3 2016 Q3 201712-Month
Forecast
Vacancy 7.5% 9.5%
Net Absorption (SF, YTD) 494k -385k
Under Construction (SF) 654k 736k
Average Asking Rent* $9.75 $9.34
*Rental rates reflect net asking $psf/year
EconomyThe Austin economy continued to show its vitality to close out Q3 2017. The city’s unemployment rate of 3.1% remains significantly
lower than the national average of 4.4% and state average of 4.2%. Local job growth, while not as robust as 2016, continues to outpace national and state averages as well. High-tech and creative industries continue to fuel this economic expansion as companies such as Facebook, Google, and Amazon confirm their faith in Austin. The city’s continued ability to maintain low
unemployment rates while effectively generating jobs indicates a strong and healthy local economy.
Market OverviewThe Austin industrial market experienced nearly 385,000 square feet (SF) of negative absorption during the third quarter of 2017. Several large move-outs, including Pearson Inc. which vacated 135,442 SF at 905 West Howard, helped push absorption levels lower. Vacancy rates for all industrial product types remain below historical levels, coming in at 9.5% to end Q3 2017. Warehouse vacancy increased 190 basis points from Q2 2017 to 8.4%, while office service (flex) product dropped 80 basis points from the previous quarter to 11.2%. The average net rental rate for all property types for Q3 2017 was $9.34 per square foot (PSF). Warehouse/Distribution rates rose slightly to $6.72 PSF, while Office service (flex) property types continue to outperform other industrial types, with an overall average rental rate of $12.52 PSF.
OutlookWhile vacancy rates for Austin industrial product remain healthy in comparison to historical averages, a trend of negative absorption seems to point to signs of a softening industrial market. With more than 850,000 SF of new industrial product already delivered in 2017 and another 750,000 SF set to deliver by year’s end, higher vacancies appear to be on the horizon as
landlords work to fill excess space. With this increase in vacancy looming, we can assume industrial product asking rates will gradually decline as landlords discount rates in order to attract tenants. All of this withstanding, the long-term outlook for the industrial market remains upbeat. Population growth in Austin continues at a torrid pace, and more and more businesses are making their way to the region and expanding their business footprints. This sustained economic growth should ultimately lead to a demand for both warehouse/distribution and flex space.
2%
5%
7%
10%
12%
15%
17%
20%
2012 2013 2014 2015 2016 2017 Q3
AUSTIN INDUSTRIAL
Historical Average = 10%
$5
$6
$7
$8
$9
$10
-100
100
300
500
2012 2013 2014 2015 2016 2017 Q3
Net Absorption, SF (thousands) Asking Rent, $ PSF
AustinIndustrial Q3 2017
MARKETBEAT
About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our43,000 employees in more than 60 countries help investors and occupiers optimize the value of their real estate by combiningour global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is amongthe largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset services,capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project &development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow@CushWake on Twitter.
Copyright © 2017 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiplesources considered to be reliable. The information may contain errors or omissions and is presented without any warranty orrepresentations as to its accuracy.
Key Lease Transactions Q3 2017
PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET
Corridor Park 184,833 Wayne Fueling Systems Lease Round Rock
Vista Park 5 86,700 Flooring Services SW, LTD Lease Round Rock
11000 N. I-35, Bldg B 49,500 FEMA Lease North Central
Key Sales Transactions Q3 2017
PROPERTY SF SELLER/BUYER PRICE / $PSF SUBMARKET
14050 Summit Dr. 53,100 BTI Austin LLC / 2017 Summit Park LP Undisclosed North Central
501 Waller St. 35,000 WBH LTD / WC 5th & Waller, LLC $6,640,000 / $189 East
3841 Ranch Road 620 32,697 D&M Dixon / MBSB Commercial Holdings Undisclosed Southwest
Cushman & Wakefield200 W. Cesar Chavez StSuite 250cushmanwakefield.com
For more information, contact:Jeff Graves, Sr. GIS & Research AnalystTel: +1 512 474 [email protected]
SUBMARKET INVENTORYOVERALL
VACANCY RATE
YTD NET OVERALL
ABSORPTIONUNDER CNSTR
DIRECT WEIGHTED
AVG.
NET RENT(MF)
DIRECT WEIGHTED
AVG.
NET RENT(OS)
DIRECT WEIGHTED
AVG.
NET RENT(W/D)
Central 18,900 0% 0 0 N/A N/A N/A
Far Northwest 1,664,349 6.9% 79,038 231,030 N/A $14.40 $6.46
North Central 6,160,796 15.5% -253,776 0 $8.74 $13.74 $6.79
Northeast 11,728,259 13.2% -331,507 39,150 N/A $9.51 $6.90
Northwest 0 0.0% 0 0 N/A N/A N/A
South Central 1,799,537 2.9% 27,853 0 N/A $14.68 $7.49
Southeast 10,178,657 10.5% 43,179 465,371 N/A $13.31 $7.08
Southwest 376,181 8.9% -1,000 0 N/A $10.50 $7.60
Round Rock 6,915,420 6.4% 51,436 0 N/A $11.52 $8.15
AUSTIN TOTALS 38,842,099 9.5% -384,777 735,551 $8.77 $12.52 $6.72*Rental rates reflect asking $psf/year MF = Manufacturing OS = Office Service/Flex W/D = Warehouse/Distribution
cushmanwakefield.com
AustinIndustrial Q2 2017
MARKETBEAT
Economic Indicators
Market Indicators (Overall, All Classes)
Overall Net Absorption/Overall Asking Rent4Q TRAILING AVERAGE
Overall Vacancy
Q2 2016 Q2 2017 12-Month Forecast
Austin Employment 994k 1,023k
Austin Unemployment 3.0% 3.6
U.S. Unemployment 4.9% 4.4%
Q2 2016 Q2 2017 12-Month Forecast
Vacancy 7.7% 8.6%
Net Absorption (SF, YTD) 242k -75k
Under Construction (SF) 414k 964k
Average Asking Rent* $9.66 $9.21
*Rental rates reflect net asking $psf/year
EconomyThe Austin economy remained steadfast to close out the first half of 2017. With an unemployment rate of 3.6%, Austin remains significantly lower than the national average of 4.4%, and job growth in the region also continues to outpace national averages. According to the U.S. Bureau of Labor statistics, the Austin MSA added more than 29,000 new jobs to the area in the past 12 months, a 2.9% increase. Construction remains robust across Austin as well. Several high-profile construction projects reflect the confidence taking place in the city, including the 37-story Fairmont Hotel in downtown Austin, as well as The Independent, a 58-story residential tower that will be the tallest residential tower west of the Mississippi once it is completed in 2018.
Market OverviewThe Austin Industrial market rebounded from the negative absorption we saw in Q1 2017. Absorption was up for Q2 2017, totaling approximately 135,000 square feet (SF) overall. The Southeast (SE) submarket experienced the majority of this absorption, recording 137,000 SF overall. Vacancy rates for all industrial product types remain low, with an overall rate of 8.6%. Although vacancy has risen from the historic lows we’ve seen recently, demand in the market is strong and leasing activity remains healthy. The average net rental rate for all property types for Q2 2017 was $9.21 per square foot (PSF). Office service (flex) property types continue to perform strongly, with an overall average rental rate of $12.51 psf. As has been the case over the last year, this trend can be attributed to the continued demand for “value” office space as traditional office users are squeezed out of higher priced office product. Subsequently, many landlords are seeing this as an opportunity to maximize rents and market flex space as a pure office alternative.
OutlookThe Austin industrial market will more than likely continue to trend upward. Overall vacancy rates are maintaining a healthy level while rental rates remain stable. Deliveries appear to be in balance with market demand with more than 900,000 square feet of industrial product under construction. As population growth continues and more and more businesses flock to the capital city and expand their business footprints, we should expect to see demand for both warehouse/distribution and flex space increase as we move into the second half of 2017 and continue this trend well into 2018. 2%
5%
7%
10%
12%
15%
17%
20%
2011 2012 2013 2014 2015 2016 Q2 2017
AUSTIN INDUSTRIAL
Historical Average = 11%
$5
$6
$7
$8
$9
$10
-100
100
300
500
2012 2013 2014 2015 2016 Q2 2017
Net Absorption, SF (thousands) Asking Rent, $ PSF
AustinIndustrial Q2 2017
MARKETBEAT
About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our43,000 employees in more than 60 countries help investors and occupiers optimize the value of their real estate by combiningour global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is amongthe largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset services,capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project &development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow@CushWake on Twitter.
Copyright © 2017 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiplesources considered to be reliable. The information may contain errors or omissions and is presented without any warranty orrepresentations as to its accuracy.
