Austin Office Investment Forecast
Tech Ecosystem Stimulates New Leases, Helping the Recovery Make Headway and Lifting Investor Sentiment
Inflow of tech firms a catalyst for additional office absorption. Fundamentals in Austin are in a solid position relative to the grim period in 2020, and the rebound will be enhanced this year. Net absorption is expected to surpass 4 million square feet, bringing the two-year total above 9 million square feet, about 34 percent larger than the next-highest 24-month count over the past decade. A growing local tech scene is helping drive the upswing in demand. Many companies in the sector have migrated to the metro from other areas for a variety of reasons, including lower business costs, a plethora of skilled workers and opportunities for collaboration with parallel firms. This trend is not novel for the market; however, location preferences are shifting. The northern submarkets were the undisputed top choices for tech-based tenants in recent years, but many are now looking to the CBD and East Austin. TikTok subleased 65,000 square feet in Downtown Austin last year while Facebook has laid claim to 33 floors of a future landmark skyscraper. In East Austin, Cloudflare and Atlassian plan to occupy 120,000-square-foot-plus floorplans in early 2022.