AUSTIN MARKET REPORT 2Q 2016

Transcription

AUSTIN
MARKET REPORT
2Q 2016
2
AQUILA
KNOWS
AUSTIN
KEEPING YOU INFORMED
AQUILA Commercial is dedicated to
DISCLAIMER This report utilizes various
providing quality service to our clients. We
real estate and economic data sources. The
understand that real time market data helps
information contained herein is confidential
our clients make smart, informed real estate
and proprietary in nature. No warranties or
decisions. This report is produced and
guarantees are made as to the accuracy of
distributed quarterly. To receive our
the information contained herein.
updates, opt in at aquilacommercial.com.
VIEW FROM THE
EAGLE'S NEST
In case you haven’t heard, Austin is hot.
We’re now in the dog days of summer and
the mercury is regularly reaching the century
mark. Despite the fact that you could cook your
breakfast taco on the pavement (and probably
sell it at a nice premium by calling it “homegrown”), people continue to move to Austin in
droves. As of June of this year, the Austin-Round
Rock MSA added over 38,000 jobs in twelve
months – the fourth most of major metros in
the country. The month of June alone saw an
Clayton Schleimer
Market Research Analyst
AQUILA Commercial
[email protected]
increase of 10,645 people joining the labor
force.
Where are all of these people moving? The
short answer is everywhere – anyone will tell
you it’s hard to find a spot in central Texas
that is less crowded than just a few years
ago. The longer answer is Georgetown, New
Braunfels and Pflugerville. These three cities
rank among the fastest growing cities in the
country with populations of 50,000 or more,
with Georgetown topping out the list.
4
VIEW FROM THE EAGLE'S NEST
8,000
3,500,000
7,000
3,000,000
6,000
2,500,000
5,000
2,000,000
4,000
1,500,000
3,000
1,000,000
2,000
500,000
1,000
0
Building Permits
Office SF Under Construction
Austin Construction - Office & Housing
4,000,000
0
Office SF Under Construction
Housing Units Authorized by Building Permits
Where are all of these people working? The professional
amenities near their offices and residences. The bulk of
and business services industry added the most jobs from
these live/work/play environments are located in central
June 2015 to June 2016 at nearly 8,000 jobs, with leisure
areas like downtown, East Austin and The Domain.
& hospitality and construction & natural resources close
behind at 5,700 and 6,000 jobs added, respectively.
These three sectors alone account for more than half of the
jobs added in the past year, and they each tell their own
unique story.
The professional and business services industry – the
employers who typically work in the buildings pertinent
to this report and often pay the highest wages – attest to
Austin as a dominant intellectual capital. The more centrally
located office submarkets of the CBD, North Central and
It is not surprising that construction is among the fastest
East Austin have absorbed more than half the square feet
growing industries. 2Q 2016 housing permits reached
of the overall market this year: 472,501 out of 743,189
5,809 units, 3,818 of which were single-family. There
total. Furthermore, education & health services added the
is almost 1.6 million square feet of office space under
fourth-most jobs over the past 12 months, most likely at
construction as well – more than half of which is in the CBD
the University of Texas and its soon-to-be-completed Dell
or nearby submarkets.
Medical School downtown.
The Austin leisure and hospitality industries are also sending
So, to answer the question of where are all of these new
employees to the hottest areas of the city. As elaborated
people working, the answer is primarily in the more
in our previous market report, office tenants and young
centrally-located areas of Austin. Therein lies one of the
professionals are willing to pay a premium for walkable
greatest threats to Austin’s continued growth: transportation.
VIEW FROM THE EAGLE'S NEST
With more people commuting every day from Austin suburbs
place to live by addressing four main areas: natural and
to their jobs within the city, traffic woes are becoming even
built environment; household affordability; mobility; and
more of an issue. The theory that if traffic problems are
fiscal health. CodeNEXT and the strategic mobility plan
not addressed people will stop
are parts of the city’s overall
moving here has proven to not be
long-term comprehensive vision:
true. And the weather apparently
isn’t holding anyone back either.
As it stands now, there are only two
main north-south thoroughfares to
get you from one side of Austin
to the other: I-35 and MoPac
Expressway; and any Austinite
will tell you to avoid those at all
With more people commuting
every day from Austin suburbs to
their jobs within the city, traffic
woes are becoming even more of
an issue. The theory that if traffic
problems are not addressed
people will stop moving here has
proven to not be true.
Imagine Austin.
One aspect of Imagine Austin
that can already be seen is the
implementation of several Transit
Oriented
Developments,
most
notably Plaza Saltillo and MLK
Station, both on the Eastside.
These aim to provide a complete
costs during rush hour. If nothing
live/work/play/commute
is done and population maintains
environment
along
MetroRail
its current trend, it could take three hours to get from Austin
stations to further provide alternative living and commuting
to Round Rock by the year 2035. For perspective, I was
options. Also in East Austin, you can find one of the most
able to make it from UT to my parents’ house north of Dallas
talked about concepts dealing with the future of travel:
in three hours back in my college years (that was only four
several of Google’s self-driving cars being tested around
years ago, and I was driving a Hyundai).
the Mueller community. For a deep-dive into the rumblings
Luckily, the city is making serious moves towards solving our
transportation issues (and I’m no longer driving a Hyundai).
going on in East Austin, see this quarter’s special report on
page 7.
Mayor Steve Adler and City Council moved forward with
Austinites have always been prideful people hanging on
proposing an unprecedented $720 million mobility bond in
to their past as a small town. The old adage that “The best
June. The bond calls for improving several main corridors
time to live in Austin is five years ago” is a testament to the
throughout the city, allowing for improved bus and bike
fact that citizens think the city is getting too full, too big
lanes, incentivizing commuters to approach alternative
for its own britches, and generally too hot to handle itself.
forms of transportation, and bringing drivers away from
However, with the citizens’ support, it is poised to leverage
I-35 and MoPac and into the city’s more central corridors.
its recent explosive growth and continue to be one of the
Another city initiative, CodeNEXT, plans to revise the Land
hottest, most desirable cities in the country decades into
Development Code to make Austin an even more desirable
the future.
Note: There are some changes to the methodology in this quarter’s market report. For a full
explanation of the AQUILA methodology, refer to page 67 at the end of the appendix.
1
http://www.tracer2.com/cgi/dataanalysis/labForceReport.asp?menuchoice=LABFORCE
2
http://kut.org/post/think-traffic-bad-now-2035-it-could-take-3-hours-get-austin-round-rock
3
http://austintexas.gov/department/austin-strategic-mobility-plan
4
http://austintexas.gov/sites/default/files/files/Planning_and_Zoning/CodeNEXT/2016_07_08_Mobility.pdf
SPECIAL REPORT
EASTSIDE SPECIAL:
AUSTIN'S FOURTH
PRIMARY SUBMARKET?
Just
beyond
the
downtown
skyline lies Austin’s Eastside.
Less than a mile from the CBD sits one
of Austin’s most authentic, eclectic
and rapidly changing neighborhoods.
An area that has, for most of its
recent history, been a working-class
neighborhood is now one of the
HYDE PARK
UPPER EASTSIDE
city’s hippest hangouts. Named as
one of the hippest neighborhoods
in the country1, coffee shops, bars,
breweries and taco stands can be
found just steps from rows of quaint
MUELLER
THE UNIVERSITY
OF TEXAS
CHERRYWOOD
CENTRAL EASTSIDE
two-bedroom houses that have stood
there since the days of the Great
Depression.
DOWNTOWN
AUSTIN
In 1990, out of the 21 census tracts
LOWER EASTSIDE
that make up the “Eastside,” 15 were
eligible for gentrification2, but only
one actually achieved gentrification
status over the next ten years. In
2000, eighteen tracts were eligible
for gentrification, and all but four of
those have achieved it today – more
than all other eligible tracts in Austin
combined.3
7
EAST CESAR
CHAVEZ
WINDSOR
PARK
SPECIAL REPORT
East Austin Household Income
Over the past decade, East Austin
100%
$75,000
has become a hotbed for house-
90%
$67,500
flippers, graduate students, young
80%
$60,000
professionals and new families. Multi-
70%
$52,500
family development has skyrocketed,
60%
$45,000
drawing a new demographic to live
50%
$37,500
in the neighborhood. Over the past
40%
$30,000
six years, more than 1,700 multi-
30%
$22,500
family units have delivered on the
20%
$15,000
Eastside. As of the second quarter
10%
$7,500
2015, there were another 1,900
0%
multifamily units under construction,
with almost one thousand more
approved for development and ready
$0
2014
<$25k
$25k-50k
$50k-100k
$100k-200k
>$200k
Median household income
to break ground.
East Austin & Citywide Education
To see the appeal of the neighborhood
is easy: its relative affordability within
90%
80%
the city, proximity to downtown and
70%
rich culture have made it a popular
60%
place to live and play. And now,
50%
the authenticity and sense of quirk
40%
that
30%
originally
2010
2000
drew
in
Austin’s
creative class is attracting new office
prospects as well.
20%
10%
The Eastside is serving up to tenants
what it is they are looking for: close
0%
East Austin
Austin Citywide
proximity to CBD, affordability, a
2000
plethora of nearby amenities, diverse
transportation options and “creative”
East Austin
High school graduate or higher
Austin Citywide
Bachelor's degree or higher
2010
2014
Median Home Values
$250,000.00
office space build-outs.
As rents in Austin’s primary three
office
submarkets
steadily
climb,
demand has increased for welllocated,
amenity-rich
$200,000.00
$150,000.00
alternatives.
In the current real estate cycle, East
$100,000.00
Austin has emerged as a frontrunner
to be Austin’s next established office
$50,000.00
market.