Key Lease Transactions Q2 2017
PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET
TechRidge Three.1 76,000 Kompan Lease Northeast
TechRidge Two.1 46,000 AG&M Granite Lease Northeast
7307 Burleson Rd. 35,000 Evolution Salt Lease Southeast
Key Sales Transactions Q2 2017
PROPERTY SF SELLER/BUYER PRICE / $PSF SUBMARKET
210 E. Saint Elmo Rd. 102,194 Veritiv Corp/Gramercy Property Trust $9,700,000 / $95 South Central
306 Tradesmen Park Dr. 52,440 Paint Sundries LLC/300 Tradesmen LLC Undisclosed Round Rock
2310 Donley Dr. 24,700 Jammer, LLC/Boost Logic $1,800,000 / $73 North Central
Cushman & Wakefield200 W. Cesar Chavez StSuite 250cushmanwakefield.com
For more information, contact:Jeff Graves, Sr. GIS & Research AnalystTel: +1 512 474 [email protected]
SUBMARKET INVENTORY OVERALLVACANCY RATE
YTD NET OVERALL ABSORPTION UNDER CNSTR
DIRECT WEIGHTED AVG.
NET RENT(MF)
DIRECT WEIGHTED AVG.
NET RENT(OS)
DIRECT WEIGHTED AVG.
NET RENT(W/D)
Central 18,900 0% 0 0 N/A N/A N/A
Far Northwest 1,664,349 5.7% 62,620 231,030 N/A $14.38 $6.46
North Central 6,160,796 8.9% -146,472 0 $8.68 $13.57 $6.88
Northeast 11,728,259 9.7% -72,132 39,150 N/A $9.55 $6.83
Northwest 0 0.0% 0 0 N/A N/A N/A
South Central 1,799,537 2.5% 18,221 0 N/A $14.68 $7.21
Southeast 9,981,007 9.8% 13,583 694,094 N/A $13.05 $8.08
Southwest 376,181 4.1% 2,750 0 N/A $8.40 $7.60
Round Rock 6,915,420 7.2% 46,973 0 N/A $11.00 $7.33
AUSTIN TOTALS 38,644,449 8.6% -74,457 964,274 $8.68 $12.51 $6.45*Rental rates reflect asking $psf/year MF = Manufacturing OS = Office Service/Flex W/D = Warehouse/Distribution
cushmanwakefield.com
AustinIndustrial Q1 2017
MARKETBEAT
Economic Indicators
Market Indicators (Overall, All Classes)
Overall Net Absorption/Overall Asking Rent4Q TRAILING AVERAGE
Overall Vacancy
Q1 2016 Q1 2017 12-Month Forecast
Austin Employment 987k 1,016k
Austin Unemployment 3.3% 3.4%
U.S. Unemployment 4.9% 4.8%
Q1 2016 Q1 2017 12-Month Forecast
Vacancy 6.8% 9.5%
Net Absorption (SF, YTD) 172k -209k
Under Construction (SF) 370k 593k
Average Asking Rent* $9.72 $9.27
*Rental rates reflect net asking $psf/year
EconomyThe Austin economy remained robust in the first quarter of 2017. Job growth remains strong and the unemployment rate is still one of the lowest in the country, coming in at 3.4% versus the national average of 4.8%. Nationally, the technology sector is the leading industry for real estate expansion and that is certainly the case in Austin as more and more tech companies relocate to or expand operations in the capital city. Additionally, Austin’s tourism industry continues to thrive, with millions of visitors making their way to Austin each year and pumping millions of dollars into the local economy.
Market OverviewThe Austin Industrial market saw its streak of positive absorption come to an end as the market recorded negative net absorption of 209,000 square feet (SF) to end the first quarter of 2017. New deliveries totaling 335,946 SF helped push vacancy rates higher for all industrial product types, with an overall rate of 9.5%. Warehouse/distribution vacancy was the lowest of all product types with an overall rate of 7.7%. Although vacancy has risen from the historic lows we’ve seen recently, demand in the market is strong and leasing activity remains healthy. Several new deliveries, including the 116,000 SF flex building at TechRidge, have lessened the supply deficit and several other large facilities, such as the 231,000 SF Brushy Creek Corporate Center, have broken ground and will further add to supply levels. The average net rental rate for all property types for Q1 2017 was $9.27 per square foot (PSF). Office service (flex) property types continue to perform strongly, with an overall average rental rate of $12.60 psf. This property type has consistently mirrored Austin’s red-hot office market, as traditional office users are priced out of expensive space and turn to “value” office alternatives.
OutlookConsistent demand for newer warehouse and flex properties have pushed developers to fill voids in the market. As of close of 1st quarter 2017, there is approximately 600,000 square feet of industrial product under construction and another 1.5 Million SF of proposed industrial product in the pipeline. Although vacancy rates have crept upward when compared to the record lows we experienced in 2016, healthy leasing activity and an ever-expanding population base should keep demand for both warehouse/distribution and flex space strong throughout 2017.
2%
5%
7%
10%
12%
15%
17%
20%
2011 2012 2013 2014 2015 2016 Q1 17
AUSTIN INDUSTRIAL
Historical Average = 11%
$5
$6
$7
$8
$9
$10
-100
100
300
500
2011 2012 2013 2014 2015 2016 Q1 2017
Net Absorption, SF (thousands) Asking Rent, $ PSF
AustinIndustrial Q1 2017
MARKETBEAT
About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live.The firm’s 43,000 employees in more than 60 countries provide deep local and global insights that create significant value foroccupiers and investors around the world. Cushman & Wakefield is among the largest commercial real estate services firms withrevenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), globaloccupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, andvaluation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
Copyright © 2017 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiplesources considered to be reliable. The information may contain errors or omissions and is presented without any warranty orrepresentations as to its accuracy.
Key Lease Transactions Q1 2017
PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET
Vista Park 4 45,900 Central Transportation Systems Lease Round Rock
2325 Ben White Blvd 40,957 Austin Warehouse & Distribution Sublease Southeast
Longhorn Center 12,909 Illusions Rentals Lease Far Northwest
Key Sales Transactions Q1 2017
PROPERTY SF SELLER/BUYER PRICE / $PSF SUBMARKET
Southpark Commerce 1-3 470,886 Clarion Partners/Colony Capital $50,600,000 / $107 Southease
11000 Middle Fiskville Rd 332,345 Golfsmith/BH Properties $20,500,000 / $61 North Central
17 Cypress Blvd 98,702 World Class Capital/Round Rock ISD $6,711,736 / $68 Round Rock
Cushman & Wakefield200 W. Cesar Chavez StSuite 250cushmanwakefield.com
For more information, contact:Jeff Graves, Sr. GIS & Research AnalystTel: +1 512 474 [email protected]
SUBMARKET INVENTORY OVERALLVACANCY RATE
YTD NET OVERALL ABSORPTION UNDER CNSTR
DIRECT WEIGHTED AVG.
NET RENT(MF)
DIRECT WEIGHTED AVG.
NET RENT(OS)
DIRECT WEIGHTED AVG.
NET RENT(W/D)
Central 18,900 0% 0 0 N/A N/A N/A
Far Northwest 5,685,270 7.0% 54,013 231,030 N/A $14.90 $5.23
North Central 5,059,583 8.5% -42,360 0 $8.74 $12.72 $7.80
Northeast 9,465,180 7.9% -9,172 51,200 N/A $9.92 $6.84
Northwest 205,561 0.0% 0 0 N/A $9.23 $6.08
South Central 1,064,820 2.8% -12,252 0 N/A $15.63 $8.19
Southeast 9,648,768 9.1% -123,160 272,500 N/A $11.89 $8.38
Southwest 259,731 5.0% 0 0 N/A $8.00 N/A
Round Rock 6,912,936 8.9% -76,088 38,400 N/A $7.98 $6.33
AUSTIN TOTALS 38,320,749 9.5% -209,019 593,130 $8.74 $12.60 $6.48*Rental rates reflect asking $psf/year MF = Manufacturing OS = Office Service/Flex W/D = Warehouse/Distribution
cushmanwakefield.com
AustinIndustrial Q4 2016
MARKETBEAT
Economic Indicators
Market Indicators (Overall, All Classes)
Overall Net Absorption/Overall Asking Rent4Q TRAILING AVERAGE
Overall Vacancy
Q4 15 Q4 16 12-Month Forecast
Austin Employment 978k 997k
Austin Unemployment 3.4% 3.5%
U.S. Unemployment 5.0% 4.8%
Q3 15 Q4 16 12-Month Forecast
Vacancy 6.1% 6.4%
Net Absorption (SF, YTD) 1.77M 611K
Under Construction (SF) 347k 841k
Average Asking Rent* $9.94 $9.71
*Rental rates reflect net asking $psf/year
EconomyThe Austin market wrapped up 2016 much like it began – with population in the metro area increasing at a record pace, phenomenal job growth, and an unemployment rate that remains one of the lowest in the country, coming in at 3.5% versus the national average of 4.8%. The technology sector is still the driving force behind this success and Fortune 500 companies continue to move to or expand their operations in Austin. This has an indirect benefit for smaller businesses and the economy as a whole. Austin’s tourism industry remains robust as well. According to the Austin Convention & Visitors Bureau, there were more than 24 million visitors to Austin in 2016, which led to an economic impact of $7 billion to the Live Music Capital of the World.
