Austin’s industrial market soars in both construction and rates

Austin’s industrial market posted 64,093 SF of positive net absorption in the second quarter of 2018.  Activity levels remained high as a large number of sizeable tenants occupied significant blocks of space over the quarter, including Uplift Desk, an ergonomic workplace furniture company, moving into approximately 57,600 SF at 401C Parker Drive in the North submarket.

Looking forward, there are approximately 20 blocks of space over 10,000 SF that will be occupied by new tenants in Q3 2018. With over half a million square feet of new industrial product set to deliver in Q3 2018 and 107,780 SF of that is build-to-suit. 

Austin’s citywide average rental rates increased considerably over the quarter from $10.45 per SF NNN to $11.02 per SF NNN.  The average citywide flex/R&D rental rates increased to $12.91 per SF NNN up from the $12.84 average rate and the average warehouse/distribution rental rate decreased slightly to $8.28 per SF NNN from $8.65 per SF NNN.

In the second quarter, Austin’s industrial market had two buildings deliver and ten new buildings begin construction. Two of those new buildings are being built at Chandler Creek Business Park, in Round Rock, which make up 127,920 SF of the 750,378 total SF new construction started this quarter.

In all, 1,566,574 square feet of industrial supply was under construction, including eleven projects, totaling 676,148 SF.  This new inventory is set to deliver in the third quarter of 2018 and includes four buildings in the North submarket at Heritage Crossing; buildings 5-8. Building 5 is 100% leased and totals 107,780 SF. 

 
Q2 2018 Highlights

Q2 2018 Austin Industrial Infographic  

Click here to view the full report.