$0.00
2000
Median Home Value East Austin
2010
2014
Median Home Value Austin Citywide
(Source: US Census and American Community Survey)
8
SPECIAL REPORT
A DIFFERENT OFFICE PRODUCT
While many of the Austin office buildings AQUILA
Much like the houses in the area, the office buildings
traditionally analyzes are large, class “A” multi-tenant
each have their own unique architecture. Eleven11,
properties with built-in amenities such as fitness
for example, features a rust-colored facade with a
facilities, delis, etc., the office projects rising on the
striking cantilevered terrace covering the sidewalk
east side are of quite a different ilk. You won’t find
below. Further east, you will find old warehouses
high rises or large, sprawling corporate campuses
converted into creative office suites alongside
here. Instead, offices on the Eastside range from
breweries and bistros. These aesthetics and amenities
converted warehouses to new mid-rise, mixed-use
tend to attract a millennial-minded tenant-base.
construction. These office projects
often embody the eclectic vibe of
the neighborhood, giving way to
multiple “creative office” projects
under development.
Given the unique positioning
of East Austin within the overall
office market, this budding area
offers spaces to suit the needs of
different types of tenants. Typical
spaces offer open ceilings, stained
concrete floors, and exposed
brick and ductwork. Floorplates
are also smaller than those in
Eleven11
the other primary submarkets,
resulting in more open layouts.
This is largely due to the land-use and development
While established accounting or legal firms continue
restrictions that run through much of the Eastside.
to look for space in the Southwest, Northwest or
Some of the built-in amenities typically found in
the other submarkets aren’t found in Eastside office
projects. Rather than having an on-site deli or
fitness area, offices capitalize on the abundance
of pre-existing retail within walking distance. Some
companies even offer credit to their employees to
make use of nearby fitness studios.
9
CBD, Eastside office projects are competing instead
to attract more creative tenants such as advertising,
media, music and web-design companies, which
are the fastest-growing segments of talent moving to
Austin, and more specifically the Eastside.
SPECIAL REPORT
DEFINING THE SUBMARKET
In order to more clearly analyze the Eastside as an
professionals spending their weekends in the area,
office submarket, we limited the definition of the
whereas the thought of crossing I-35 on a Saturday
East Austin office submarket to the following area:
night was not even a consideration just five years
north of the Colorado river, between I-35 and US
ago. Now, locally-owned businesses thrive east of
183. This area can also be parsed into three smaller
downtown, bringing in customers who might live just
micromarkets: The Lower Eastside, Central Eastside
blocks away or across the country on vacation. What
and Upper Eastside. (See the map on page 7 for
was once a generally overlooked neighborhood full
reference.) These three areas each have their own
of worn-down houses is now being redeveloped into
unique culture and style, attracting a mixed pool of
a tourist destination live with contemporary homes
tenants and office product.
and nationally-renowned boutiques, bars and
restaurants.
Lower Eastside
The increase in popularity can be partially
attributed to the city designating East 6th as a core
The Lower Eastside is comprised of the area north
transportation corridor, allowing increased traffic
of the river, west of 183 and south of 12th Street.
flow to and from downtown. The added ease-of-
This micromarket is so close to the CBD—just across
access has given rise to thousands of Class A multi-
I-35—that it is almost an extension of downtown
family units being developed over the past decade,
itself. The city has instituted several measures to
with many more under construction and in the
help facilitate growth in the area, and the area has
planning stages.
responded favorably.
Developers are also taking advantage of the Lower
Here you will find the highest density of bars and
Eastside’s popularity with several mixed-use projects.
restaurants outside of downtown. The East 6th
One such project, Eastside Village, is currently
Street entertainment district, for example, has
under construction and offers both a new Class A
seen an explosion of college students and young
10
Patio at Burn Pizza + Bar on East 6th Street
SPECIAL REPORT
office building (recently purchased by CIM Group
developer of the Domain in Northwest Austin first
in June) and 800 multi-family units atop ground
dipped their toes into Lower Eastside waters with a
floor retail. Tenants who have signed on at Eastside
little project at 2021 E. Fifth Street in 2013. Targeted
Village early to take advantage of the excitement of
towards the creative workers that reside in the area,
the area include C3 Presents, who relocated their
the project was quickly preleased by EnviroMedia,
headquarters from downtown, and Conde Nast,
one of Austin’s most notable marketing firms. The
who will be opening their new Digital Innovation
success of the development has since been followed
Center in the building.
by another, larger proposed office project, 901 E.
Blocks
away
6th, which is still in the
from
planning stages.
Eastside Village will be
Endeavor Real Estate
Group’s Plaza Saltillo,
which will offer over
100,000 square feet
of retail and office
space, a public park,
and 800 residential
units. Plaza Saltillo is
one of the city’s two
designated
Some of the greatest
potential on the Eastside
lies in redeveloping
existing owner-occupied
offices into multi-tenant,
Class A buildings.
Adjacent to Eastside Village
and
Plaza
Saltillo
are
two more multi-use office
developments: The Foundry
by Cielo and Fourth & by
Capsa Ventures. Currently
under construction, these
two projects combined will
feature over 100,000 sf
of office space and 115
Transit
residential units. Although
Oriented Development
(TOD) sites on the Eastside. The TOD presents an
smaller
exciting opportunity for tenants to capture a whole
developments, the rise of these live/work/play
new mix of commuters who will be brought to their
solutions attest to the growth of the Lower Eastside’s
area from as far away as Leander via MetroRail.
popularity, proving that just one or two developments
Endeavor’s involvement on the Eastside is a testament
are not enough to capture all of the demand in the
to the area’s high demand for office product. The
area.
11
Food truck park on East 6th Street
than
Transwestern’s
and
Endeavor’s
SPECIAL REPORT
Starting Rental Rates - CBD vs Lower Eastside
Source: AQUILA Market Research Lease Comparables
$45.00
$40.00
$35.00
$30.00
$25.00
$20.00
$15.00
$10.00
$5.00
$0.00
1/1/2010
1/1/2011
1/1/2012
12/31/2012
1/1/2014
1/1/2015
1/1/2016
Lower Eastside Starting Rent
CBD Starting Rent
Lower Eastside Starting Rent Trendline
CBD Starting Rent Trendline
1/1/2017
1/1/2018
While large ground-up mixed-use redevelopment
in redeveloping existing owner-occupied offices
projects like the Eastside Village and Plaza Saltillo
into multi-tenant, Class A buildings. Prime examples
are getting most of the hype on the Lower Eastside,
of such projects are the former Goodwill Career
there is a plethora of smaller projects that continue to
Academy building at East 6th and Chicon Streets
change the landscape. Central Austin Management
and the Capital Area Rural Transportation System
Group, for example, has two projects along
office less than a block down the street. These
Springdale Road – Canopy and Springdale General
projects—recently sold to office developers—will
– that will include over 200,000 sf of space across
add over 200,000 sf to the market. Riverside
more than 15 buildings. Also in planning stages
Resources has four total sites of this kind under
is 1719 East 2nd Street. Much like the recently
ownership on the Lower Eastside awaiting lead
delivered 2400 Webberville and 1711 Cesar
tenants to break ground on potentially 300,000+ sf
Chavez projects, this 10,000 sf project embodies
of space between the four of them.
the “creative” solution that small marketing and
technology firms are looking for on the Eastside:
white-box conditioned with custom finish-outs at a
low rent.
Some of the greatest potential on the Eastside lies
As
demand
for
limited
downtown
space
increases, the rise of the Lower Eastside as an
extension of downtown appears to be imminent.
As shown in the graph above, starting rental
rates are quickly approaching downtown levels
12
EAST
AUSTIN
51
ST
ST
11
AIR
LVD
38
TH
MANOR
18
KING
RT
B
5
BERKMAN DR
DEVELOPMENTS
LUTHER
MARTIN
12
PO
1/
2S
T
7
RD
26
D
JR BLV
2
29 1
1TH
ST
SP
10 30
AL
ST
CES
1
16
CH
AVE
Z
ST
24
CH
AR
17
D
CO
M
3
V
RT BL
15
31
23
19 20
4
25
T V
ALLE
Y RD
8
21
27
13
32 14 22
AIRPO
AIL
9
PLEA
SAN
ROR
33
NS
T
MET
ST
VE
OOD A
ROSEW
ICO
6TH
RIN
GD
AL
ER
D
28
6
13
OFFICE
Project Name
Status
Completion
Date
Office SF
Developer/Owner
Endeavor
1
2021 E. Fifth Street
Recently Delivered
2014
30,100
2
2921 E 17th St Bldgs B-D
Recently Delivered
2015
100,000
3
2400 Webberville
Recently Delivered
2015 Q2
8,000
4
1711 Cesar Chavez
Recently Delivered
2016 Q2
7,156
Emergence Commercial Realty
5
The Diamond Building at Mueller
Under Construction
2016 Q3
37,198
Catellus
6
atx Factory
Under Construction
2016 Q3
11,500
Vijay Mehra
7
The Station on Manor
Under Construction
2016 Q4
31,600
Lincoln Ventures
8
901 E 6th
Planned
2017 Q1
132,000
Endeavor
9
Springdale General
Planned
2018 Q1
165,000
Central Austin Management Group
10
The Lab on East Sixth (CARTS Site)
Planned
2018 Q4
115,000
Altair
11
Build to Suit Opportunities at Mueller
Planned
TBD
2,000,000
Catellus
12
The Park at Mueller
Planned
TBD
116,000
Catellus
13
6th & Onion
Planned
TBD
100,000
Riverside Resources
14
5th & Onion
Planned
TBD
82,000
Riverside Resources
15
1817 E 6th (Former Goodwill)
Planned
TBD
80,000
Riverside Resources
16
4th & Robert Martinez
Planned
TBD
43,000
Riverside Resources
17
Canopy
Planned
TBD
40,200
Central Austin Management Group
18
2015 Manor
Planned
TBD
23,000
Lincoln Ventures
19
Chavez Village
Planned
TBD
14,618
ECC Commercial
20
1719 East 2nd
Planned
TBD
10,000
Lonestar Syndicate
MIXED USE
Project Name
Status
Completion
Date
Office SF
Retail SF
Residential
Units
Developer/Owner
16,000
256
Cypress
7,500
348
Transwestern
97
Capsa Ventures LLC
208
Trammel Crow Residential
18
Cielo Property Group
21
Corazon
Recently Delivered
2015 Q2
22
Eastside Village
Recently Delivered
2016 Q2
94,500
23
Fourth &
Under Construction
2017 Q2
42,000
24
Alexan on 6th
Under Construction
2017 Q2
25
The Foundry
Under Construction
2017 Q4
75,369
26
The CityLine at MLK Station
Planned
2017 Q3
134,000
11,000
22
CityLine Development
27
Plaza Saltillo
Planned
TBD
120,000
110,000
800
Endeavor
28
One Two East
Planned
TBD
472
Legend Communities
6,440
MULTI-FAMILY
Project Name
Status
Residential Units
Completion Date
Developer/Owner
29
Eleven by Windsor
Recently Delivered
257
2013
Windsor
30
7East
Recently Delivered
186
2015
Stonelake
31
Eastside Station
Recently Delivered
330
2016 Q2
Flournoy
32
Spire
Planned
260
TBD
33
8th and Embassy
Planned
176
TBD
14
SPECIAL REPORT
for new deals done on the Lower Eastside.
million square feet of office and retail use, and over
While rates have historically hovered around 60%
100 acres of public open space. The development
of those in the CBD, recent deliveries of Class A
is nearing its final stages of construction, with the
spaces within the past year have fetched rates on
majority of commercial space completed with the
par with those in older buildings downtown. With
exception of several build-to-suit opportunities.
over 800,000 sf of office product in its pipeline, the
Lower Eastside is set to prove itself as a major player
for centrally-located Austin office space.