Market OverviewThe Austin Industrial market recorded just over 116,000 square feet (SF) of overall absorption during Q4 2016. The Northeast (NE) led all submarkets, recording 89,788 SF of overall absorption. Vacancy rates for all industrial product types remain low, with an overall rate of 6.4%, down from the 7.5% rate recorded in Q3 2016. Although absorption has slowed somewhat as compared to previous quarters, lack of supply should continue to keep vacancy rates low and push rental rates upward. The average net rental rate for all property types for Q4 2016 was $9.71 per square foot (PSF). Office service (flex) property types continue to perform strongly, with an overall average rental rate of $11.71 psf. This property type has consistently mirrored Austin’s red-hot office market, as traditional office users are priced out of expensive space and turn to “value” office alternatives.
OutlookAs we kick-off 2017, we can expect to see the industrial market continue its upward trend. Demand for quality warehouse and flex properties has pushed construction starts as developers look to fill voids in the market. As of close of 4th quarter 2016, there is currently more than 840,000 square feet of industrial product under construction as compared to 340,000 SF at the same time in 2015. With overall vacancy rates at near record lows and asking rates on the rise, we should see these newer deliveries leased up steadily. With population growth expected to continue, we will likely see demand for both warehouse/distribution and flex space increase throughout 2017.
2%
5%
7%
10%
12%
15%
17%
20%
2011 2012 2013 2014 2015 2016 Q4
AUSTIN INDUSTRIAL
Historical Average = 11%
$5
$6
$7
$8
$9
$10
-100
100
300
500
2011 2012 2013 2014 2015 2016 Q4
Net Absorption, SF (thousands) Asking Rent, $ PSF
AustinIndustrial Q4 2016
MARKETBEAT
About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live.The firm’s 43,000 employees in more than 60 countries provide deep local and global insights that create significant value foroccupiers and investors around the world. Cushman & Wakefield is among the largest commercial real estate services firms withrevenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), globaloccupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, andvaluation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
Copyright © 2016 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiplesources considered to be reliable. The information may contain errors or omissions and is presented without any warranty orrepresentations as to its accuracy.
Key Lease Transactions 2016
PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET
Southpark Commerce Center 145,000 Austin Lighthouse Lease Southeast
Heritage Crossing 126,782 LKQ Corporation Lease Round Rock
116 E. Old Settlers 122,012 UPS Sublease Round Rock
Key Sales Transactions 2016
PROPERTY SF SELLER/BUYER PRICE / $PSF SUBMARKET
Tech Ridge I,II,III 1,023,120 TA Realty/Stockbridge $53,000,000 / $52 Northeast
Met Center 15 257,000 Daymark Realty/Virtua Partners 28,000,000 / $109 Southeast
Parmer Business Park 257,000 RREEF/Eurus Capital Partners Undisclosed Far Northwest
Cushman & Wakefield200 W. Cesar Chavez StSuite 250cushmanwakefield.com
For more information, contact:Jeff Graves, Sr. GIS & Research AnalystTel: +1 512 474 [email protected]
SUBMARKET INVENTORY OVERALLVACANCY RATE
YTD NET OVERALL ABSORPTION UNDER CNSTR
DIRECT WEIGHTED AVG.
NET RENT(MF)
DIRECT WEIGHTED AVG.
NET RENT(OS)
DIRECT WEIGHTED AVG.
NET RENT(W/D)
Central 18,900 0% 0 0 N/A N/A N/A
Far Northwest 4,456,859 1.2% -34,135 30,000 N/A $14.95 $5.43
North Central 9,600,964 4.2% 251,797 0 $7.80 $12.71 $7.88
Northeast 12,546,533 14.7% -29,439 551,200 N/A $9.18 $6.49
Northwest 4,139,606 2.3% 158,976 0 N/A $9.03 $6.23
South Central 1,354,422 8.2% -60,737 0 N/A $16.53 $8.29
Southeast 9,938,982 7.3% 55,475 220,965 N/A $11.64 $8.40
Southwest 272,660 2.3% 20,883 0 N/A $11.96 N/A
Round Rock 3,712,935 6.1% 131,575 38,400 N/A $7.58 $6.30
AUSTIN TOTALS 46,041,861 6.4% 611,005 840,565 $7.80 $11.71 $6.92*Rental rates reflect asking $psf/year MF = Manufacturing OS = Office Service/Flex W/D = Warehouse/Distribution
cushmanwakefield.com
Industrial Snapshot Q2 2016Austin
MARKETBEAT
Economic Indicators
Market Indicators (Overall, All Classes)
Overall Net Absorption/Overall Asking Rent4Q TRAILING AVERAGE
Overall Vacancy
Q2 2015 Q2 2016 12-Month Forecast
Austin Employment 953k 987k
Austin Unemployment 3.3% 3.0%
U.S. Unemployment 5.4% 4.9%
Q2 2015 Q2 2016 12-Month Forecast
Vacancy 8.6% 7.7%
Net Absorption (sf) 594k 242k
Under Construction (sf) 411k 349k
Average Asking Rent* $9.36 $9.66
*Rental rates reflect net asking $psf/year
EconomyThe Austin economy continues to impress. With an unemployment rate of 3.0%, Austin’s jobless rate remains significantly lower than the national average of 4.9%. Job growth in the region also continues to outpace national averages. According to the U.S. Bureau of Labor Statistics, the Austin MSA added more than 34,000 new jobs to the area in the past 12 months, a 3.6% increase. Population figures continue to follow a similar path. A recent demographic study by the City of Austin indicated there was a net population gain of more than 150 people per day added to the Austin MSA. This includes Georgetown, TX, a north Austin suburb, which was recently ranked #1 as the fastest growing city in the country according to the U.S. Census Bureau.
Market OverviewThe Austin Industrial market recorded 242,070 square feet (sf) of overall absorption during Q2 2016. The North Central (NC) submarket experienced the majority of this absorption, recording 138,414 sf overall. Vacancy rates for all industrial product types remain low, with an overall rate of 7.7%, compared to 8.6% in Q2 2015. Continued strong absorption rates coupled with lack of supply should continue to lower vacancy rates and subsequently push rental rates higher. The average net rental rate for all property types for Q2 2016 was $9.66 per square foot (psf), which was up $0.06 psf from Q1 2016. Additionally, office service property types continue to perform strongly, with an overall average rental rate of $11.64 psf. As has been the case over the last year, this trend can be attributed to the continued demand for “value” office space as traditional office users are squeezed out of higher priced office product. Subsequently, many landlords are seeing this as an opportunity to maximize rents and have begun marketing flex space as pure office.
OutlookThe Austin industrial market will more than likely continue to trend upward. Overall vacancy rates are maintaining a very healthy level while rental rates continue to rise. Deliveries appear to be in balance with market demand with more than 349,000 square feet of industrial product under construction. As population growth continues and more and more businesses flock to the capital city and expand their business footprints, we can expect to see demand for both warehouse/distribution and flex space increase as we move into the second half of 2016 and continue this trend well into 2017. 2%
5%
7%
10%
12%
15%
17%
20%
2011 2012 2013 2014 2015 2016
AUSTIN INDUSTRIAL
Historical Average = 11%
$5
$6
$7
$8
$9
$10
-100
100
300
500
2011 2012 2013 2014 2015 2016
Net Absorption, SF (thousands) Asking Rent, $ PSF
Industrial Snapshot Q2 2016Austin
MARKETBEAT
About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live.The firm’s 43,000 employees in more than 60 countries provide deep local and global insights that create significant value foroccupiers and investors around the world. Cushman & Wakefield is among the largest commercial real estate services firms withrevenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), globaloccupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, andvaluation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
Copyright © 2016 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiplesources considered to be reliable. The information may contain errors or omissions and is presented without any warranty orrepresentations as to its accuracy.
Key Lease Transactions Q2 2016
PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET
116 E. Old Settlers 122,012 UPS Sublease Round Rock
Expo 13 32,000 Ketra Lease Southeast
Southpark Commerce Center 4 25,680 Ingersoll-Rand Lease Southeast
Key Sales Transactions Q2 2016
PROPERTY SF SELLER/BUYER PRICE / $PSF SUBMARKET
Met Center 15 257,000 Daymark Realty/Virtua Partners $28,000,000 / $109 Southeast
210 E. Saint Elmo 102,194 William Bell/Veritiv Operating Co. Undisclosed South Central
Howard Lane Distribution Center 77,484 Seetha Singh/John Lewis Co. $3,500,000 / $45 North Central
Cushman & Wakefield200 W. Cesar Chavez StSuite 250cushmanwakefield.com
For more information, contact:Jeff Graves, Sr. GIS & Research AnalystTel: +1 512 474 [email protected]
SUBMARKET INVENTORY OVERALLVACANCY RATE
YTD NET OVERALL ABSORPTION UNDER CNSTR
DIRECT WEIGHTED AVG.
NET RENT(MF)
DIRECT WEIGHTED AVG.
NET RENT(OS)
DIRECT WEIGHTED AVG.
