Marcus & Millichap

Austin Industrial Investment Forecast

2019 Outlook

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Consistency Defines Austin in 2019; More Investors Target Bulk Acquisitions

Two-pronged industry expansion supports reduction in vacancy. Austin enters 2019 following four years in which industrial tenants absorbed a combined 6.3 million square feet of space. The local retail trade and tech manufacturing industries were largely to credit for this leasing velocity, as sizable growth by companies within these sectors constricted the market’s stock of vacant properties. Moving forward, the tech manufacturing sector is on solid ground, with Oracle recently opening a new campus and Apple slated to construct a new $1 billion campus. These moves should motivate smaller firms that support these heavy hitters to also grow, maintaining a need for smaller to midsize flex space. An inflow of higher-paying jobs in 2019 will again bolster consumer spending, encouraging further expansions on the part of retailers, some of which will consolidate storage and distribution operations into one larger warehouse to maximize efficiencies. The metro’s currently limited inventory of available space suggests any recently vacated floor plans or newly delivered speculative projects should be filled quickly, supporting a level of absorption that lowers metro vacancy below 5 percent.

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