The most notable tenants of the Mueller district
include Seton Healthcare’s administrative campus
and Texas Mutual Insurance Co., who announced
Furthermore, Reconnect Austin plans to physically
in April that it will be building its new corporate
remove the greatest barrier between downtown
headquarters next to Dell Children’s Medical
and the Lower Eastside: I-35. The Reconnect Austin
Center – one of largest office deals of the year at
plan proposes to bury I-35 underground and literally
270,000 sf. The close proximity to the new UT
bridge the gap between downtown and East Austin
medical school and Dell Children’s Medical Center
with surface-level walkways, mixed-use buildings
makes the area desirable to medical office users.
and open areas. While such plans will likely not be
realized anytime soon, they point to the growth of
As the popularity of East Austin
East Austin as a primary urban area.
continues to grow, tenants and residents
Central Eastside
alike will surely desire the next, hippest
spots with affordability and
To the north of 12th Street from the Lower Eastside lies
proximity to downtown.
the Central Eastside. The Central Eastside extends up
to 51st Street and East to Highway 183. If the Lower
Eastside is considered an extension of downtown,
then the Central Eastside would be considered an
The Central Eastside is also home Austin’s second
extension of the University of Texas. Just east of I-35,
transit oriented development east of I-35: MLK
UT has its baseball and softball fields, as well as
Station. Cityline Companies LLC is planning the
several administrative buildings. The university is still
Cityline at MLK Station development. Set to deliver
in the market to purchase and redevelop lots as it
in 2017, the CityLine Development will offer over
expands its footprint.
130,000 of office space, 11,000 sf of retail,
The Central Eastside is tamer than the Lower Eastside,
as residents are typically graduate students or young
families, often new to Central Texas. To that end,
multi-national retailers are more apt to lay claim to
this area, most notably in the Mueller Community.
After Austin’s first civilian airport, Robert Mueller
Municipal Airport, was replaced by Austin Bergstrom
International Airport in 1999, the 700-acre site was
redeveloped into a Planned Unit Development (PUD)
by Catellus. The area is replete with single and
multi-family housing for over 13,000 residents, 4
15
and 36,000 sf of residential townhomes, as well
as a structured parking garage. Currently under
construction across the street, the MLK Station
Apartments will also offer 355 multi-family units as
well as 11,000 sf of restaurant and retail space.
100,000 sf of office space already exists at MLK
Station. Completed in 2015, 2921 East 17th Street
Buildings B-D are fully leased and home to several
Austin
nonprofits,
including
Sustainable
Food
Center, PeopleFund, Creative Action and Interfaith
Action of Central Texas.
SPECIAL REPORT
Eastside Village
Thoroughfares such as Airport Boulevard, Manor Road
and Martin Luther King Jr. Boulevard are examples
of core transit corridors connecting the Central
Eastside to the rest of Austin, and many retailers are
capitalizing on the added traffic generated by the
increased accessibility. Manor Road, for example,
has several of the hippest new bars outside of the
downtown and East 6th areas, as well as Salty Sow,
one of Austin’s must-eat restaurants, as evidenced
by Michelle Obama’s recent patronage during this
year’s SXSW conference. Lincoln Ventures is one of
the first office developers to capitalize on the Manor
Road frenzy with two creative office buildings under
construction at The Station on Manor – just blocks
away from the MLK Station TOD – and another
mixed-use development set to break ground later
this year: 2015 Manor, which has already signed
Texas Mutual Insurance Company for approximately
270,000 sf.
Upper Eastside
The Upper Eastside, defined by the area north of
51st Street, south of Highway 290 and west of
Highway 183, is the least developed office market.
Here you will find mainly older, Class B and C office
buildings along the highways and mid-to-late-century
homes in between. The area is not to be dismissed;
however, as just north of Highway 290 lie several
industrial complexes, and many would argue that
the Lower and Central Eastside looked much like
this area does now just a few decades ago. As the
popularity of East Austin continues to grow, tenants
and residents alike will surely desire the next, hippest
spots with affordability and proximity to downtown.
Furthermore, with Round Rock just to the north and
quickly expanding down I-35 as plans are set in
place to ease the traffic flow, the two growing areas
will have to meet somewhere in between.
16
SPECIAL REPORT
1711 Cesar Chavez
WHAT DOES THIS MEAN FOR YOU?
Landlords: The Eastside presents an exciting
Tenants: If you’re looking for an opportunity to re-
opportunity to invest in one of Austin’s fastest grow-
locate within Austin, the Eastside is in high demand
ing submarkets. With so much support from the
and can be a great fit for modern tenants. With
City of Austin to develop the area, and with more
a burgeoning bar and restaurant scene, employees
gracious land-use regulations, the neighborhood
will be enlivened to office within walking distance
has certainly not hit its full potential yet. As long as
of some of Austin’s coolest amenities. Chances are
Austin continues to grow, people are going to flock
some of your employees are already living there.
to the Eastside since it embodies so much that Aus-
Time is of the essence though, as rents are growing
tin stands for: quirky, creative, authentic, unique.
at a faster pace than in other submarkets. One of
This makes the Eastside more of a competitor to
AQUILA’s own clients, for example, signed a lease
capture the media-type and technology firms that
on the Eastside for $12 per sf in 2012. Just three
may have historically looked for space in the other
years later they signed another lease on the Eastside
primary submarkets. An example of such a com-
for double that amount. With most new build-outs,
pany is Conde Nast. Just five years ago it would
asking rents are in the low-to-mid-twenties, compa-
have been unimaginable to see a multinational
rable to those in the Northwest submarket.
media publishing company sign a lease for space
east of I-35. Now, however, the company will feel
right at home.
1
http://www.forbes.com/sites/morganbrennan/2012/09/20/americas-hippest-hipster-neighborhoods/#30546b41ccaa
To be eligible to gentrify, a tract's median household income and median home value needed to fall within the bottom 40th percentile of all tracts within a metro area
at the beginning of the decade. Tracts considered to have gentrified recorded increases in the top third percentile for both inflation-adjusted median home values and
percentage of adults with bachelors’ degrees.
2
17
3
http://www.governing.com/gov-data/austin-gentrification-maps-demographic-data.html
4
Reconnectaustin.com
AUSTIN CITYWIDE
2Q UPDATE
300,427 SF
Net Absorption
10.40%
Direct & Sublease Vacancy Rate
$37.02
Avg. Class A Full Service Rental Rate
View of Hartland Plaza and downtown via 5th Street; Photo by Scott Mason Photography
18
SNAPSHOT:
CAPITAL MARKETS
MAJOR SALES TRANSACTIONS
100 CONGRESS
SOLD AVENUE
Market
CBD
CHAMPION
SOLD OFFICE PARK
Market
AUSTIN
SOLD CENTRE
NW
Market
CBD
A
Class
A
Class
A
Class
Size (SF)
412,000
Size (SF)
221,136
Size (SF)
326,335
Buyer
Invesco Real Estate
Buyer
Menlo Equities
Buyer
Sidra Real Estate, Inc.
Seller
Metlife Real Estate
Investors
Seller
Granite Properties
Seller
Lincoln Property Company
Price
$125,000,000
Price
$92,900,000
Price
$130,000,000
Price/SF
$607
Price/SF
$420
Price/SF
$398
Notes
Invesco bought 50% stake,
Metlife retained 50%
PLAZA ON THE
SOLD LAKE I & II
EASTSIDE
SOLD VILLAGE
LAKEWOOD ON
SOLD THE PARK, BLDG B
Market
SW
Market
E
Market
NW
Class
A
Class
A
Class
B
Size (SF)
234,874
Size (SF)
95,135
Size (SF)
102,056
Buyer
Intercontinental Real Estate
Corp
Buyer
CIM Group
Buyer
CapRidge Partners
Seller
Cornerstone
Seller
Equity Commonwealth
$74,750,000
Transwestern Development
Co.
Seller
Price
Price
$20,958,958
Price/SF
$318
Price/SF
$205
Price
$32,750,000
Price/SF
$344
Interior Space at Eastside Village
19
RIATA CORPORATE
SOLD PARK
STONEBRIDGE
SOLD PLAZA
NW
Market
NW
Class
A
Class
A
Size (SF)
688,433
Size (SF)
386,101
Buyer
Partners Group
Buyer
KBS
Seller
Accesso Partners
Seller
Heitman
Price
Undisclosed
Price
Unknown
Price/SF
Undisclosed
Price/SF
Unknown
Partners Group bought
50% stake, Accesso
retained 50%
Notes
Currently under contract
Market
Notes
MAJOR LEASES SIGNED
Leases signed this quarter over 20,000 sf:
CBD
• Deloitte signed three big leases this quarter, the largest of which is for 47,374 sf at 500 W 2nd. The financial
consulting firm will be relocating their current offices at 400 W. 15th to the new location downtown. Deloitte
signed two smaller leases as well: 12,153 sf at 7700 Parmer Bldg C in the Far Northwest and 13,607 sf at
Westlake Oaks Executive Park in the Southwest submarket.