NET RENT(W/D)
Central 18,900 0% 0 0 N/A N/A N/A
Far Northwest 4,456,859 1.7% (36,478) 30,000 N/A $14.93 $5.34
North Central 9,600,964 5.2% 188,264 0 $7.80 $12.81 $7.88
Northeast 12,121,947 14.4% (35,780) 180,395 N/A $9.13 $6.50
Northwest 4,139,606 4.4% 48,079 0 N/A $8.98 $6.14
South Central 1,434,649 7.6% 5,993 0 N/A $17.44 $8.24
Southeast 9,725,951 6.8% 109,554 58,005 N/A $11.72 $8.47
Southwest 272,660 2.7% 13,383 0 N/A $11.70 N/A
Round Rock 3,644,669 6.1% 120,721 80,340 N/A $7.58 $6.30
AUSTIN TOTALS 45,614,617 7.7% 413,736 348,740 $7.80 $11.64 $6.90*Rental rates reflect asking $psf/year MF = Manufacturing OS = Office Service/Flex W/D = Warehouse/Distribution
Industrial Snapshot Q1 2016Austin
MARKETBEAT
Economic Indicators
Market Indicators (Overall, All Product Types)
Overall Net Absorption/Asking Rent4Q TRAILING AVERAGE
Overall Vacancy
Q1 15 Q1 16 12-Month Forecast
Austin Employment 944k 985k
Austin Unemployment 3.5% 3.2%
U.S. Unemployment 5.6% 4.9%
Q1 15 Q1 16 12-Month Forecast
Vacancy 9.6% 6.8%
Net Absorption (sf) 256k 172k
Under Construction (sf) 348k 370k
Average Asking Rent* $9.36 $9.72
*Rental rates reflect asking $psf/year
EconomyThe first quarter of 2016 marked yet another quarter that the Austin unemployment rate ranked as one of the lowest amongst the 50 largest metropolitan areas, coming in at 3.2% (as of March 2016). The local Austin unemployment rate also remains ahead of both the Texas rate of 4.5% and the national rate of 4.9%. Additionally, the rate of job growth in the Austin MSA continues to impress. According to the U.S. Bureau of Labor Statistics, Austin has added more than 39,800 new jobs in the past 12 months, ranking it 3rd nationally. Many of these new jobs can be attributed to more and more companies relocating or expanding to Austin from other areas, including many Silicon Valley tech companies that are finding the Austin market rich in talent. Austin’s unique vibes, original cuisine, and spectacular music has only fueled this popularity and the city’s continued economic growth is reflective of that.
Market OverviewThe Austin Industrial market recorded 171,666 square feet (sf) of overall absorption during Q1 2016. The Southeast (SE) submarket experienced the majority of this absorption, recording 134,303 sf overall. Vacancy rates for all industrial product types remain low, with an overall rate of 6.8%, compared to 9.6% in Q1 2015. Continued strong absorption rates coupled with lack of supply should continue to lower vacancy rates and subsequently push rental rates higher. The average net rental rate for all property types for Q1 2016 was $9.72 per square foot (psf), which was up $0.36 psf from the same quarter in 2015, an increase of 3.8%. Additionally, office service property types continue to perform strongly, with an overall average rental rate of $11.36 psf. This trend can be attributed to the continued demand for “value” office space as traditional office users are squeezed out of higher priced office product.
OutlookAustin continues to be an attractive destination for growing businesses. Large, established companies such as Amazon, Oracle, Apple, Google, and others have shown their commitment to Austin and continue to expand their presence in the capital city. Additionally, existing local companies are continuing to add to their current footprints as their businesses reap the benefits of a strengthening economy. Nationally, the spotlight continues to shine on Austin. In January, Forbes named Austin No.1 for “America’s Next Boom Towns”. This is evident as Austin’s population growth continues to climb at a record pace. With this increased population, demand for both warehouse/distribution and flex space will increase, and as supply continues to lag behind, higher rental rates and lower vacancy rates will continue across most Austin submarkets.
2%
5%
7%
10%
12%
15%
17%
20%
2011 2012 2013 2014 2015 Q1 16
AUSTIN INDUSTRIAL
Historical Average = 11%
$5
$6
$7
$8
$9
$10
-100
100
300
500
2010 2011 2012 2013 2014 2015 Q1 16
Net Absorption, SF (thousands) Asking Rent, $ PSF
Industrial Snapshot Q1 2016Austin
MARKETBEAT
Oxford Commercial is an independently owned and operated member of the Cushman & Wakefield Alliance. Through the Alliance, Oxford clients benefit from seamless access to the global Cushman & Wakefield (C&W) platform. Cushman & Wakefield advises and represents clients on all aspects of property occupancy and investment. The firm’s 43,000 employees in more than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the world. It offers a complete range of services to its occupier and investor clients for all property types, including leasing, sales and acquisitions, equity, debt and structured finance, corporate finance and investment banking, appraisal, consulting, corporate services, and property, facilities, project and risk management. For further information, please visit our website, www.oxfordcommercial.com or follow @OxfordCRE.
Copyright © 2016 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sourcesconsidered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to itsaccuracy. Alliance firms are independently owned and operated.
Key Lease Transactions Q1 2016
PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET
Heritage Crossing 126,782 LKQ Corporation Lease Round Rock
NorhTech 6 111,300 Unknown Lease Northwest
Heritage Crossing 1 95,672 Goodwill Industries Lease Round Rock
Harris Ridge 5 54,460 Sheri Hill Lease Northeast
Key Sales Transactions Q1 2016
PROPERTY SF SELLER/BUYER PRICE / $PSF SUBMARKET
Parmer Business Park 257,000 RREEF/Eurus Capital Partners Undisclosed Far Northwest
Stock Building Supply 241,564 Capital Comm Invest./JLM Financial Undisclosed Southeast
Bergstrom Technology Center 204,346 DivcoWest/Capital Comm Invest. Undisclosed Southeast
Wall St & Burleson Rd Portfolio 163,063 Industry Capital/Saber Realty Partners $13,550,000 / $83 Southeast/Northeast
Cushman & Wakefield / OxfordCommercial200 W. Cesar Chavez StreetSuite 250www.oxfordcommercial.com
For more information, contact:Jeff Graves, Director of GIS and ResearchTel: +1 512 474 [email protected]
SUBMARKET INVENTORY OVERALLVACANCY RATE
YTD NET OVERALL ABSORPTION UNDER CNSTR
DIRECT WEIGHTED AVG.
NET RENT(MF)
DIRECT WEIGHTED AVG.
NET RENT(OS)
DIRECT WEIGHTED AVG.
NET RENT(W/D)
Central 18,900 0% 0 0 $7.80 N/A N/A
Far Northwest 4,480,259 1.9% (21,199) 0 N/A $15.01 $5.28
North Central 9,892,596 5.7% 49,850 0 N/A $12.87 $7.80
Northeast 12,043,527 15.9% (56,775) 96,000 N/A $9.30 $6.60
Northwest 4,139,606 5.2% 5,981 0 N/A $9.12 $6.00
South Central 1,434,649 7.0% 15,052 0 N/A $17.73 $8.28
Southeast 9,565,951 5.9% 134,303 193,600 N/A $11.65 $8.33
Southwest 272,660 2.8% 23,383 0 N/A $11.73 N/A
Round Rock 3,606,469 8.4% 21,071 80,340 N/A $7.56 $6.24
AUSTIN TOTALS 45,454,617 6.8% 171,666 369,940 $7.80 $11.76 $6.84*Rental rates reflect asking $psf/year MF = Manufacturing OS = Office Service/Flex W/D = Warehouse/Distribution
Industrial Snapshot Q4 2015Austin
MARKETBEAT
Economic Indicators
Market Indicators (Overall, All Product Types)
Overall Net Absorption/Asking Rent
4Q TRAILING AVERAGE
Overall Vacancy
Q4 14 Q4 1512-Month
Forecast
Austin Employment 927k 955k
Austin Unemployment 3.7% 3.1%
U.S. Unemployment 5.7% 5.0%
2014 201512-Month
Forecast
Vacancy 8.7% 6.1%
Net Absorption (sf) 1.1M 1.8M
Under Construction (sf) 329k 347k
Average Asking Rent* $9.12 $9.94
*Rental rates reflect gross asking $psf/year
EconomyThe fourth quarter of 2015 marked another consecutive quarter
that the Austin unemployment rate ranked as one of the lowest
amongst the 50 largest metropolitan areas, coming in at 3.1%
(as of December 2015). The local Austin unemployment rate also
remains ahead of both the Texas rate of 4.6% and the national
rate of 5.0%. Additionally, the Austin MSA continues to be a
major job producer, adding more than 32,000 jobs to the area
between October 2014 to October 2015 (U.S. Bureau of Labor
Statistics). Austin continues to be at the top of the list of fastest
growing cities. According to Forbes.com, Austin ranks number
one in net in-migration population out of the 53 largest U.S.
metro areas. This influx of new residents to the Austin area is
due in large part to low unemployment rates and strong job
growth, indicating an extremely healthy economy.
Market OverviewThe Austin Industrial market recorded 385,165 square feet (sf) of
overall absorption during Q4 2015. This number brought the
2015 year-to-date total of overall absorption to more than 1.7
million sf. The Northeast (NE) submarket experienced the
strongest amount of absorption, recording 139,063 sf of overall
absorption. Vacancy rates in the Austin market continued their
decline, as the overall vacancy decreased to 6.1% compared to
6.9% in Q3 2015. Continued strong absorption rates coupled
with low vacancy rates continue to raise average asking net
rental rates. The average net rental rate for all property types
rose to $9.94 per square foot (psf) for Q4 2015, an increase of
$0.10 psf from Q3 2015. Additionally, office service property
types reported a significant increase, jumping $0.24 psf from the
previous quarter to an average rental rate of $11.40 psf.
