Why buy when you can build?
Office property sales in Austin this year are among the lowest in the nation, and well behind Houston and Dallas, CommercialEdge reported. That may be because developers are putting up new buildings at the fastest pace in the country as demand grows from new companies
relocating to the Texas capital.
Austin led the country in new office starts last year with 5.3 million square feet, with Dallas finishing second at 4.5 million square feet. Other top markets like the San Francisco Bay Area finished in the 3 million square foot range.
Austin boasted 10 million square feet of office space under construction in March, according to the publication. The only other cities with more square footage were Boston (11 million) and Manhattan (19 million). Planned office projects in Austin total more than 25.3 percent of Austin’s existing stock — by far the highest share among top markets.
Austin also led in workers returning to the office, with 17.6 percent growth in the number of workers coming back to offices since the outbreak of the pandemic. Dallas was second with just 9.7 percent growth since the spring of 2020.
In the first three months of this year, nine major Austin office properties traded, totaling more than 692,000 square feet in Austin, at an average price of $253 per square foot. Other Sunbelt cities with similar growth patterns all had higher prices, such as Charlotte ($605), Atlanta ($423) and Nashville ($310).
The Austin sales totaled $144 million, while Houston and Dallas both passed the $1 billion mark.
“Austin’s robust population and employment growth gives developers more confidence about breaking ground on office projects, even after multiple new towers, including the 36-story Indeed Tower, were delivered last year,” according to the report.
The Indeed Tower topped out at 36 stories, with approximately 740,000 square feet and last year it was bought by Kilroy Realty for $580 million— the largest office transaction in Austin’s recent history. Its biggest tenant is Indeed, a job recruiting firm.
Among the projects being built is 98 Red River, which will be Texas’ tallest tower. The building will be more than 70 stories tall and rise to a height between 1,022 and 1,034 feet. That qualifies it as a “supertall” — a building taller than 984 feet, as defined by the Council of Tall Buildings and Urban Habitat.
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