NORTHWEST
• Trend Micro announced it will fully occupy Domain 5. The IT security firm will be moving in to the 74,805 sf
building this Fall.
• Aristocrat Technologies leased 24,412 sf at Domain 1 in June. Set to move in December, the gaming company
will be relocating from their current offices at Northview Centre II, also in the Northwest submarket.
• Cognitive Scale signed a new lease for 35,751 sf at 9500 Arboretum.
• Atkins Global signed for approximately 37,000 sf at Domain 1. The engineering firm is currently at Bridgepoint
Square, also in the Northwest submarket.
SOUTHWEST
• Emergo Group subleased 20,724 sf of EZCorp’s space at Rollingwood Center I.
• Mirna Therapeutics
leased 23,578 SF at Encino Trace II, bringing the newest Class A office product in the
Southwest to 36% occupied.
20
AUSTIN OFFICE
DEVELOPMENT PIPELINE
This timeline shows office projects over 30,000 SF that have either broken ground or will be breaking ground soon.


2016
2017
3Q
1Q
Braker Pointe III*
195,230 SF
Northwest
500 W 2nd
489,404 SF
CBD
Pioneer Bank Building
46,000 SF
Central
Domain 8
290,983
Northwest
The Diamond Building
at Mueller
35,015 SF
East
*Already existing-coming to market 2Q 2016
4Q
The Station on Manor
31,600 SF
East
2Q
801 Barton Springs
90,500 SF
South
Walsh Tarlton Overlook
55,500 SF
Southwest
Lantana Ridge I & II
175,000 SF
Southwest
Fourth &
42,000 SF
East
3Q
Shoal Creek Walk
218,432 SF
CBD
The Overlook at Barton
Creek
53,091 SF
Southwest
3Q
Westview*
98500 SF
*Already existing-coming to market 4Q 2017
21
CBD

PLANNED
Future Developments
Future Developments
405 Colorado
195,511 SF
CBD
Paloma Ridge C
112,500 SF
Northwest
604 W 6th Street
31,035 SF
CBD
Research Park Bldg 6
117,314 SF
Northwest
Austin American Statesman
TBD SF
CBD
Riata Corporate Park Bldg 1
65,000 SF
Northwest
Novare/Post Office
TBD SF
CBD
Riata Crossing Bldg 6
49,716 SF
Northwest
Rainey Gateway
355,000 SF
CBD
Frontera Ridge
400,000 SF
Round Rock
Third + Shoal
338,279 SF
CBD
St. Elmo
225,000 SF
South
Waller Creek Center
325,000 SF
CBD
The Waterfront
625,000 SF
South
901 E 6th
132,000 SF
East
Galleria Oaks I & II
147,928 SF
Southwest
Canopy
40,200 SF
East
Overwatch Campus Phase II
123,525 SF
Southwest
Cityline at MLK
134,000 SF
East
Regency Park
90,000 SF
Southwest
Mueller Market District
2,000,000 SF
East
Rollingwood Center III
107,000 SF
Southwest
Plaza Saltillo
120,000 SF
East
Southwest
165,000 SF
East
The Backyard Buildings B, J, & H
171,450 SF
Springdale General
The Foundry (310 Comal)
75,369 SF
East
The Terrace 3
203,130 SF
Southwest
The Lakes at TechRidge Buildings A & B
97,600 SF
East
The Terrace 4
285,663 SF
Southwest
The Terrace 5
218,809 SF
Southwest
The Park at Mueller
116,000 SF
East
Amber Oaks Phase I
90,300 SF
Northwest
Amber Oaks Phase II
90,300 SF
Northwest
Amber Oaks Phase III
45,000 SF
Northwest
Aspen Lake Three
128,700 SF
Northwest
Domain Tower
308,000 SF
Northwest
Four Points Centre Building 3
250,000 SF
Northwest
Four Points Centre Building 4
80,000 SF
Northwest
22
23
CBD
2Q UPDATE
Last quarter, Austin’s CBD saw the
biggest quarter-over-quarter jump in asking
Class A rental rates of all time: a $3.88 jump
from 4Q 2015 to 1Q 2016. The primary
cause of this spike can be attributed to the
dramatic increases in operating expenses.
This quarter, the positive trend continued,
though much more steadily, with a stable
$0.41 increase to $47.93. The fact that
there was not a negative shift in rental rates
from such a drastic spike in the first quarter
points to the strength of the market.
115,454 SF
Net Absorption
6.08%
$53.73
View of the State Capitol from the 5th floor of 900 Congress; By: Scott Mason Photography
24
CBD UPDATE
Downtown asking rental rates reached
all-time highs for the second consecutive quarter
across all classes of buildings this quarter. While
the CBD saw negative absorption for the first
time in two years, the majority of this negative
activity occurred in Class B and C buildings.
When looking at the list of Class A buildings in
or near the core of downtown (the list of these
competitive set buildings can be found on page
47), over 100,000 sf of space was absorbed.
This comes in the wake of the delivery of Lincoln
Property Group’s 5th + Colorado, the first Class
A office delivery since 501 Congress one year
ago. 5th + Colorado delivered 84% occupied
with an asking rental rate of $40.00 – tying it
for the highest asking rate in Austin with 100
Congress and Frost Bank Tower.
One of the largest increases in vacancy occurred
at 301 Congress, which saw an increase in
vacancy of 44,541 sf this quarter. This can
be attributed to the fact that Gerson Lehrman
Group was occupying about 40,000 sf of
temporary space while their new space on the
14th & 15th floors was being built-out and off
market. Considering this, only six buildings saw
a true increase in directly unoccupied space,
25
with the average of those increases totaling
approximately 10,500 sf.
In total, there was just over 400,000 sf
available to lease within the downtown Class A
competitive set at the close of the quarter. This
is the highest total of available square footage
in three quarters, but well below the ten-year
average of approximately 700,000 sf. Over
the past ten years, the CBD competitive set
has added 1.3 million sf with an average total
vacancy rate of 12.3%.
With rental rates continuing to squeeze
upwards, the market for prime downtown office
space further tightened this quarter. Between
the two new office projects under construction
– 500 W 2nd and Shoal Creek Walk – there
is only 320,213 sf remaining to pre-lease.
Given these statistics, it appears as though
there is no slowdown in sight for downtown
rental rates, further highlighting the importance
of comparable spaces on the periphery of
downtown.
For an in depth analysis of increasing operating expenses, see the special
report in AQUILA’s 2015 Q4 Austin Market Report
1
Delivery
Quarter
Building Name
NRA (SF)
% Occupied at
Delivery
Asking Base Rental
Rate at Delivery
2014 Q3
IBC Bank Plaza
194,749
93%
$28.50
2015 Q1
Colorado Tower
373,334
96%
$33.00
2015 Q1
Seaholm
143,151
100%
$28.00
2015 Q2
501 Congress
122,551
81%
$32.00
2016 Q2
5th + Colorado
179,000
84%
$40.00
CBD
COMPETITIVE SET PERFORMANCE
CBD COMPETITIVE SET
Quarter
Net
Rentable Area
Direct
Vacant SF
Sublease
Available SF
Net Absorption*
Direct & Sublease
Vacancy Rate
Average Class A Full
Service Rental Rate
2014 Q3
5,827,916
483,868
81,356
227,210
9.70%
$45.13
2014 Q4
5,827,916
503,540
69,160
(7,476)
9.83%
$46.49
2015 Q1
6,344,401
421,858
55,200
612,127
7.52%
$47.28
2015 Q2
6,466,952
479,092
40,409
80,108
8.03%
$47.74
2015 Q3
6,466,952
370,193
38,822
110,486
6.32%
$48.70
2015 Q4
6,471,834
237,718
55,748
120,431
4.53%
$52.03
2016 Q1
6,471,834
239,406
101,083
(47,023)
5.26%
$52.80
2016 Q2
6,651,030
319,379
84,852
115,454
6.08%
$53.73
*Absorption includes sublease space
NET ABSORPTION
600
12%
400
8%
200
0
4%
2014
Q3
2014
Q4
Di rect Vacant SF
2015
Q1
2015
Q2
2015
Q3
2015
Q4
Su blease Avai lable SF
2016
Q1
2016
Q2
Absorption (Thousands of SF)
16%
Vacancy Rate
Availability (Thousands of SF)
800
700
96%
600
95%
500
94%
400
93%
300
92%
200
91%
100
90%
0
89%
(100)
0%
Di rect & Subleas e Vacancy Rate
2014
Q3
2014
Q4
Net Abs orption*
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
Occupancy Rate
AVAILABLE SF VS. VACANCY RATE
88%
Di rect & Subleas e Occupancy Rate
$55
16%
$53
14%
$51
12%
$49
10%
$47
8%
$45
6%
$43
2014
Q3
2014
Q4
2015
Q1
2015
Q2
Average Class A Full Service Rental Rate
2015
Q3
2015
Q4
2016
Q1
2016
Q2
Vacancy Rate
Rental Rate
VACANCY VS. RENTAL RATES
4%
26
CBD DEVELOPMENT
& LARGE AVAILABILITY
27
LARGE BLOCKS OF CONTIGUOUS AVAILABILITY
Building
Available SF
Max. Contiguous
300 West 6th
31,373 SF
29,952 SF
301 Congress
62,471 SF
20,591 SF
One Congress Plaza
26,136 SF
23,142 SF
OFFICE PROJECTS UNDER CONSTRUCTION
Building
500 W 2nd
801 Barton Springs
Shoal Creek Walk
Westview*
Est.