OutlookThe Austin market continues to sizzle as more and more
companies move or expand into the area. Demand for qualified
employees has led to a surge in population, record low
unemployment rates and increased job growth across the greater
Austin region. As population grows, need for both warehouse/
distribution and flex space will increase. Additionally, office
service “flex space” continues to be a go-to, cost effective
alternative for traditional office users looking to expand. This
demand will most likely continue to push these rates even higher
until developers catch up with demand and increase inventory. In
the meantime, we can expect to see higher rental rates and
lower vacancy rates across most Austin submarkets.2%
5%
7%
10%
12%
15%
17%
20%
2011 2012 2013 2014 2015
AUSTIN INDUSTRIAL
Historical Average = 12%
$5
$6
$7
$8
$9
$10
-100
100
300
500
2010 2011 2012 2013 2014 2015
Net Absorption, SF (thousands) Asking Rent, $ PSF
Industrial Snapshot Q4 2015Austin
MARKETBEAT
Oxford Commercial is an independently owned and operated member of the Cushman & Wakefield Alliance. Through the Alliance, Oxford
clients benefit from seamless access to the global Cushman & Wakefield (C&W) platform. Cushman & Wakefield advises and represents
clients on all aspects of property occupancy and investment. The firm’s 43,000 employees in more than 60 countries provide deep local and
global insights that create significant value for occupiers and investors around the world. It offers a complete range of services to its occupier
and investor clients for all property types, including leasing, sales and acquisitions, equity, debt and structured finance, corporate finance and
investment banking, appraisal, consulting, corporate services, and property, facilities, project and risk management. For further information,
please visit our website, www.oxfordcommercial.com or follow @OxfordCRE.
Copyright © 2016 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources
considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its
accuracy. Alliance firms are independently owned and operated.
Key Lease Transactions 2015
PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET
Braker 12 126,750 Active Power Renewal North Central
Expo 8 122,400 Novitex Lease Southeast
9800 Metric 117,000 Image Microsystems Renewal Northwest
Tuscany 5 107,933 Ginny’s Copying Service Renewal Northeast
Key Sales Transactions 2015
PROPERTY SF SELLER/BUYER PRICE / $PSF SUBMARKET
One83 Office Park 935,255 JLM Financial Investments/ IDM Capital Undisclosed Northeast
Northpointe Trade Center 450,015 Exeter/ADIA JV PSP Investments $20,178,533 / $45 Northeast
2105 Gracy Farms Lane 384,174 Cornerstone Real Estate Advisors $51,000,000 / $133 Northeast
15833 Long Vista Drive 372,606 JV Global Logistic Properties $27,849,878 / $75 Northeast
Cushman & Wakefield / Oxford
Commercial
200 W. Cesar Chavez Street
Suite 250
www.oxfordcommercial.com
For more information, contact:
Jeff Graves, Director of GIS and
Research
Tel: +1 512 474 2400
SUBMARKET TOTAL BLDGS INVENTORYOVERALL
VACANCY RATE
YTD NET
OVERALL
ABSORPTION
UNDER CNSTR
DIRECT WEIGHTED
AVG.
NET RENT(MF)
DIRECT
WEIGHTED AVG.
NET RENT(OS)
DIRECT WEIGHTED
AVG.
NET RENT(W/D)
Central 1 18,900 0.0% 0 0 N/A N/A N/A
Far Northwest 55 4,480,259 0.7% 209,893 0 N/A $9.00 $5.16
North Central 151 9,635,628 2.8% 241,699 0 N/A $13.56 N/A
Northeast 163 12,096,327 12.6% 449,702 153,000 N/A $11.28 $6.36
Northwest 63 4,139,606 5.9% 36,070 0 N/A $9.24 N/A
South Central 42 1,434,649 3.9% (9,782) 0 N/A $16.56 $7.20
Southeast 120 9,484,835 5.6% 533,976 193,600 N/A $12.00 $8.64
Southwest 8 272,660 16.5% (9,500) 0 N/A $13.56 N/A
Round Rock 60 3,606,469 6.7% 319,199 0 N/A $9.12 $6.00
AUSTIN TOTALS 663 45,169,333 6.1% 1,771,257 346,600 - $11.40 $6.48
*Rental rates reflect asking $psf/year MF = Manufacturing OS = Office Service/Flex W/D = Warehouse/Distribution
Industrial Snapshot Q3 2015AUSTIN
MARKETBEAT
Economic Indicators
Market Indicators
Net Absorption/Asking Rent
4Q TRAILING AVERAGE
Overall Vacancy
www.cushmanwakefield.com
EconomyThe Austin MSA continues to lead both state and national
averages in unemployment levels. For the third quarter of 2015
the local unemployment rate was recorded at 3.2%, lower than
both the Texas rate of 4.4% and the national unemployment rate
of 5.1%. Additionally Austin continues to rank first among the
largest fifty metropolitan areas in the U.S. with the lowest
unemployment rates. In addition, observed job creation
continued to occur as 16,275 jobs were created through the city
from August 2015 to August 2015. The city’s ability to both
maintain low unemployment rates in addition to effectively
generate jobs indicate a strong and healthy local economy.
Market OverviewThe Austin industrial market experienced 535,220 square feet
(sf) of positive absorption during the third quarter of 2015. This
quarter marked the tenth consecutive quarter of positive
absorption in the Austin industrial market, dating back to Q2
2013. The Round Rock (RR) submarket experienced the highest
absorption totals as 186,412 sf was absorbed during Q3. Strong
absorption figures across the entire market led to the continued
drop of overall vacancy. The overall vacancy rate for the third
quarter was recorded at 6.9%, down 1.7 percentage point from
the 8.6% vacancy rate recorded in the second quarter. Low
vacancy and strong absorption figures have contributed to an
expected rise in rental rates. The average direct rental rate
recorded for all property types rose to $9.84 per square foot
(psf), up $0.84 psf from the recorded rent during the second
quarter. Additionally, the average rental rate for office service
property types increased to $11.16 psf, up from $11.04 psf
during the second quarter.
OutlookAs vacancy continues to tighten throughout the Austin industrial
market, it is highly likely that rents across all property types will
approach record highs rates. In particular, there is a high
probability that office service rates maintain their sharp increase.
This is due to the fact that they both provide a more cost
effective type of space for traditional office tenants and that there
is little inventory of this product type in many development
pipelines. With these spaces at such a premium, it is possible
many developments will shift towards the addition of more office
service options to the industrial market as a whole.
Q3 14 Q3 1512-Month
Forecast
Austin Employment 919k 946k
Austin Unemployment 4.0% 3.2%
U.S. Unemployment 6.1% 5.1%
Q3 14 Q3 1512-Month
Forecast
Overall Vacancy 9.4% 6.9%
Net Absorption 16k 535k
Under Construction 439k 392k
Overall Average Asking
Rent$9.00 $9.84
AUSTIN INDUSTRIAL
$5
$6
$7
$8
$9
$10
-100,000
100,000
300,000
500,000
2010 2011 2012 2013 2014 Q3 2015
Net Absorption, SF Asking Rent, $ PSF
2%
6%
10%
14%
18%
22%
2010 2011 2012 2013 2014 Q32015
Historical Average = 13%
Industrial Snapshot Q3 2015AUSTIN
MARKETBEAT
www.cushmanwakefield.comCopyright © 2015 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from mult iple sources considered
to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy. Alliance
firms are independently owned and operated.
About Cushman & WakefieldCushman & Wakefield is a global leader in commercial real estate services, helping clients transform the way
people work, shop, and live. The firm’s 43,000 employees in more than 60 countries provide deep local and
global insights that create significant value for occupiers and investors around the world. Cushman & Wakefield
is among the largest commercial real estate services firms in the world with revenues of $5 billion across core
services of agency leasing, asset services, capital markets, facilities services (branded C&W Services), global
occupier services, investment management (branded DTZ Investors), tenant representation and valuations &
advisory. To learn more, visit www.cushmanwakefield.com or follow @Cushwake on Twitter.
