This Month’s report highlights the sales and leasing trends for commercial real estate in Austin and surrounding areas.
Sales activity has been robust with 4.6% of downtown Austin inventory turning over in 2021. That equates to a whopping $685M in sales volume. The average capitalization rate was 5.3%. The average sales price has been $567/ft. For smaller buildings under 10,000 sq.ft., sales prices are averaging from $600/ft to $1,100/ft.
The second most active sales markets are in northwest Austin and the Domain area with 7.2 to 7.6 % of the inventory selling in 2021. That’s $640M in sales volume with an average capitalization rate of 5.8%. The average sales price in northwest Austin was $350/ft. and was $450/ft. in the Domain.
Sales in surrounding markets looked like this:
- Hays County averaged $286/ft.
- Georgetown averaged $243/ft.
- Bastrop averaged $215/ft.
- Round Rock/Cedar Park averaged $330/ft.
Leasing activity is back in full swing in central Texas with market rental growth numbers being a key indicator going from 0.5% annual increases to 4% annual increases. Rental rates plateaued in late 2020/early 2021 but have been rising ever since. Rental rates have been highest in downtown Austin with rates in the $35 to $50/ft/yr. nnn range. Suburban rental rates are in the $18/ft/yr. to $36/ft/yr. nnn range. Current trends show occupancy rates dropping to 85.5% suggesting that rental rates will likely remain where they are in the short term with expectations that they will continue to grow as the market adjusts to post-covid economic activity.
Landlords are still offering free rent in the range of one to three months depending on lease term. In regards to annual rental rates (for office space), increases are in the range of 3% annual increase while increases in industrial properties are creeping up to 4% per year due to the tightness in that market segment.
If you would like to know more about your specific market or the value of your commercial property, call me at 512-736-5933 or email me at firstname.lastname@example.org