Delivery
% Preleased
Total SF
53%
500,436 SF
1Q 2017
0%
90,500 SF
2Q 2017
61%
218,432 SF
3Q 2017
0%
98,500 SF
4Q 2017
*Already existing - coming to market 4Q 2017
HOTEL/RESIDENTIAL UNDER CONSTRUCTION
Units/Rooms
5th & West
Units/Rooms
Est. Delivery
154 Units
4Q 2017
226 Units, 160 Rooms
TBD
422 Rooms
3Q 2017
1,066 Rooms
3Q 2017
190 Rooms
4Q 2016
436 Units
1Q 2017
The Austin Proper
250 Rooms, 120 Units
2Q 2017
The Independent
370 Units
3Q 2018
Hotel Zaza/Gables
Aloft & Element
Fairmont
Hyatt House Hotel
NorthShore
FUTURE/PLANNED DEVELOPMENTS
Units/Rooms
405 Colorado
604 W 6th Street
Austin American Statesman
Novare/Post Office
Size/Units
Use
195,511 SF
Office
31,035 SF
Office
TBD
Office
TBD
Office
Rainey Gateway
355,000 SF
Office
Third + Shoal
338,279 SF
Office
Waller Creek Center
325,000 SF
Office
164 Units
Multifamily
TBD
Multifamily
196 Units
Multifamily
70 Rainey
Green Water Residential Tower
Rise - 8th & Nueces
28
AVAILABILITY SUMMARY
CBD CLASS A
SUBLEASE SPACE
AVAILABLE SPACE
32
31
30
23
29
28
28
27
27
26
26
26
25
25
25
24
24
24
23
23
23
22
2,674 SF
22
22
31,051 SF
22
22
22
21
29,952 SF
21
21
32,603 SF
21
21
21
20
20
32,603 SF
20
20
20
19
19
33,931 SF
19
19
18
33,931 SF
18
18
18
31,822 SF
17
17
17
17
16
16
16
16
15
15
15
14
14
14
20
19
1,421 SF
6,861 SF
18
18
17
17
17
17
16
16
16
16
15
15
15
15,598 SF
15
14
14
14
14
23,798 SF
14
13
13
12
12
11
11
10
10
9
9
8
15
5,855 SF
29
942 SF
2,502 SF
1,648 SF
2,277 SF2,838 SF
19
19,087 SF
782 SF
18
13
13
13
13
13
13
12
12
12
12
12
12
11
11
11
11
11
11
10
10
10
10
10
10
9
9
9
9
9
9
8
8
8
8
8
8
8
7
7
7
7
7
7
7
7
6
6
6
6
6
6
6
6
5
5
5
5
5
5
5
5
5
4
4
4
4
4
4
4
4
4
3
3
4,118 SF
3
3
3
3
3
3
3
6,593 SF
2
2
19,912 SF
2
6,432 SF2,358 SF
2
2
2
2
2
7,887 SF
1
1
1
2,195 SF
1
1
1
1
1
2,809 SF
2,893 SF
8,487 SF
20,591 SF
17,436 SF
20,396 SF
28,967 SF
4,995 SF
2,965 SF
2
8,860 SF
100 Congress
100 Congress Ave.
300 W 6th
300 W 6th St.
301 Congress
301 Congress Ave.
400 W 15th
400 W 15th St.
500 W 2nd
500 W 2nd St.
501 Congress
501 Congress Ave.
515 Congress
515 Congress Ave.
5th + Colorado
201 W 5th St.
600 Congress
600 Congress Ave.
411,536 SF
22 Floors
95% Leased
$39.00-$40.00 NNN
$20.84 Op/Ex
$59.84-$60.84 Gross
454,225 SF
23 Floors
93% Leased
$36.00 NNN
$21.75 Op/Ex
$57.75 Gross
428,419 SF
22 Floors
85% Leased
$34.00-35.00 NNN
$19.55 Op/Ex
$53.55-$54.55 Gross
281,196 SF
17 Floors
97% Leased
$25.50 NNN
$14.65 Op/Ex
$40.15 Gross
500,436 SF
29 Floors
47% Pre-Leased
$38.00 - $40.00
NNN
$15.50 Op/Ex
122,551 SF
5 Floors
76% Leased
$20.00-$35.00 NNN
$20.93 Op/Ex
$40.93-$55.93 Gross
258,176 SF
26 Floors
99% Leased
$34.00 NNN
$18.05 Op/Ex
$52.05 Gross
179,000 SF
18 Floors
85% Leased
$33.00-$40.00 NNN
$15.20 Op/Ex
$48.20-$55.20 Gross
32 Floors
98% Leased
$34.00 NNN
$18.75 Op/Ex
$52.75 Gross
$52.75 Gross
29
Availability Summary
1
33
32
31
3,325 SF
30
30
29
29
29
28
28
28
27
27
27
3,733 SF
26
26
25
25
24
24
24
23
23
23
22
22
22
21
21
21
21
21
20
20
20
20
20
20
19
19
19
19
19
19
18
18
18
18
18
18
17
17
17
17
17
17
16
16
16
26
4,471
25
16
16
16
16
15
15
15
15
15
15
15
14
14
14
14
14
14
14
13
13
13
13
13
13
13
13
21,218 SF
12
12
12
12
12
12
12
12
21,218 SF
11
11
11
11
11
11
11
21,218 SF
10
10
10
10
878 SF
10
10
21,218 SF
9
9
9
9
23,142 SF
9
9
8
8
7
7
11
7,322 SF
10
10
9
2,110 SF
7
6
8,933 SF
4,403 SF
5
5,418 SF
9
1,993 SF
14,328 SF
8
8
8
8
7
7
7
7
7
6
6
6
6
6
6
5
5
5
5
5
5
8
8
10,821 SF
30
2,116 SF
6
7,306 SF
5
4
963 SF
4
4
4
4
4
4
4
3
1,716 SF
3
3
3
3
3
3
3
2
2
2
2
2
2
2
2
1
1
1
1
1
1
1
1
816 Congress
816 Congress Ave.
Austin Centre
701 Brazos St.
Chase Tower
221 W 6th St.
Colorado Tower
303 Colorado St.
Frost Bank Tower
401 Congress Ave.
IBC Bank Plaza
500 W 5th St.
One Congress Plaza
111 Congress Ave.
San Jacinto Center
98 San Jacinto Blvd.
Shoal Creek Walk
835 W 6th St.
434,081 SF
20 Floors
97% Leased
$27.00 -32.00 NNN
$17.59 Op/Ex
$44.59 - 49.59 Gross
326,335 SF
16 Floors
93% Leased
$28.00 NNN
$17.65 Op/Ex
$45.65 Gross
389,503 SF
21 Floors
99% Leased
$37.50 NNN
$19.85 Op/Ex
$57.35 Gross
373,334 SF
30 Floors
100% Leased
$34.00 NNN
$16.83 Op/Ex
$50.83 Gross
535,078 SF
33 Floors
97% Leased
$40.00 NNN
$21.75 Op/Ex
$61.75 Gross
194,749 SF
13 Floors
100% Leased
$33.00 NNN
$21.00 Op/Ex
$54.00 Gross
518,385 SF
30 Floors
95% Leased
$35.00-$38.00 NNN
$18.14 Op/Ex
$53.14-$56.14 Gross
406,279 SF
21 Floors
100% Leased
$36.00 NNN
$20.02 Op/Ex
$56.02 Gross
218,432 SF
14 Floors
61% Pre-Leased
$31.00 - $35.00
NNN
$16.50 Op/Ex
$47.50 - $51.50 Gross
30
NORTHWEST
SUBMARKET
2Q UPDATE
-79,052 SF
Net Absorption
12.53%
$35.44
Following a drop in vacancy rates
at the end of 2015, the NW submarket
has experienced an uptick in vacancy
rates this year. The 1Q 2016 vacancy
rate rose significantly in response to the
delivery of two major projects, Domain
1 and Domain 5, which introduced
over 200,000 sf of new space to the
Northwest submarket. Coupled with the
addition of IBM’s Broadmoor Campus,
the vacancy rate rose over two hundred
basis points from 4Q 2015 to 1Q 2016.
NORTHWEST UPDATE
Domain 8, currently under construction with
an estimated delivery date of 1Q 2017, will
add another 300,000 sf to the NW submarket.
This addition, which will be the largest Class A
office building at The Domain, is currently 0%
preleased. However, it is widely believed that
there are deals in place to fill most of this space
upon delivery.
This quarter, the bulk of the availability in the
competitive set can be attributed to Braker
Pointe III. As renovations are underway at
the old Harcourt building, almost 200,000 sf
of vacant space is being counted against the
area’s absorption. Out of the 132 competitive
set buildings in the Northwest submarket, only
17 saw an increase in directly available area,
while 27 experienced positive direct absorption.
Several transactions occurred this quarter in
the NW submarket. Two major properties
exchanged hands, including the 137,000 sf
Quarry Oaks III, leased by Bazaarvoice, and
the 100,000 sf Lakewood on the Park B, which
sold for approximately $21 million. Trend Micro
signed on for approximately 75,000 sf of space
at Domain 5. Accruent also recently announced
that it will consolidate its Austin headquarters in
a building at the Domain.
32
NORTHWEST UPDATE
NORTHWEST MICROMARKETS
Round Rock
Cedar Park
FAR NORTHWEST/
ROUND ROCK Pﬂugerville
Lake Travis
McNeil
Arboretum
Domain
ARBORETUM
SHEPHERD
MOUNTAIN
West Lake
Hills
Tarrytown
Austin
The flurry of activity within the Arboretum/
Domain Micromarket suggests that proximity
to amenities is a major factor attracting
tenants
to
the
Northwest
submarket.
The 2Q 2016 rental rate for this micromarket,
$36.09, is more than a dollar higher than the
rental rate for the overall submarket and quickly
approaching rates in the Southwest submarket.
At $34.62 in 2Q, rental rates in the Northwest
33
remain the lowest of the three major submarkets.
Combined with the growth of amenities in
and around the Domain, comparatively low
rental rates will likely continue to draw major
companies into the Northwest submarket.