SUBMARKET TOTAL BLDGS INVENTORYOVERALL
VACANCY RATE
YTD NET OVERALL
ABSORPTION
UNDER
CNSTR
DIRECT WEIGHTED
AVG. NET RENT(MF)
DIRECT WEIGHTED
AVG. NET RENT(OS)
DIRECT WEIGHTED
AVG. NET RENT(W/D)
Central 2 18,900 0.0% 0 0 N/A N/A N/A
Far Northwest 55 4,480,259 0.1% 213,396 0 N/A $8.04 N/A
North Central 150 9,725,621 3.7% 161,996 0 $5.40 $13.44 $5.64
Northeast 163 12,096,327 13.6% 310,639 153,000 N/A $11.28 $6.24
Northwest 63 4,139,606 6.5% 12,821 0 N/A $9.12 N/A
South Central 42 1,434,649 3.9% (5,654) 0 N/A $16.56 $7.20
Southeast 120 9,394,842 4.5% 424,845 239,205 N/A $10.80 $7.80
Southwest 8 272,660 17.6% (12,500) 0 N/A $13.44 N/A
Round Rock 61 3,659,314 6.9% 280,549 0 N/A $9.48 $6.00
AUSTIN TOTALS 664 45,222,178 6.9% 1,386,092 392,205 $5.40 $11.16 $6.36
*Rental rates reflect asking $psf/year MF = Manufacturing OS = Office Service/Flex W/D = Warehouse/Distribution
Key Lease Transactions Q3 2015
PROPERTY SF TENANT PROPERTY TYPE SUBMARKET
Vista Park 57,750 Kodiak Assembly Solutions Warehouse/Distribution Round Rock
Prologis Corridor Park 7 57,600 Capitol Beverage Warehouse/Distribution Round Rock
Excel Filter Inc. 57,600 Expo 12 Warehouse/Distribution Southeast
The Liquidation Channel 55,000 Corridor Park Pointe E Office Service/Flex Round Rock
Key Sales Transactions Q3 2015
PROPERTY SF SELLER/BUYER PROPERTY TYPE PRICE SUBMARKET
One83 Office Park 935,255JLM Financial Investments/
IDM CapitalOffice Service/Flex Undisclosed Northeast
301 West Howard Lane 292,000 Karlin Real Estate/Casa Marco Warehouse/Distribution Undisclosed Northeast
Director NameTitle
Address Line 1
Address Line 2
Tel: +0 000 000 0000
Fax: +0 000 000 0000
Cushman & Wakefield | Oxford Commercial
200 W. Cesar Chavez St. Suite 250
Austin, TX 78701
www.cushmanwakefield.com/knowledge
For more information, contact:
Richard Whiteley, Research Analyst
+1 (512) 474 2400
The market terms and definitions in this report are based on NAIOP standards. No
warranty or representation, express or implied, is made to the accuracy or completeness
of the information contained herein, and same is submitted subject to errors, omissions,
change of price, rental or other conditions, withdrawal without notice, and to any special
listing conditions imposed by our principals.
© 2015 Cushman & Wakefield, Inc. All rights reserved.
1
ECONOMIC OVERVIEW
The Austin MSA continues to lead both state
and national averages in unemployment levels.
For the second quarter, the local
unemployment level was recorded at 3.1%,
ahead of both the Texas and U.S.
unemployment rates of 4.1% and 5.3% respectively (U.S. Bureau of
Labour and Statistics). These low unemployment numbers are
especially impressive, when considering that 32,000 jobs were created
from May 2014 to May 2015. Austin has warranted much national
attention for the ability to maintain low unemployment rates amongst
the city’s current population boom. A large portion of the job growth
and generation can be attributed to the rapidly expanding and
burgeoning technology sector, placing Austin as a new powerhouse
on the national “tech” landscape.
VACANCY RATES BEGIN TO DECLINE
Austin experienced 558,202 square feet (sf) of direct absorption
across all industrial property types during Q2 2015. Q2 2015 and
marked the ninth consecutive quarter of positive direct absorption
for the total market, dating back to Q2 2013. The Southeast (SE)
submarket posted the highest levels of absorption for Q2 2015,
recording 365,512 sf of absorption. The Northeast (NE) submarket
also reported a strong quarter of activity experiencing 253,996 sf of
direct absorption. The strong absorption activity in the NE and SE
submarkets contributed to a drop in overall vacancy during this time.
The overall vacancy rate dropped to 8.6% from 9.6% recorded last
quarter. Similarly the largest industrial submarkets, the SE and NE,
reported low overall vacancy rates of 4.7% and 14.8%, respectively.
FLEX/ R&D RATES CONTINUE TO RISE
The average direct asking rental rate recorded for all industrial
property types was $9.36 per square foot (psf) for Q2 2015, 4.0%
higher than the average rental rate of $9.00 psf in Q2 2014. Rental
rates for Flex/R&D properties experienced an increase on a quarter-
to-quarter basis, climbing to $11.04 psf, $0.12 psf higher than the Q2
2015 of $10.92 psf. High increases in Flex/ R&D rates were observed
in the South Central (SC) submarket, and once again in the North
Central (NC) submarket, which has experienced consistent quarterly
escalations in psf rent averages.
OUTLOOK
The industrial market continues to operate in optimal conditions
throughout the Austin MSA. Many landlords continue to report both
low vacancies in, Flex/ R&D and Warehouse/ Distribution property
types. Recent construction has remained focused on generating large
vacant blocks for users needing traditional Warehouse/ Distribution
spaces. However the recent trend of extremely high demand for Flex/
R&D properties, combined with the inflated rates these spaces are
quoting, create a landscape in which these property types might yield
the greatest returns for both developers and landlords. Such
situations could lead to many groups kicking off new construction for
Flex/ R&D projects. Additionally, the case and need for these types of
“value-office” properties is especially strong as a result of an office
market which continues to tighten in vacancy and post historically
high rental rates. The existing circumstances will likely contribute to
an evolving industrial real estate market in the city as whole.
STATS ON THE GO
Q2 2014 Q2 2015
Y-O-Y CHANGE
12 MONTH FORECAST
Overall Vacancy 9.8% 8.6% -1.2 pp
Direct Asking Rents (psf/yr) $9.00 $9.36 4.0%
YTD Direct Absorption (sf) 408,839 757,749 85.3%
OVERALL RENTAL VS. OVERALL RATES
NEW SUPPLY
0.0%
5.0%
10.0%
15.0%
20.0%
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
2011 2012 2013 2014 Q2 2015
psf
/yr
OVERALL RENT OVERALL VACANCY
0
172,8
00
263,1
55
452,3
41
89,6
00
0
250,000
500,000
2011 2012 2013 2014 YTD 2015
SF
Q2 2015 AUSTIN, TX
INDUSTRIAL SNAPSHOT
MARKETBEAT
A Cushman & Wakefield Research Publication
Cushman & Wakefield | Oxford Commercial
200 W. Cesar Chavez St. Suite 250
Austin, TX 78701
www.cushmanwakefield.com/knowledge
For more information, contact:
Richard Whiteley, Research Analyst
+1 (512) 474 2400
The market terms and definitions in this report are based on NAIOP standards. No
warranty or representation, express or implied, is made to the accuracy or completeness
of the information contained herein, and same is submitted subject to errors, omissions,
change of price, rental or other conditions, withdrawal without notice, and to any special
listing conditions imposed by our principals.
© 2015 Cushman & Wakefield, Inc. All rights reserved.
2
AUSTIN, TX
SUBMARKET INVENTORY OVERALL VACANCY
RATE
YTD USER SALES
ACTIVITY
UNDER CONSTRUCTION
YTD CONSTRUCTION COMPLETIONS
YTD DIRECT NET
ABSORPTION
YTD OVERALL NET ABSORPTION
DIRECT WEIGHTED
AVERAGE NET
RENTAL RATE
MF R/D W/D
Central 18,900 0.0% 0 0 0 0 0 N/A N/A N/A
Far Northwest 4,480,259 4.4% 0 0 0 55,227 55,227 N/A $12.12 $5.16
North Central 9,725,621 6.0% 0 0 0 55,707 55,707 $5.40 $12.48 $6.36
Northeast
Northwest
South Central
Southeast
Southwest
Round Rock
12,096,327
4,139,606
1,434,649
9,223,111
272,660
3,578,300
14.8%
7.0%
4.0%
4.7%
16.2%
13.1%
302,604
0
0
0
0
0
153,600
0
0
239,205
19,150
0
89,600
0
0
0
0
0
218,178
(2,971)
(7,378)
353,599
(8,750)
94,137
247,178
(2,971)
(7,378)
416,922
(8,750)
94,137
N/A
N/A
N/A
N/A
N/A
N/A
$11.16
$9.36
$16.56
$10.32
$13.32
$8.76
$6.24
N/A
$7.20
$7.80
N/A
$6.12
TOTALS 44,969,433 8.6% 302,604 411,955 89.600 757,749 850,872 $5.40 $11.04 $6.24
* RENTAL RATES REFLECT ASKING $PSF/YEAR MF = MANUFACTURING R/D = RESEARCH/DEVELOPMENT W/D = WAREHOUSE/DISTRIBUTION
MARKET HIGHLIGHTS
SIGNIFICANT Q2 2015 LEASE TRANSACTIONS SUBMARKET TENANT PROPERTY TYPE SQUARE FEET
Expo 8 SE Novatex Warehouse/Distribution 122,400
Expo 11 SE Kendra Scott Design Manufacturing 64,800
Corridor Park Pointe E* RR Flight Director Flex/R&D 61,766
SIGNIFICANT Q2 2015 SALE TRANSACTIONS SUBMARKET BUYER PURCHASE PRICE / $PSF SQUARE FEET
2105 Gracy Farms Lane NC Cornersone RE Advisers Undisclosed 381,062
13301 McCallen Pass NE General Motors Undisclosed 302,604
3912-3920 Gattis School Road RR Longview Equity Partners Undisclosed 160,971
SIGNIFICANT Q2 2015 CONSTRUCTION COMPLETIONS SUBMARKET MAJOR TENANT COMPLETION DATE BUILDING SQUARE FEET
(% LEASED)
Tuscany 9 NE Speculative Q2 2015 89,600 (0%)
SIGNIFICANT PROJECTS UNDER CONSTRUCTION SUBMARKET MAJOR TENANT COMPLETION DATE BUILDING SQUARE FEET
(% LEASED)
Harris Ridge Business Center- Building 5 NE Speculative Q1 2016 153,000 (0%)
Expo Center 11 SE Kendra Scott Design Q4 2015 130,002 (50%)
Expo Center 10 SE Speculative Q4 2015 109,203 (0%)
*RENEWAL- NOT INCLUDED IN LEASING STATISTICS
Cushman & Wakefield | Oxford Commercial
200 W. Cesar Chavez St. Suite 250
Austin, TX 78701
www.cushmanwakefield.com/knowledge
For more information, contact:
Richard Whiteley, Research Analyst
+1 (512) 474 2400
The market terms and definitions in this report are based on NAIOP standards. No
warranty or representation, express or implied, is made to the accuracy or completeness
of the information contained herein, and same is submitted subject to errors, omissions,
change of price, rental or other conditions, withdrawal without notice, and to any special
listing conditions imposed by our principals.
