Military funds will fuel new construction in the Austin area. The Armed Forces Guard and Reserve Center at Austin-Bergstrom International Airport (ABIA) is now in the design stage. The planned $16.5 million facility will span 250,000 square feet and is expected to replace an existing aviation support facility currently leased from the city. Plans also call for a $5.7 million Vehicle Maintenance facility. To ease overcrowding, a new $20 million Armed Forces Reserve Center is likely to be built at Camp Mabry. Read more in Austin getting money for new National Guard and Reserve Centers, Austin American-Statesman, 12-12-09 and Military center near Austin-Bergstrom International Airport a go, Austin Business Journal, 12-14-09.
The Trade Group has renewed its lease of 4,705 square feet at Commerce Center South. Mark Milstead, an Industrial Specialist with NAI Austin, represented them.
Established in 1986, The Trade Group specializes in providing trade show display equipment and services, and has constructed over 40,000 exhibits.
NAI Austin is one of Austin’s most experienced commercial real estate firms and the Austin area representative for NAI GlobalTM, the industry’s largest global network of real estate service-providers, comprising 5,000 brokers in 325 offices serving more than 55 countries worldwide. For more information on NAI Austin, please visit www.naiaustin.com.
The Master’s Craft has taken 4,436 square feet of space at 901 Reinli in Austin, Texas. Rob Eaves and David Barber of NAI Austin represented the landlord.
The Master’s Craft is a flooring company specializing in manufacturing, importing and distributing hardwood flooring and related products.
NAI Austin is one of Austin’s most experienced commercial real estate firms and the Austin area representative for NAI GlobalTM, the industry’s largest global network of real estate service-providers, comprising 5,000 brokers in 325 offices serving more than 55 countries worldwide. For more information on NAI Austin, please visit www.naiaustin.com.
NAI Austin retail specialists Sherry Sanchez and Travis Waldrop represented Sushi Zushi in the leasing of 5,447 sf of retail space located in The Domain. This will be the second Austin location for Sushi Zushi and their seventh in Texas.
Sushi Zushi serves an unusual variety of Japanese cuisine, offering both sushi and cooked items on their large menu.
NAI Austin is one of Austin’s most experienced commercial real estate firms and the Austin area representative for NAI GlobalTM, the industry’s largest global network of real estate service-providers, comprising 5,000 brokers in 325 offices serving more than 55 countries worldwide. For more information on NAI Austin, please visit www.naiaustin.com.
Texas was declared the winner of the coveted Best Business Climate ranking from Business Facilities Magazine, which covers a range of critical development factors including cost of labor, incentives, infrastructure and tax climate.
Dallas Rail and Mantel leased 3,870 square feet at 13803 Quitman Pass in Austin, Texas. The landlord was represented by Rob Eaves and David Barber of NAI Austin.
Dallas Rail and Mantel, originally a window sill installation company, focuses primarily on fireplace mantel and stair installation in residential homes.
NAI Austin is one of Austin’s most experienced commercial real estate firms and the Austin area representative for NAI GlobalTM, the industry’s largest global network of real estate serviceproviders, comprising 5,000 brokers in 325 offices serving more than 55 countries worldwide. For more information on NAI Austin, please visit www.naiaustin.com.
From now to the end of 2010, the economy of Austin is projected to grow by $5 billion, and unemployment has stayed relatively subdued. The city’s diverse economy, home to Dell, the University of Texas and the Texas state government, has kept the economy strong. Forbes.com also recently ranked Austin the Best Big City for Jobs.
Austin, Texas is in as good a position as any city in the United States in the current market, and in many regards, better-positioned. In contrast to most cities, the unemployment rate here has dropped two-tenths of a percent. Jobs are being added – 6,000 positions in February alone. And Austin continues to accumulate accolades, receiving top positions on a variety of “Best Of” lists. It was just named in Forbes magazine as one of the fastest growing metro areas in the nation, based on business opportunities, weather and affordable housing.
Retail
The Austin Retail Market, with a footprint of 65 million square feet, has remained surprisingly strong, given the current national economic conditions. The overall vacancy rate for the Austin MSA increased slightly from 6.9% in 4Q 2008 to 7.1% the first quarter of 2009. There was approximately 450,000 square feet of retail space under construction by the end of the first quarter of 2009. The current total retail inventory in the Austin MSA is comprised of roughly 25 million square feet of general retail, 25 million square feet of shopping centers, 10 million square feet of power centers, 6 million square feet of malls and 300,000 square feet of specialty center retail space. Two newcomers to the Austin Retail Market are Sprouts and El Rancho Supermercado. Sprouts – an organic produce, prepared foods and general mid-sized supermarket – is working on their fourth location in the Austin MSA and has signed agreements for Sunset Valley, Round Rock and Rollingwood already in place. They’ve taken approximately 30,000 square feet overall. El Rancho Supermercado has taken slightly less square feet and has inked its first Austin location at 8700 Research Boulevard off Ohlen Road.