Images on pages 31 + 32: Aspen Lake Two; By: Scott Mason Photography
NORTHWEST
NORTHWEST COMPETITIVE SET
Quarter
Net
Rentable Area
Direct
Vacant SF
Sublease
Available SF
Net Absorption*
Direct & Sublease
Vacancy Rate
Service Rental Rate
2014 Q3
2014 Q4
12,389,252
911,833
321,739
12,845,611
1,197,426
320,587
189,579
9.96%
$32.12
171,918
11.82%
$32.93
2015 Q1
12,931,909
992,203
2015 Q2
13,120,924
897,208
292,334
319,774
9.93%
$33.39
284,035
292,309
9.00%
$33.83
2015 Q3
13,634,732
1,453,835
287,248
(46,032)
12.77%
$33.40
2015 Q4
2016 Q1
14,156,083
1,460,249
235,206
566,979
11.98%
$34.14
15,142,863
1,422,335
395,496
864,404
12.00%
$35.14
2016 Q2
15,142,863
1,471,413
425,470
(79,052)
12.53%
$35.44
NET ABSORPTION
12%
1,200
9%
800
6%
400
3%
0
0%
2014
Q3
2014
Q4
Di rect Vacant SF
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
1,000
92%
600
91%
400
90%
200
89%
0
88%
(200)
93%
800
2014
Q3
2014
Q4
Net Abs orption*
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
Occupancy Rate
15%
1,600
2,000
Vacancy Rate
87%
$36
15%
$35
13%
$34
11%
$33
9%
$32
7%
$31
5%
$30
2014
Q3
2014
Q4
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
Vacancy Rate
Rental Rate
3%
34
NORTHWEST AUSTIN
LARGE OFFICE AVAILABILITY
20,000 SF + of available space
Building
Direct
Vacant SF
Sublease
Available
SF
Total
Available
SF
Building
Direct
Vacant SF
Sublease
Available
SF
Total
Available
SF
1
Amber Oaks F
60,652
0
60,652
14
Paloma Ridge B
81,101
0
81,101
2
Amber Oaks J
6,245
33,147
39,392
15
Park Centre Bldg 3
45,711
5,397
51,108
3
Atrium Office Centre
27,384
0
27,384
16
Prominent Pointe I
30,987
0
30,987
4
Austin Oaks
5
Braker Pointe III
6
Bridgepoint Square 2
53,246
2,659
55,905
17
Research Park Place 8
33,518
0
33,518
167,158
0
167,158
18
Research Park Plaza IV
3,355
96,334
99,689
4,814
16,005
20,819
19
Research Park Plaza V
72,709
0
72,709
7
Domain 1
86,271
0
86,271
20
Reserve at Bull Creek B
43,713
0
43,713
8
Domain 3
0
20,041
20,041
21
Reserve at Bull Creek C
43,695
0
43,695
9
IBM Broadmoor Campus
144,818
0
144,818
22
57,188
0
57,188
0
21,477
21,477
9,616
16,662
26,278
10
Ladera Bend 3
11
Lakewood Center I
12
Lakewood on the Park B
13
Paloma Ridge A
35
0
27,980
27,980
23
23,885
45,020
68,905
24
River Place Corporate Park II
24,446
0
24,446
25
The Park at 8300 N. MoPac
6,911
31,958
38,869
103,368
0
103,368
26
Tower of the Hills/Tower Point
25,383
0
25,383
NORTHWEST AUSTIN
OFFICE DEVELOPMENT
Building
Total SF
Percent Preleased
Estimated Delivery
Status
1
Braker Pointe III*
195,230
15%
2016 Q3
Coming to Market
2
Domain 8
290,983
0%
2017 Q1
Under Construction
3
Four Points Centre Bldg 3
250,000
0%
2018 Q1
Planned
4
Amber Oaks Phase I
90,300
0%
Planned
Planned
5
Amber Oaks Phase II
90,300
0%
Planned
Planned
6
Amber Oaks Phase III
45,000
0%
Planned
Planned
7
Aspen Lake Three
128,700
0%
Planned
Planned
8
Domain Tower
308,000
0%
Planned
Planned
9
Frontera Ridge
400,000
0%
Planned
Planned
10
Four Points Centre Bldg 4
80,000
0%
Planned
Planned
11
Paloma Ridge C
112,500
0%
Planned
Planned
12
Research Park Bldg 6
117,314
0%
Planned
Planned
13
65,000
0%
Planned
Planned
14
49,716
0%
Planned
Planned
*Already existing - Coming to market 3Q 2016
Planned
Under Construction
36
SOUTHWEST
SUBMARKET
2Q UPDATE
-20,795 SF
Net Absorption
10.99%
$38.82
A historically resilient submarket,
the performance of the competitive set
of Southwest Class A office buildings
remained fairly on par with the previous
two quarters. With no major deliveries
since Encino Trace in 3Q 2015, vacancy
rates steadily climbed for the third quarter
in a row, reaching its highest level in almost
four years at nearly 11%. Absorption is
now at a negative 13,653 sf for the year.
Lobby of The Terrace; Photo by Scott Mason Photography
SOUTHWEST UPDATE
In spite of these seemingly adverse statistics,
asking rental rates steadily marched upwards
to a record high rate of $38.82 – the 17th
consecutive quarter of record highs – and several
new projects and leases were announced this
quarter.
lifestyle company prepares for explosive growth
with mentions of an initial public offering,
the move down the street from their current
headquarters at 5301 Southwest Parkway will
be a short, but huge event for both the company
and the Austin real estate market.
In addition to Lantana Ridge, two more projects
Mirna Therapeutics signed for approximately
broke ground this quarter: Walsh Tarlton
24,000 sf at the recently delivered Encino
Overlook and The
Trace II. According to
Overlook at Barton
their Form 8-K filing
Creek, which will
with the SEC in June,
add
55,500
sf
Mirna is entitled to
and 53,091 sf of
approximately $80/
Over a million
space, respectively.
sf of improvement
square
feet
of
Meanwhile,
over
allowances
and
planned developments
a million square
three months of free
feet
of
planned
rent for a 123-month
remain in the pipeline
developments remain
lease with a starting
waiting to sign major
in
the
pipeline
base rental rate of
waiting to sign major
approximately $25/
tenants and begin
tenants and begin
sf – $1.50/sf higher
construction.
construction.
than the asking rate.
Apple plans to start
moving in to its
215,000 sf space at
Capital Ridge later
this year – more than a year after the lease
was signed. Given this information, CBRE,
who tracks absorption according to physical
occupancy of space, will likely show a huge
uptick in absorption in the Southwest submarket
in 3Q.
It was confirmed this quarter that Yeti signed on
to fully occupy 175,000 sf at Lantana Ridge I
& II upon its delivery in 2017. As the outdoor
Given the above
information,
the
Southwest submarket
proves to be a curious
one. Landlords are proceeding cautiously
with developments, hoping to land credit or
desirable tenants like Apple or Yeti before
breaking ground. Smaller companies are still
attracted to the Southwest submarket as well
due to its proximity to Westlake Hills, where
many executives reside. There is increasing
demand for higher-quality spaces – much like
in the CBD. For example, in the Near Southwest
38
SOUTHWEST UPDATE
micromarket, there have been ten deals under
10,000 sf this year in The Terrace project alone.
The movement of tenants towards newer spaces
has caused Class A rental rates to rise while
Class C rates dropped by $1.74 this quarter.
Furthermore, Class A is the only property class to
experience positive total absorption year-to-date.
SOUTHWEST MICROMARKETS
Lake Travis
McNeil
Arboretum
Domain
FAR SW
West Lake
Hills
Barton Creek
Tarrytown
Austin
Lost Creek
NEAR SW
Sunset
Valley
ABIA
39
SOUTHWEST
SOUTHWEST COMPETITIVE SET
Quarter
Net
Rentable Area
Direct
Vacant SF
Sublease
Available SF
Net Absorption*
Direct & Sublease
Vacancy Rate
Service Rental Rate
2014 Q3
7,102,874
294,587
169,604
132,700
6.54%
$35.27
2014 Q4
7,102,547
386,333
182,477
(104,946)
8.01%
$35.87
2015 Q1
