Austin Office Market
Annual full-service rental rates remain near record highs at $41.09/SF, reflecting a 0.1% decrease year over year and just $0.05 shy of the record set in the fourth quarter of 2023. Direct availabilities declined by 70 basis points on a quarterly basis, pushing overall vacancy down by 30 basis points quarter over quarter to 23.2%. The under-construction pipeline continued to contract, ending the year with 2.5 MSF under construction as restrictive fiscal policies and rising building costs curbed new office groundbreakings in the market. Financial uncertainty has decreased total yearly leasing activity to 6.1 MSF, well below the 16-year yearly average of 7.7 MSF.
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Austin Industrial Market
The market recorded 1.1 MSF of positive absorption in the fourth quarter of 2024, bringing total net absorption to 5.7 MSF through year-end 2024 and marking the 22nd consecutive quarter of positive absorption. Overall rental rates increased 1.9% year over year to $14.74/SF, reflecting a modest decline of 1.9% from the historic high achieved during the first quarter of 2024. The construction pipeline delivered 3.1 MSF during the fourth quarter of 2024. The under-construction pipeline ended the quarter with 18.4 MSF remaining under construction, slightly below the previous quarter’s record high of 19.3 MSF. After three years of new deliveries outpacing annual demand, vacancy increased by 260 basis points year over year to a recent high of 11.8%.
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