© 2015 Cushman & Wakefield, Inc. All rights reserved.
1
ECONOMIC OVERVIEW
The Austin MSA continues to lead both state
and national averages in unemployment levels.
For the first quarter 2015, the local
unemployment level was recorded at 3.4%,
lower than both the Texas unemployment rate
of 4.3% and the U.S. unemployment rate of 5.8% (U.S. Bureau of
Labour and Statistics). Job creation also remained strong during Q1
2015, as 8,600 jobs were generated from January 2015- February
2015 alone. Austin has warranted much national attention for the
ability to maintain low unemployment rates amongst the current
population boom. Much of this job growth and high employment rate
can be attributed to city’s rapidly expanding technology sector.
VACANCY RATES INCREASE SLIGHTLY
Austin experienced 199,547 square feet (sf) of direct absorption
across all industrial property types during Q1 2015. Q1 2015 marked
the eighth consecutive quarter of positive direct absorption for the
total market, dating back to Q2 2013. The Round Rock (RR)
submarket posted the highest levels of absorption for Q1 2015,
recording 85,241 sf of absorption. The North Central (NC) and
Northwest (NW) submarkets also reported strong quarters of
activity 69,509 sf (NC submarket) and 59,053 sf respectively of direct
absorption. However in spite of the positive absorption observed in
some submarkets such as the NE, SE, and SW, all experienced
negative direct absorption for the quarter. This negative absorption
coupled with construction deliveries in the third and fourth quarters
of 2014 contributed to a slight rise in the vacancy rate for Q1 2015.
The Q1 2015 overall vacancy rate was recorded at 9.6%, 0.9
percentage point higher than the Q4 2014 rate of 8.7%.
RENTAL RATES CONTINUE STEADY CLIMB
The average direct rental rate recorded for all industrial property
types was $9.36 per square foot (psf) for Q1 2015, 4.0% higher than
the average rental rate of $9.00 psf in Q1 2014. Rental rates for
Flex/R&D properties remained consistent on a quarter-to-quarter
basis. However the Q1 2015 average rate for Flex/R&D property
types of $10.92 psf is 3.4% higher than the Q1 2014 average for Flex/
R&D properties of $10.56 psf. The highest increases in Flex/R&D
rates on both a quarter-over-quarter and year-over-year basis were
observed in the North Central submarket.
OUTLOOK
Based upon the continued hikes in rental rates for Flex/R&D
properties in the overall Austin market, it is clear that landlords are
responding to an ever increasing demand for these spaces. This
demand is driven both by them serving as more economical and
fiscally responsible alternatives to traditional office space and that
many serve as call and data centres to support the burgeoning
technology sector dominating the Austin economy. As the technology
presence continues to grow and flourish throughout the city, it is
highly unlikely that rents and the subsequent demand for Flex/R&D
properties will diminish. However, this focus on Flex/R&D is not to
discredit a large amount of activity in Warehouse/Distribution
properties, as many companies renewed large blocks of space in their
existing homes (Image Microsystems, Life Technologies). Such activity
can speak to many companies’ desires to maintain their existing
presence in the city; as Austin continues to strengthen its presence
on the national scene.
STATS ON THE GO
Q1 2014 Q1 2015
Y-O-Y CHANGE
12 MONTH FORECAST
Overall Vacancy 9.4% 9.6% 0.2 pp
Direct Asking Rents (psf/yr) $9.00 $9.36 4.0%
YTD Direct Absorption (sf) 348,939 199,547 -42.8%
OVERALL RENTAL VS. OVERALL RATES
NEW SUPPLY
0.0%
5.0%
10.0%
15.0%
20.0%
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
2011 2012 2013 2014 Q1 2015
psf
/yr
OVERALL RENT OVERALL VACANCY
0 172,8
00
263,1
55
452,3
41
347,9
55
0
250,000
500,000
2011 2012 2013 2014 YTD 2015
SF
Q1 2015 AUSTIN, TX
INDUSTRIAL SNAPSHOT MARKETBEAT
A Cushman & Wakefield Research Publication
Cushman & Wakefield | Oxford Commercial
200 W. Cesar Chavez St. Suite 250
Austin, TX 78701
www.cushmanwakefield.com/knowledge
For more information, contact:
Richard Whiteley, Research Analyst
+1 (512) 474 2400
The market terms and definitions in this report are based on NAIOP standards. No
warranty or representation, express or implied, is made to the accuracy or completeness
of the information contained herein, and same is submitted subject to errors, omissions,
change of price, rental or other conditions, withdrawal without notice, and to any special
listing conditions imposed by our principals.
© 2015 Cushman & Wakefield, Inc. All rights reserved.
2
AUSTIN, TX
SUBMARKET INVENTORY OVERALL VACANCY
RATE
YTD USER SALES
ACTIVITY
UNDER CONSTRUCTION
YTD CONSTRUCTION COMPLETIONS
YTD DIRECT NET
ABSORPTION
YTD OVERALL NET ABSORPTION
DIRECT WEIGHTED
AVERAGE NET
RENTAL RATE
MF R/D W/D
Central 18,900 0.0% 0 0 0 0 0 N/A N/A N/A
Far Northwest 4,480,259 4.5% 0 0 0 47,499 47,499 N/A $11.76 $5.16
North Central 9,725,621 5.9% 0 0 0 69,509 69,509 $5.40 $12.36 $6.48
Northeast
Northwest
South Central
Southeast
Southwest
Round Rock
12,006,106
4,139,606
1,434,649
9,223,111
272,660
3,578,300
16.3%
5.6%
3.6%
8.8%
17.6%
13.4%
0
0
0
0
0
0
89,600
0
0
239,205
19,150
0
0
0
0
0
0
0
(35,818)
59,053
(1,724)
(11,713)
(12,500)
85,241
(35,818)
59,053
(1,724)
44,987
(12,500)
85,241
N/A
N/A
N/A
N/A
N/A
N/A
$11.04
$9.24
$16.56
$10.68
$13.44
$8.88
$6.00
$N/A
$7.20
$7.08
N/A
$6.24
TOTALS 45,050,853 9.6% 0 347,955 0 199,547 256,247 $5.40 $10.92 $6.24
* RENTAL RATES REFLECT ASKING $PSF/YEAR MF = MANUFACTURING R/D = RESEARCH/DEVELOPMENT W/D = WAREHOUSE/DISTRIBUTION
MARKET HIGHLIGHTS
SIGNIFICANT Q1 2015 LEASE TRANSACTIONS SUBMARKET TENANT PROPERTY TYPE SQUARE FEET
Metric Center 4* NC Image Microsystems Warehouse/Distribution 117,000
Southpark Commerce Center I* SE Life Technologies Warehouse/Distribution 103,645
Southpark F* SE Ambion Diagnostics Warehouse/Distribution 67,645
SIGNIFICANT Q1 2015 SALE TRANSACTIONS SUBMARKET BUYER PURCHASE PRICE / $PSF SQUARE FEET
15833 Long Vista Drive RR JV Global Logistic Properties $27,849,878 / $75 372,606
12555 Harris Branch Parkway NE JV Global Logistic Properties $21,076,297 / $57 371,200
7100 Metropolis Drive SE CyrusOne Undisclosed 172,000
SIGNIFICANT Q1 2015 CONSTRUCTION COMPLETIONS SUBMARKET MAJOR TENANT COMPLETION DATE BUILDING SQUARE FEET
(% LEASED)
N/A
SIGNIFICANT PROJECTS UNDER CONSTRUCTION SUBMARKET MAJOR TENANT COMPLETION DATE BUILDING SQUARE FEET
(% LEASED)
Expo Center II SE Speculative Q4 2015 130,002 (0%)
Expo Center 10 SE Speculative Q4 2015 109,203 (0%)
Tuscany 9 NE Speculative Q2 2015 89,600 (0%)
* RENEWAL - NOT INCLUDED IN LEASING ACTIVITY STATISTICS
Cushman & Wakefield | Oxford Commercial
200 W. Cesar Chavez St. Suite 250
Austin, TX 78701
www.cushmanwakefield.com/knowledge
For more information, contact:
Greg Bacus, Research Director
+1 (512) 474 2400
The market terms and definitions in this report are based on NAIOP standards. No
warranty or representation, express or implied, is made to the accuracy or completeness
of the information contained herein, and same is submitted subject to errors, omissions,
change of price, rental or other conditions, withdrawal without notice, and to any special
listing conditions imposed by our principals.
