Austin Warehouse Market | Q2 2016

Here is a summary of the Austin warehouse market for the 2nd quarter in 2016, it is looking like we are headed for a 20 yr low for vacancies. Current vacancy rates in the Austin area are coming in at below 7 percent currently at 6.7%. There is alot of corporate interest in Austin and the city’s incentives to get the attention of large corporations. Most warehouse spaces that are being occupied are smaller in size below 30,000SF.

Lease Rates for Warehouse Properties

Austin’s warehouse leasing rates moved upward to $0.04 cents per sf over the last quarter of 2016. Vacancy remains low and demand remains high, flex warehouse space is still an alternative to more expensive office leasing rates if the tenant can utilize the flex space efficiently like an office.  The majority of the occupancy was in flex warehouse space which currently is going at an average of $1.10 psf without NNN expenses.  The East side and Round Rock had the most vacancy and subsequent occupancy occurred in those sub-markets more so than other sub-markets. Austin is on pace for 6 consecutive quarters of positive occupancy.

Construction Warehouse update Texas

Construction for new products is mostly in the SE sub-market, which will be between ABIA and the urban areas. Pre-leasing is popular currently and if you are a tenant looking for warehouse space on new construction pre-leasing is a good strategy due to current market demands on these properties. High growth in Hays and Williamson County are putting pressure on finding suitable warehouse space.  Austin does run the risk of losing business if supply cannot keep up with the demand.