The average quoted retail rental rate for the Austin MSA dropped only slightly from $20.64 last quarter to $20.41 in 1Q 2009. The highest rates were $30.06 in the Central Business District and $28.67 in the Southwest submarket. The lowest average rates were found in the North submarket at $15.88 and Southeast submarket at $16.52. The highest vacancy rate was in the Southeast at 11.4% and the lowest vacancy rate was the Central Business District at 1.8%. All economic indicators show Austin to be a strong Retail market. The future continues to look bright.
Land
The global capital market meltdown has had a tremendous negative impact on land sale transactions in the Austin area. According to Costar Comps, land sales volume in the Austin MSA decreased by 85% between 1Q 2008 and 1Q 2009 and 93% from 1Q 2007 to 1Q 2009. Liquidity issues have forced many banks to insist on unrealistically high equity positions from developers, and more seller financing has been required to help close transactions. Much of the activity that is occurring in the land market is user-driven with some large investment land plays on the periphery of the market.
For the most part, only projects that commenced before the onset of the financial crisis are under construction. Very few developers have started construction on new commercial projects. There is still a “wait and see” and “it’s safer to do nothing” attitude from both banks and developers.
Up until recently, pricing has held steady as owners try to ride out the recession. We are now starting to see owners who are more willing to concede on price due to their own liquidity issues. Austin by most accounts is expected to swing back out of these economic doldrums with a vengeance. And it is the hope of many land owners that they can hold out until the turnaround.
Office
New construction of office space has had huge impacts on Austin over the past couple of years. Most recently in the first quarter of 2009, Austin saw the delivery of almost half a million square feet. Newly delivered construction is located in the Northwest and Far Northwest submarkets where the Domain Gateway, Pecan Park 2 and Travesia Corporate Park were completed. Nearly half a million square feet is now under construction, which is an 80% decrease from this time a year ago.
Vacancy in office product increased to more than 19% in the first quarter of 2009. This is a dramatic increase from one year ago when the vacancy rate was in the 14% range.
Full service office rates decreased from an average of $0.50 to $0.26. Although rates in the Central Business District increased overall – mostly due to increased tax hikes – rental rates in the Northwest and Southwest submarkets decreased.
Naturally, sub-lease office availability has increased dramatically, exceeding one million square feet. This number is likely to increase as layoffs continue and companies attempt to consolidate their space.
Industrial
From the start of 2008 through the 18 months ending in June of 2009, Austin added a whopping 3.1 million square feet to its base of 34.5 million square feet of industrial investment space tracked by NAI Austin. That’s a 9% increase and is a historical record for growth in the Austin market. Even without the new inventory, Austin vacancy rates were beginning to rise by late 2008 and have increased into 2009. Official numbers will be counted as of the end of June but we expect the vacancy rate could increase by as much as another 1,000,000 square feet resulting in a total vacancy of over 20%.
It is a great time for tenants to renew leases for long terms as lease rates drop by 15-20% and incentives for TI allowance or free rent are being used more each month. About 65% of Austin’s industrial market is bulk warehouse and 35% flex space. Final industrial figures for the first six months of 2009 will be available in early July.
Click here to download the pdf version of the Austin Chamber’s monthly newsletter, the Member V.O.I.C.E., which includes the article below.
The Austin Chamber of Commerce has released the results of a recent national survey of corporate leaders of companies with revenues in excess of at least fifty million dollars. The goal of the survey was to find out how these executives looked at Austin relative to other cities as a site for possible expansion or relocation.
Out of 15 possible metropolitan areas across the country, Austin was the city most often chosen as a desired target for expansion or relocation. Executives cited an educated workforce, top-notch universities, a thriving tech community and abundant quality of life as reasons to consider Austin, the Human Capital, when repositioning a company.
The survey, conducted in the fall of 2008 by The Benchmark Company, an Austin market research firm which numbers many national firms among its client base, mentioned that Austin was also perceived to be the city that would stand a greater chance of being recession resistant.
“Considering the current national malaise that has affected so many cities, the fact that Austin has maintained a strong, favorable perception among C-level executives across the country is extremely important,” said Dr. Robert Balon, CEO Benchmark. “This should bode well for increased corporate visits and interest in Austin from a cross section of large companies representing many industries. And ultimately, that should pay dividends for Austin businesses and residents.”
The survey shows a drastic increase in recognition of Austin-based companies over 2006, indicating that a greater number of executives not only distinguish Austin as a strong business climate, but also understand that Austin is an attractive market for headquarter relocation as well.
The Austin Chamber, through Opportunity Austin 2.0, has made a commitment to drive the healthy growth and expansion of Austin’s business community with a committed focus on attracting new business from around the country and the globe as well as retaining and expanding existing businesses. The primary goal is to create 117,000 new jobs and $10.8 billion in payroll in the next five years.
Opportunity Austin 2.0 is targeting five specific industries to strengthen and grow, creating a greater depth of diversity in Central Texas: convergence technologies, creative media, green industries, corporate headquarters and health care/life sciences.