© 2015 Cushman & Wakefield, Inc. All rights reserved.
1
ECONOMIC OVERVIEW
The Austin area continues to lead both state
and national averages for many economic
indicators including: a 3.9% unemployment rate
for the Austin MSA and generating 28,600 jobs
from November 2013 to November 2014 (U.S.
Bureau of Labor and Statistics). The jobs generated for the past year
place Austin 9th among major U.S. cities in job production. Of those
new jobs, 1,000 of these new jobs can be attributed to the
manufacturing industry. Advanced manufacturing has long been a
constant facet of the Austin business climate, and demand for the
products provided by companies such as Freescale Semiconductors,
National Instruments, and IBM will continue to drive and support the
city’s expanding economy.
VACANCY RATES CONTINUE TO DECLINE
Austin experienced 497,725 square feet (sf) of direct absorption
across all industrial property types during Q4 2014, and 1.1 million sf
of absorption for all of 2014. Q4 2014 marked the seventh
consecutive quarter of positive direct absorption for the total market,
dating back to Q2 2013. The Northeast submarket experienced the
most activity during Q4 2014 with 139,014 sf absorbed. However, the
Southeast submarket posted the highest year-end total across all
submarkets, absorbing 356,132 sf for the year. The past quarter’s
absorption coupled with historic strong positive absorption numbers
continue to lower the overall vacancy rate, to 8.7% at the end of Q4
2014, 1.0 percentage point lower than the overall vacancy rate of
9.7% seen at the end of Q4 2013. The Southeast submarket overall
vacancy rate continues to tighten on a quarter-to-quarter basis from
11.2% seen in Q3 2014, to a rate of 7.0% in Q4 2014. Slight decreases
were also observed in the Far Northwest and Southwest submarkets,
particularly with tenants occupying Flex/R&D spaces.
RENTAL RATES STEADILY CLIMB
The average direct rental rate recorded for all industrial property
types was $9.12 per square foot (psf) for Q4 2014, 1.3% higher than
the average rental rate of $9.00 psf in Q4 2013. Average rental rates
for Flex/R&D property types continue to steadily rise, increasing to
an average rate of $10.92 psf for Q4 2014, higher than the Q3 2014
average of $10.68 psf, and 4.5% higher than the Q4 2013 average of
$10.44 psf. Additionally, on a year-to-year basis the average rental
rate of Warehouse/ Distribution property types increased 6.19%
from $5.64 psf in Q4 2013, to $6.00 psf in Q4 2014.
OUTLOOK
The Austin office market continues to consistently experience high
levels of absorption decreasing overall vacancy and driving higher
rental rates. As a result, many tenants and users continue to seek
more affordable options for their office needs, turning them to
Flex/R&D “value” office alternatives. This trend has been quite
apparent in previous quarters and continued throughout Q4 2014.
The increased demand for such Flex/R&D properties has resulted in
an observable rise in rental rates for these property types. In the Far
Northwest and Southwest submarkets, the increase in rates is most
dramatics as these areas have experienced high levels of office
absorption. It is likely that as the overall vacancy for office products
continues to tighten and rental rates continue to rise, demand for
cheaper alternative in Flex/R&D “value” office options will increase,
as will the subsequent rental rates for these industrial property types.
STATS ON THE GO
Q4 2013 Q4 2014
Y-O-Y CHANGE
12 MONTH FORECAST
Overall Vacancy 9.7% 8.7% -1.0pp
Direct Asking Rents (psf/yr) $9.00 $9.12 1.3%
YTD Direct Absorption (sf) 1,234,562 1,061,010 14.1%
DIRECT RENTAL VS. VACANCY RATES
NEW SUPPLY
0.0%
5.0%
10.0%
15.0%
20.0%
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
2010 2011 2012 2013 Q4 2014
psf
/yr
DIRECT NET RENTAL RATE DIRECT VACANCY RATE
0
172,8
00
263,1
55
452,3
41
328,8
05
0
200,000
400,000
600,000
2011 2012 2013 2014 2015
NEW SUPPLY
Q4 2014 AUSTIN, TX
INDUSTRIAL SNAPSHOT MARKETBEAT
A Cushman & Wakefield Research Publication
Cushman & Wakefield | Oxford Commercial
200 W. Cesar Chavez St. Suite 250
Austin, TX 78701
www.cushmanwakefield.com/knowledge
For more information, contact:
Greg Bacus, Research Director
+1 (512) 474 2400
The market terms and definitions in this report are based on NAIOP standards. No
warranty or representation, express or implied, is made to the accuracy or completeness
of the information contained herein, and same is submitted subject to errors, omissions,
change of price, rental or other conditions, withdrawal without notice, and to any special
listing conditions imposed by our principals.
© 2015 Cushman & Wakefield, Inc. All rights reserved.
2
AUSTIN, TX
SUBMARKET INVENTORY OVERALL VACANCY
RATE
YTD LEASING ACTIVITY
YTD USER SALES
ACTIVITY
UNDER CONSTRUCTION
YTD CONSTRUCTION COMPLETIONS
YTD DIRECT NET
ABSORPTION
YTD OVERALL NET ABSORPTION
DIRECT WEIGHTED
AVERAGE NET
RENTAL RATE
HT MF R/D W/D
Central 18,900 0.0% N/A 0 0 0 0 0 N/A N/A N/A N/A
Far Northwest 4,480,259 4.4% N/A 0 0 0 55,226 55,226 N/A N/A $11.16 $5.16
North Central 9,725,621 5.6% N/A 0 0 0 48,755 (68,245) N/A $5.40 $11.04 $6.36
Northeast
Northwest
South Central
Southeast
Southwest
Round Rock
12,132,516
4,200,806
1,434,649
9,223,111
272,660
3,554,184
14.4%
6.2%
3.5%
7.0%
11.9%
13.0%
N/A
N/A
N/A
N/A
N/A
N/A
0
0
0
0
0
0
89,600
0
0
239,205
0
0
120,000
0
0
0
0
332,341
286,081
186,145
2,393
356,132
(750)
127,628
372,481
186,145
2,393
356,132
(8,250)
138,628
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$5.76
N/A
N/A
$11.28
$7.32
$12.96
$11.76
$13.56
$9.00
$5.76
$5.40
$7.20
$6.60
N/A
$6.00
TOTALS 45,214,437 8.7% N/A 0 328,805 452,341 1,061,010 1,009,751 N/A $5.64 $10.92 $6.00
* RENTAL RATES REFLECT ASKING $PSF/YEAR HT= HIGH TECH MF = MANUFACTURING R/D = RESEARCH/DEVELOPMENT W/D = WAREHOUSE/DISTRIBUTION
MARKET HIGHLIGHTS
SIGNIFICANT 2014 LEASE TRANSACTIONS SUBMARKET TENANT PROPERTY TYPE SQUARE FEET
Pecan 130 Business Park NE FedEx Ground W/D 250,000
Southpark Commerce Center III* SE Calendar Club W/D 202,000
130 Commerce NE Cortec Precision Sheetmetal W/D 150,000
SIGNIFICANT 2014 SALE TRANSACTIONS SUBMARKET BUYER PURCHASE PRICE / $PSF SQUARE FEET
Braker Center NC Westmount Realty Capital Undisclosed 537,000
Southpark Commerce Center IV SE Realty Associates Fund Undisclosed 417,400
15833 Long Vista Drive RR IndCor Properties $20,876,792/ $56 372,606
SIGNIFICANT 2014 CONSTRUCTION
COMPLETIONS
SUBMARKET MAJOR TENANT COMPLETION DATE BUILDING SQUARE FEET
(% LEASED)
Heritage Crossing 1 RR N/A Q1 2014 222,454 (0%)
Pecan 130 Business Park A NE El Lago Q2 2014 120,000 (20.0%)
Heritage Crossing 3 RR Magnetic Clay Q4 2014 109,887 (23.1%)
SIGNIFICANT PROJECTS UNDER
CONSTRUCTION
SUBMARKET MAJOR TENANT COMPLETION DATE BUILDING SQUARE FEET
(% LEASED)
Expo Center II SE N/A Q4 2015 130,002 (0.0%)
Expo Center 10 SE N/A Q4 2015 109,203 (0.0%)
Tuscany 9 NE N/A Q2 2015 89,600 (0.0%)
* RENEWAL - NOT INCLUDED IN LEASING ACTIVITY STATISTICS