Cisco Systems Leases 27K in Downtown Austin

An international telecommunications company has eased some of the pain in downtown Austin’s office market.

San Jose-based Cisco Systems leased 27,400 square feet in the 16-story Horizon Bank building at 600 West Fifth Street, the Austin Business Journal reported.

The lease puts a small dent in the city’s office vacancy rate, which soared to new heights last year, and it provides a glimmer of hope for a downtown submarket that’s been pummeled by remote-work trends and massive sublease offerings.

Austin’s vacancy rate stood at 18.7 percent at year end, according to Aquila Commercial. In the Central Business District, however, vacancies reached 22.2 percent, and have been rising steadily since the first quarter of last year, when the rate was 15.6 percent.

The mountain of empty office space downtown can be partly attributed to the hesitancy of larger tenants, particularly those in the tech sector, to commit to office space.

Tech companies are reevaluating their workplace needs, focusing on location and the ability to lure employees back to the office, said Lexie Burns of Cushman & Wakefield.

“Data shows that if a company can be in a location that checks the box or is more appealing than leaving the house, employees are eager to come in a few days a week,” she told the outlet. “If the building or location is not better than their home setup, it is becoming a nonstarter.”

While tech firms navigate these uncertainties, there has been a noticeable return of employees from law and financial services firms to downtown offices, according to Ryan Bohls, the regional managing director at Franklin Street.

Horizon Bank finished a major overhaul of its 150,000-square-foot namesake building last year. It features 7,000 square feet of amenities on the ninth floor, including meeting rooms, a food and beverage service bar, catering kitchen, lounge area and an outdoor terrace. There’s also a rooftop terrace and a 3,900-square-foot lobby.

—Quinn Donoghue