CBRE Research has identified six key trends that are bringing the Texas capital into the ranks of America’s major metros and altering its commercial real estate sectors right along with them.
- Due to robust employment growth, Austin’s office market is firing on all cylinders, setting record highs in absorption and rents, while reaching new post-recession vacancy lows. Austin is a high demand destination for corporate relocation and expansion with major players across multiple tech sectors. Further, a growing number of them are making Austin home to their corporate headquarters.
- Co-working space has emerged as a desirable office type in Austin with nearly two dozen now in operation and a half dozen coming to market this year alone. Reflecting the communicative, creative, and collaborative values of today’s millennials this space category tends to attract, Austin’s shared working space scene is bringing growing ranks of creative people together, an emerging trend that may indicate Austin’s tech cycle 4.0.
- Home to one of the largest regional concentrations of semiconductor and electronic component manufacturers in the nation, the Austin industrial market has seen falling vacancies and escalating asking rents in recent years. Given the sheer activity seen in Austin’s other asset types, namely office and multifamily, it is remarkable that the Texas capital has not yet experienced an industrial development boom, partially due to different rates of industrial rent growth following the Great Recession than witnessed in other Texas markets particularly outside of R&D/flex product. But there are indications industrial development could change soon.
- Austin is a metropolitan leader in patent production with patents for inventions rocketing out of the recessions since 2000. This high-patenting industry has helped establish Austin as a seat of innovation and technological creativity, attracting even more publicly-traded technology companies in addition to the highly-skilled talent they employ. As a result, Austin’s creative class is changing the real estate face of the city one patent at a time.
- Austin has seen rapid multifamily development in the urban core. This trend has been stimulated by Austin’s ever strengthening workforce and the influx of millennials willing to pay for access to the central city’s cultural offerings. Austin has added 5,824 multifamily units to its urban core since the beginning of 2015, which further fuels its cultural identity as a city on the go.
- The life sciences industry is quickly imbedding itself in Austin’s tech DNA. Anchored by a Tier I research university and the flagship of the University of Texas System (in addition to several other area colleges and universities), the northeast end of the Austin CBD will be developing even stronger life sciences ties to its economy following completion of the Dell Medical School at The University of Texas at Austin, with over 1 million sq. ft. of new developments.