This article was published in July 2021. If you’re looking for more up-to-date data comparing Miami and Austin please reach out to AQUILA’s director of market research, Kirk Silas.
Miami and Austin have each recently made headlines for being ideal sites for large companies looking to relocate or expand into new markets in search of tax incentives and growing metropolitan areas. Questions like “hill country views or oceanfront property” are among the many that companies have been asking themselves as they consider moving headquarters or opening an additional office in a new location such as Austin or Miami.
To help companies answer these questions, we compiled four main points of comparison between Austin and Miami:
- Real estate costs and availability
- Access to employees
- Established infrastructure and capital
- Cost of living and culture
Availability and Real Estate Costs in Miami vs. Austin
Austin and Miami are very similarly priced office markets. As of 2Q 2021, the average full-service rate for office space in Austin was $41.87 per square foot, compared to $44.54 per square foot in Miami. For reference, this means a 10,000-square-foot tenant in Austin would be paying $418,700 per year, while the same tenant in Miami would pay $445,400 per year.
|City||CBD Office Rent||Average Office Rent||Vacancy Rate|
Source: CBRE 2Q 2021 Office Market Reports
In Austin’s CBD, the average full-service rent was $55.22 per square foot in 2Q 2021 according to CBRE’s Austin MarketView Q2 2021 report. This is compared to $51.45 per square foot in Miami’s CBD rate from the Miami Office MarketView Q2 2021 report, yielding a roughly 7% difference. These areas of Downtown Austin and Miami are host to the most prominent office spaces in each respective city, and draw some of the largest tenants.
In addition to rental rate comparisons, the number of buildings under construction is a relevant metric for tenants to analyze when looking to lease office space. Austin has nearly 8.18% of its current office inventory under construction, encompassing roughly 4.78 million square feet of new, upcoming deliveries. In comparison, Miami currently only has 1.43 million square feet under construction or 3.62% of its total office market. With an influx of supply from local and national developers, Austin is proving that there is a strong and growing demand for the highest-quality office space.
Access to Employees in Miami vs. Austin
Access to available, high-quality office space is only one part of the comparison that needs to be made. The other, arguably more important, factor companies should consider when choosing between Austin and Miami is the availability of a qualified workforce.
The Austin area is home to the University of Texas, Texas State University, and other institutions graduating approximately 40,000 students annually within a 60-mile radius. In addition, Austin is centrally located to Texas State University, Texas A&M, SMU, Baylor, UT-Dallas, Rice University, and the University of Houston.
Austin’s central location relative to Dallas, Houston, and San Antonio creates a hub of creativity and innovation, drawing the most talented individuals from all across Texas and the country. This is the reason that Austin is considered the “human capital” of Texas. According to data compiled by Esri, nearly 30% of Austin’s residents have a bachelor’s degree and 16.57% hold a graduate degree.
Miami has access to an abundance of talent as well, with the University of Miami, the University of Florida, and Florida International University all nearby. However, according to data provided by Esri, only 20.72% of the population in the Miami MSA holds a bachelor’s degree, and 12.83% hold a graduate degree. This is an important factor to consider when hiring and is an important point of comparison between Miami and Austin.
|MSA||Bachelor’s Degree||Graduate Degree|
With a large pool of educated employees, it is important to ensure that there are jobs available. Office-using employment growth in Austin through June 2021 has been the second strongest in the nation at an estimated 9%. This data, provided by CBRE’s Q2 2021 US Office report, shows that only 14 other major markets experienced above the U.S. average (about 5.5%) employment growth. Miami saw an increase in office employment of approximately 5%. This data goes to show that firms in Austin are still looking to grow, and are hiring at consistently higher rates than the rest of the country.
Access to Capital in Miami vs. Austin
Austin has recently seen large corporations such as Tesla, Oracle, Amazon, and Facebook migrate to the city with the hopes of centering their businesses in a place welcoming towards corporate culture and innovation. Miami’s lure of venture capital money and connections to New York City has also garnered attention from many Silicon Valley firms and employees.
Austin’s venture capital activity accounted for more than 50% of all venture capital funding in the state of Texas in 2020. Venture-funded companies in Austin raised an impressive $1.78 billion across 144 deals in 2020.
Most notably, an influx of venture capital firms have started to move to Austin. Specifically, Joe Lonsdale’s company, 8VC has recently relocated its headquarters to Austin, bringing with it nearly $3.5 billion in committed capital. Lonsdale’s firm intends to raise nearly $880 million more in VC funds to invest in local Austin startups and entrepreneurs.
In Miami, venture-backed companies raised $972 million across 57 deals in 2020. The highest level of funding seen in recent years has set in motion a trend of economic growth and innovation. In 2020, Miami was responsible for 34.7% of Florida’s $2.8 billion annual venture funding.
Cost of Living and Culture in Miami vs. Austin
Miami has historically been considered one of the more expensive U.S. cities to live in, and with data provided by the Cost of Living Index, we find that still to be the case.
Recent news has revealed significant increases in the home markets in both Austin and Miami. From 2Q 2020 to 2Q 2021, the National Association of Realtors estimates that the Austin MSA housing market has increased prices by 45.1% and the Miami MSA has increased by nearly 28% year over year. According to NAR, the median home price in Miami rose from $379,000 to $485,000 over this timeframe. In Austin, home prices spiked from $355,000 to $515,100.
In order to compare Austin and Miami equitably across all aspects of everyday living, we use the Cost of Living Index calculator provided by the Austin Chamber.
|City||Cost of Living Index (2020)|
|Los Angeles, CA||147.7|
|New York (Manhattan), NY||244.7|
The cost of living is approximately 14% higher in Miami than it is in Austin. Because of this, an employee being paid a $50,000 salary in Miami would need to be paid $43,889 in Austin to have the same standard of living. Depending on your company and the number of employees you will be hiring, this cost difference could have more of an impact on your bottom line than the slight differences in rental rates between Austin and Miami.
We hope this article gives you a useful overview of the potential differences between locating your office in Austin vs. Miami. To continue learning more about the Austin market, check out our Austin Resources on the AQUILA Learning Center.