Austin office market stayed hot in 2014

Jan 23, 2015
Austin American Statesman

Office leasing in Central Texas ended 2014 on a strong note, with top-tier office space 90 percent full on average amid the region’s ongoing job growth, new figures show

Austin-based Oxford Commercial said the final three months of 2014 saw a net gain of more than 290,000 square feet of first-class space leased, bringing the annual total to 1.7 million square feet. The 90 percent occupancy rate was up slightly from 88.9 percent at the close of 2013

Rents for first-class space averaged $32.36 per square foot by year end, down a tad from $32.47 at the end of 2013

The largest leases in 2014 were EZCorp, with 139,500 square feet in Rollingwood Center in Southwest Austin; Bazaarvoice, with 137,615 square feet in Quarry Oaks III in Northwest Austin; and Parsley Energy, with 135,107 square feet in Colorado Tower downtown

At year’s end, 26 office buildings were under construction across the region, which will add 3.2 million square feet of space to market when they open

“Demand for office space has not slowed down and that trend will continue in 2015,” said Karen Judson, a vice president with Transwestern in Austin

This week, Houston-based Patrinely Group said it will develop Aspen Lake Two, a 129,000-square-foot building to be located at Lake Creek Parkway and Pecan Park Boulevard, just east of U.S. 183 (Research Boulevard). Q2banking, which provides electronic banking solutions and is now in a sister building, Aspen Lake One, will lease 54 percent of the new building. It is due to be completed in the fall of 2015. A third Aspen Lake building also is planned

In the market as a whole, “there’s a lot of development in the pipeline but it appears that the demand is matching up well,” said Bart Matheney, a founding principal of Aquila, which will handle leasing for Aspen Lake Two. “We’re continuing to see strong demand, particularly in the Southwest market, and we are seeing good demand in far Northwest Austin

Matheney said the Austin area continues to attract interest from companies looking to grow here as an alternative to more expensive markets, including Silicon Valley

Downtown, two new buildings — Colorado Tower and IBC Bank Plaza — have filled up quickly. Another new building got underway downtown in December, when Trammell Crow Co. and partner Principal Real Estate Investors started on a 29-story office tower to be named after its address, 500 W. 2nd Street. The tower — at the site that once housed the Thomas C. Green Water Treatment Plant — will have nearly 490,000 square feet of space, along with street-level retail and restaurant space

Also downtown, Dallas-based Lincoln Property Co. said it is seeing healthy interest in an 18-story office tower it started construction on in October at Fifth and Colorado streets. The building is expected to open in early 2016 with 179,000 square feet of new office space. Goldman Sachs is Lincoln’s financial partner in the project

“We had good activity pre-construction, and we’ve had even better activity since we started construction,” said Seth Johnston, a vice president in Austin with Lincoln Property Co. “There’s obviously demand for (first-class) office space downtown.”

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