7,100,750
399,919
188,613
(21,519)
8.29%
$36.76
2015 Q2
7,782,464
428,605
213,812
627,829
8.25%
$37.35
2015 Q3
7,949,325
353,625
264,345
191,308
7.77%
$37.41
2015 Q4
8,158,872
634,326
246,492
(53,301)
10.80%
$37.94
2016 Q1
8,161,143
680,309
195,638
7,142
10.73%
$38.47
2016 Q2
8,161,143
696,616
200,126
(20,795)
10.99%
$38.82
15%
800
12%
600
9%
400
6%
200
0
3%
2014
Q3
2014
Q4
Di rect Vacant SF
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
800
95%
600
93%
400
91%
200
89%
0
87%
(200)
0%
2014
Q3
2014
Q4
Net Abs orption*
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
Occupancy Rate
1,000
NET ABSORPTION
Vacancy Rate
85%
$40
12%
$38
10%
$36
8%
$34
6%
$32
2014
Q3
2014
Q4
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
Vacancy Rate
Rental Rate
4%
40
SOUTHWEST AUSTIN
LARGE OFFICE AVAILABILITY
20,000 SF + of available space
Building
1
41
Direct Vacant SF
Sublease Available SF
Total Available SF
3700 San Clemente
70,192
0
70,192
135,366
0
135,366
5,896
24,275
30,171
2
3900 San Clemente
3
Barton Skyway II
4
Cityview Center
5
Encino Trace II
6
Las Cimas II
7
8
9
The Park on Barton Creek 1
0
24,478
24,478
101,822
0
101,822
19,402
6,641
26,043
Rialto II
0
36,421
36,421
Rollingwood Center I & II
0
31,000
31,000
21,262
2,203
23,465
10
38,991
0
38,991
11
The Summit at Lantana Bldgs 1-5
52,934
0
52,934
12
The Terrace 6
13,055
8,258
21,313
SOUTHWEST AUSTIN
OFFICE DEVELOPMENT
Building
Total SF
1
2
3
The Overlook at Barton Creek
4
5
Percent Preleased
Estimated Delivery
Status
55,500
0
2017 Q2
Under Construction
175,000
100%
2017 Q2
Under Construction
53,091
0
2017 Q3
Under Construction
Galleria Oaks I & II
147,928
50%
Planned
Planned
The Backyard - Buildings B, J, & H
171,450
0
Planned
Planned
6
Overwatch Campus Phase II
123,525
0
Planned
Planned
7
Regency Park
90,000
0
Planned
Planned
8
Rollingwood Center III
107,000
0
Planned
Planned
9
The Terrace 3
203,130
0
Planned
Planned
10
The Terrace 4
285,663
0
Planned
Planned
11
The Terrace 5
218,809
0
Planned
Planned
Planned
Under Construction
42
AVAILABILITY SUMMARY
SOUTHWEST CLASS A
4,901 SF
5
5
5
5
5
4
4
4
4
4
4
3
3
3
3
3
2
2
1
1
3
11,073 SF
2
1
NSW
7,153 SF
2
5,736 SF
2
2
1
5,438 SF
1
1
NSW
NSW
NSW
3,647 SF
2,762 SF
NSW
NSW
Barton Oaks Plaza I
901 S Mopac Expy
Barton Oaks Plaza II
901 S Mopac Expy
Barton Oaks Plaza III
901 S Mopac Expy
Barton Oaks Plaza IV
901 S Mopac Expy
Barton Oaks Plaza V
901 S Mopac Expy
One Barton Skyway
1501 S Mopac Expy
5 Floors
99,404 SF
95% Leased
$27.00 NNN
$15.98 Op/Ex
$42.98 Gross
5 Floors
116,368 SF
84% Leased
$26.50 NNN
$15.56 Op/Ex
$42.06 Gross
5 Floors
121,467 SF
91% Leased
$26.50 NNN
$14.59 Op/Ex
$41.09 Gross
5 Floors
104,324 SF
100% Leased
$26.27 NNN
$14.73 Op/Ex
$41.00 Gross
5 Floors
119,549 SF
97% Leased
$27.00 NNN
$14.47 Op/Ex
$41.47 Gross
4 Floors
195,324 SF
100% Leased
$26.50 NNN
$14.95 Op/Ex
$41.45 Gross
5
42,671 SF
4
3
42,369 SF
3
3
2
16,782 SF
2
4
1
1
FSW
FSW
3,700 SF
3
2
19,402 SF 2,947 SF
1
3,694 SF
FSW
3,042 SF
4
6,176 SF
3
2
1
1
1
FSW
FSW
FSW
Encino Trace II
5707 Southwest Pkwy
Las Cimas I
804 Las Cimas Pkwy
Las Cimas II
807 Las Cimas Pkwy
Las Cimas III
805 Las Cimas Pkwy
Las Cimas IV
900 S Capital of Tx Hwy
4 floors
161,606 SF
100% Leased
$23.50 NNN
$13.15 Op/Ex
$36.65 Gross
4 floors
158,137 SF
36% Leased
$23.50 NNN
$13.15 Op/Ex
$36.65 Gross
3 Floors
82,853 SF
96% Leased
$23.50 NNN
$14.29 Op/Ex
$37.79 Gross
4 Floors
156,682 SF
88% Leased
$26.50 NNN
$14.92 Op/Ex
$41.42 Gross
4 Floors
156,682 SF
94% Leased
$26.50 NNN
$14.73 Op/Ex
$41.23 Gross
5 Floors
142,000 SF
100% Leased
$27.00 NNN
$14.58 Op/Ex
$41.58 Gross
18,658 SF
17,159 SF
27,276 SF
NSW
5
5
4
11,874 SF
4
3
50,798 SF
3
3
3
3
2
2
2
2
50,798 SF
2
1
1
1
1
21,896 SF
1
NSW
Rollingwood Center I
2500 Bee Caves Rd
Rollingwood Center II
2500 Bee Caves Rd
4 Floors
145,437 SF
100% Leased
$30.00 NNN
$12.00 Op/Ex
$42.00 Gross
2 Floors
69,150 SF
100% Leased
$30.00 NNN
$12.00 Op/Ex
$42.00 Gross
FSW
3600 San Clemente B
3600 N Capital of
Tx Hwy
3 Floors
90,267 Sf
100% Leased
$26.50 NNN
$15.63 Op/Ex
$42.13 Gross
51,534 SF
FSW
3700 San Clemente
3700 N Capital of
Tx Hwy
5 Floors
249,870 SF
72% Leased
$26.00 NNN
$10.50 Op/Ex
$36.50 Gross
3
2
Encino Trace I
5707 Southwest Pkwy
4
FSW
3900 San Clemente
3900 N Capital of
Tx Hwy
5 Floors
251,146 SF
46% Leased
$24.50 NNN
$13.81 Op/Ex
$38.31 Gross
Availability Summary
43
14,373 SF
2
Southwest Submarket
4
3
52,934 SF
2
1
FSW
The Summit at Lantana Bldg 300
7171 Southwest Pkwy
4 Floors
217,077 SF
76% Leased
$25.00 NNN
$13.06 Op/Ex
$38.06 Gross
7
6
5
5
4
4
4
4
4
3
3
3
3
3
2
2
2
2
2
2
1
1
1
1
1
1
4
3
5,896 SF 24,275 SF
NSW
9,303 SF
NSW
5
NSW
FSW
FSW
FSW
Two Barton Skyway
1601 S Mopac Expy
Three Barton Skyway
1221 S Mopac Expy
Four Barton Skyway
1301 S Mopac Expy
Capital Ridge
320 Capital of Tx Hwy
Dimensional Place 1
6304 Bee Caves Rd
Dimensional Place 2
6300 Bee Caves Rd
4 Floors
195,639 SF
97% Leased
$26.50 NNN
$14.61 Op/Ex
$41.11 Gross
4 Floors
173,302 SF
95% Leased
$26.50 NNN
$14.52 Op/Ex
$41.02 Gross
5 Floors
222,580 SF
100% Leased
$26.50 NNN
$13.86 Op/Ex
$40.36 Gross
7 floors
238,000 SF
100% Leased
$30.00 NNN
$10.56 Op/Ex
$40.56 Gross
7 Floors
220,000 SF
100% Leased
$24.00 NNN
$12.42 Op/Ex
$36.42 Gross
5 Floors
156,000 SF
100% Leased
$22.50 NNN
$15.00 Op/Ex
$37.50 Gross
5
4
3
3
2
2
4,125 SF
1
1
NSW
5
21,262 SF
4
3
2,203 SF
5
3
9,506 SF
2
20,228 SF
2
1
18,763 SF
1
NSW
The Park on Barton
Creek One
3711 S Mopac Expy
5 floors
102,608 SF
79% Leased
$25.00 NNN
$14.02 Op/Ex
$39.02 Gross
3 Floors
121,147 SF
100% Leased
$27.50 NNN
$14.02 Op/Ex
$41.52 Gross
9,980 SF
2
NSW
Mira Vista
2705 Bee Caves Rd
3
Plaza on the Lake I
5001 Plaza on the
Lake Dr.
3 Floors
122,530 SF
93% Leased
$28.50 NNN
$15.35 Op/Ex
$43.85 Gross
6
5,725 SF
6
5
8,258 SF
5
2,974 SF
4
4
4
4
4
3
3
6,354 SF
3
3
3
2
2
3,840 SF
2
2
2
1
1
FSW
The Summit at Lantana Bldg 400
7171 Southwest Pkwy
4 Floors
220,218 SF
100% Leased
$25.00 NNN
$13.06 Op/Ex
$38.06 Gross
NSW
3,447 SF
NSW
1
4,356 SF
NSW
FSW
Plaza on the Lake II
4801 Plaza on the
Lake Dr.
3 Floors
114,261 SF
100% Leased
$28.50 NNN
$14.96 Op/Ex
$43.46 Gross
2,052 SF
19,000 SF
1
NSW
The Terrace I
2600 Via Fortuna
The Terrace II
2700 Via Fortuna
The Terrace VI
2901 Via Fortuna
The Terrace VII
2801 Via Fortuna
5 Floors
115,460 SF
91% Leased
$25.50 NNN
$15.68 Op/Ex
$41.18 Gross
5 Floors
114,635 SF
97% Leased
$25.50 NNN
$15.65 Op/Ex
$41.15 Gross
6 Floors
197,909 SF
93% Leased
$28.50 NNN
$15.92 Op/Ex
$44.42 Gross
6 Floors
192,214 SF
99% Leased
$28.50 NNN
$15.99 Op/Ex
$44.49 Gross
Austin, TX
Q2 2016 Class A Office Space
2
1
FSW
5000 Plaza on the Lake
5000 Plaza on the
Lake Dr.
3 Floors
119,463 SF
92% Leased
$27.50 NNN
$15.85 Op/Ex
$43.35 Gross
5
1
8,936 SF
1
FSW
The Park on Barton
Creek Two
3711 S Mopac Expy
5 floors
102,587 SF
62% Leased
$25.00 NNN
$14.47 Op/Ex
$39.47 Gross
3
To find out more, visit:
SUBLEASE
SPACE
AVAILABLE
SPACE
aquilacommercial.com/reports
44
View from a patio at The Terrace; Photo by Scott Mason Photography
TheAppendix
Competitive Sets
47-58
Central Business District
47
Arboretum/Domain
48
Shepherd Mountain/2222
51
Far Northwest
53
Near Southwest
55
Far Southwest
57
Longterm Performance of Submarkets
59
Longterm Performance: CBD vs. Suburban
60
CBD Overall Performance
61
Southwest Overall Performance
63
Northwest Overall Performance
65
The AQUILA Methodology
67
COMPETITIVE SET
BUILDING LISTS AND
SUBMARKET DATA
CBD COMPETITIVE SET BUILDINGS
Net Rentable Area
Direct
Vacant SF
Sublease
Available SF
Asking
Rental Rate
Estimated
OpEx
100 Congress
411,536
20,182
5,855
$40.00 ↑
$20.84
300 West 6th
454,225
31,373 ↑
3,616 ↑
$36.00
$21.75
301 Congress
418,338
62,471 ↑
0↓
$35.00
$19.55
400 West 15th
281,196
8,627
21,442
$25.50 ↓
$15.92
501 Congress
122,747
28,967 ↑
20,396
$35.00
$20.93
515 Congress
263,058
2,277 ↓
2,838 ↓
$34.00 ↑
$18.05
5th + Colorado
179,000
27,047
0
$40.00
$15.20
600 Congress Ave.
503,951
9,642 ↓
0
$34.00
$18.75
816 Congress
434,081
10,821
3,325 ↑
$32.00 ↑
$17.59
Austin Centre
326,335
21,621 ↓
3,826 ↓
$28.00
$17.65
Capitol Center
164,044
9,985 ↑
7,097 ↓
$30.00
$19.70
Capitol Tower
172,837
10,580 ↑
0
$31.00
$16.52
Chase Tower
389,503
1,993 ↓
5,418
$37.50 ↑
$19.85 ↑
Colorado Tower
373,334
0
0
$34.00
$16.83
Frost Bank Tower
535,078
14,328 ↑
0
$40.00
$21.75
IBC Bank Plaza
194,749
0
0
$33.00
$21.00
Lavaca Plaza
118,635
7,784 ↑
0↓
$32.50
$21.74
Littlefield Building
109,779
15,132 ↓
0
$35.00
$18.08
One Congress Plaza
518,385
26,136 ↓
3,733
$38.00 ↓
$18.14 ↑
San Jacinto Center
406,279
0
7,306 ↑
$36.00
$20.02 ↑
Scarbrough Building
130,789
10,413 ↓
0
$35.00 ↑
$19.04
Seaholm
143,151
0
0
$28.00
$12.00
Building Name
47
COMPETITIVE SET
ARBORETUM/DOMAIN
MICROMARKET PERFORMANCE
ARBORETUM/DOMAIN COMPETITIVE SET
Quarter
Net
Rentable Area
Direct
Vacant SF
Sublease
Available SF
Net Absorption*
Direct & Sublease
Vacancy Rate
Service Rental Rate
2014 Q3
6,253,014
401,651
157,535
173,068
8.94%
$33.66
2014 Q4
6,474,987
445,544
121,157
214,458
8.75%
$34.38
2015 Q1
6,553,774
447,850
71,595
126,043
7.93%
$34.46
2015 Q2
6,742,789
389,248
63,891
255,321
6.72%
$34.77
2015 Q3
6,719,697
407,169
76,078
(53,200)
7.19%
$34.38
2015 Q4
6,938,611
322,314
93,200
286,647
5.99%
$34.82
2016 Q1
8,253,506
617,666
88,016
1,024,727
8.55%
$35.76
2016 Q2
8,253,506
687,546
100,846
(82,710)
9.55%
$36.09
15%
800
12%
600
9%
400
6%
200
3%
0
0%
2014
Q3
2014
Q4
Di rect Vacant SF
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
1,100
1,000
900
800
700
600
500
400
300
200
100
0
(100)
97%
95%
93%
91%
89%
Occupancy Rate
1,000
NET ABSORPTION
Vacancy Rate
87%
2014
Q3
2014
Q4
Net Abs orption*
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
85%
$37
11%
$36
9%
$35
7%
$34
5%
$33
2014
Q3
2014
Q4
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
Vacancy Rate
Rental Rate
3%
48
COMPETITIVE SET
ARBORETUM/DOMAIN MICROMARKET COMPETITIVE SET BUILDINGS
Net Rentable
Area
Direct
Vacant SF
Asking
Rental Rate
Estimated
OpEx
3307 Northland
98,888
1,103 ↓
9500 Arboretum
182,331
0
0
$17.50
$11.52 ↑
0
$22.00
$13.51
Arboretum Atrium
90,280
2,515
8,222 ↑
$21.00
$14.38
Arboretum Plaza One
146,347
Arboretum Plaza Two
98,828
2,446 ↑
0
$27.00
$15.53
0
0
$27.00
$15.53
Arboretum Point
150,033
0
0
$23.00
$13.44
Atrium Office Centre
199,858
27,384 ↑
0
$18.00
$8.05
Austin Oaks
445,240
53,246 ↑
2,659
$19.00
$11.60
Balcones Centre
74,876
0
0
$24.00
$9.86
Braker Pointe I
77,454
8,714 ↓
0
$22.50
$13.31
Braker Pointe II
103,114
1,953
5,162
$22.50
$13.07
Braker Pointe III
196,380
167,158 ↑
0
$25.00
$12.84
Colina West
69,299
3,448 ↑
1,150
$20.50
$11.73
Domain 1
124,571
86,271
0
$30.00
$11.00
Domain 2
143,331
0
0
$29.00
$11.00
Domain 3
179,006
0
20,041
$26.00 ↑
$10.34
Domain 4
152,012
0
0
$24.00
$11.16
Building Name
Domain 5
78,987
0
0
$26.00
$11.00
Domain 7
221,973
0↓
0
$29.00
$12.00
Domain Gateway
173,962
0
0
$28.00 ↑
$14.95
Great Hills Corporate Center I
59,228
2,403 ↓
0
$18.50
$11.39
Great Hills Corporate Center II
60,429
0↓
0
$18.00
$11.39
Great Hills Corporate Center III
56,422
13,207 ↑
0
$18.50
$11.39
Great Hills Plaza
139,252
5,855 ↓
0
$21.00 ↑
$12.93
Greystone Plaza
78,248
5,800 ↓
0
$20.00
$13.04
Heritage Plaza
74,736
7,677
0
$28.50 ↑
$12.49
IBM Broadmoor Campus
49
Sublease
Available SF
1,111,734
144,818
0
TBD
Neg.
Kaleido I & II
73,149
2,072 ↓
0
$18.50
$9.93
Lakeview Plaza
120,559
9,276 ↑
4,608 ↑
$21.00
$12.22
Northpoint Centre I & II
151,126
1,394 ↓
0
$23.00
$12.33
COMPETITIVE SET
Net Rentable
Area
Direct
Vacant SF
Sublease
Available SF
Asking
Rental Rate
Estimated
OpEx
Offices at the Domain Bldg 1
92,955
0↓
0
$27.50
$15.49
Offices at the Domain Bldg 2
75,509
0
0
$27.50
$14.75
Building Name
One Far West Plaza
70,642
885
0
$18.00
$12.87
Park North I & II
133,568
1,337
0
$19.50
$11.83
Plaza 7000
155,076
6,214 ↓
2,653
$26.00
$13.82
Prominent Pointe I
150,376
30,987 ↓
0
$24.50
$14.72
Prominent Pointe II
102,567
0↓
12,579
$24.50
$15.62 ↓
Quarry Lake Business Center
117,512
0↓
0
$21.00
$11.88 ↓
Quarry Oaks I
165,435
0
0
$27.00 ↑
$11.82
Quarry Oaks II
126,000
2,044
0
$27.00 ↑
$11.48
Quarry Oaks III
137,615
0
11,814
$28.00 ↑
TBD ↑
Reunion Park
118,142
17,116 ↑
0
$19.00
$11.16
Stone Creek I
76,860
0
0
$24.00
$10.90
Stone Creek II
162,723
5,077
0
$24.00
$13.31
Stone Creek Park
77,185
0
0
$20.00
$13.45
Stonebridge Plaza I
193,200
0↓
0
$27.50 ↑
$14.97
Stonebridge Plaza II
192,864
10,898
0
$27.50 ↑
$15.04
Stratum Executive Center Bldg A
61,000
4,055
0
$21.50 ↑
$14.12
Stratum Executive Center Bldg B
61,000
0
0
$21.50 ↑
$14.12
Stratum Executive Center Bldg C
61,000
6,169
0
$21.50 ↑
$14.12
Stratum Executive Center Bldg D
61,000
3,715 ↑
0
$21.50 ↑
$14.12
The Campus at Arboretum 1
60,059
5,351 ↑
0
$23.50
$14.13
33,135
0
0
$23.50
$13.60
32,765
0
0
$23.50
$14.53
85,916
12,572
0
$23.50
$14.17
105,000
0
0
$23.50
$13.94
The Park at 8300 N. MoPac
93,317
6,911
31,958
$23.00
$14.01
UFCU Plaza
246,869
15,194 ↓
0
$22.00 ↑
$13.30
Westech 360 Bldgs 1-4
175,529
4,025 ↑
0
$20.00
$13.60
Westpark Office 1-4
97,034
8,256
0
$18.50
$10.89
50
COMPETITIVE SET
SHEPHERD MOUNTAIN/2222
SHEPHERD MOUNTAIN/2222 COMPETITIVE SET
Quarter
Net
Rentable Area
Direct
Vacant SF
Sublease
Available SF
Net Absorption*
Direct & Sublease
Vacancy Rate
Service Rental Rate
2014 Q3
2,453,857
2014 Q4
2,688,442
211,437
92,007
(14,565)
12.37%
$32.28
389,788
127,233
21,008
19.23%
$33.10
2015 Q1
2015 Q2
2,690,750
207,238
179,538
132,553
14.37%
$34.17
2,690,750
181,807
152,245
52,724
12.41%
$34.45
2015 Q3
2,690,750
193,874
135,899
4,279
12.26%
$34.55
2015 Q4
2,690,835
173,907
79,703
76,248
9.42%
$35.16
2016 Q1
2,690,835
266,741
97,821
(110,952)
13.55%
$36.11
2016 Q2
2,690,835
293,144
137,974
(66,556)
16.02%
$36.16
525
18%
350
12%
175
0
6%
2014
Q3
2014
Q4
Di rect Vacant SF
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
$36
18%
$34
12%
$32
6%
$30
2014
Q3
2014
Q4
2015
Q1
2015
Q2
51
2015
Q3
2015
Q4
2016
Q1
2016
Q2
0%
Vacancy Rate
Rental Rate
24%
160
91%
120
89%
80
87%
40
85%
0
83%
(40)
81%
(80)
79%
(120)
(160)
0%
$38
24%
Vacancy Rate
700
NET ABSORPTION
77%
2014
Q3
2014
Q4
2015
Q1
Net Abs orption*
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
75%
Occupancy Rate
COMPETITIVE SET
SHEPHERD MOUNTAIN/2222 MICROMARKET COMPETITIVE SET BUILDINGS
Building Name
Net Rentable
Area
Direct
Vacant SF
Sublease
Available SF
Asking
Rental Rate
Estimated
OpEx
Bridgepoint Plaza I
105,333
0
0
$23.50
$13.54 ↑
Bridgepoint Plaza II
72,640
5,016 ↓
6,287
$23.50
$13.54
84,692
6,636 ↓
3,933
$24.50
$13.22
92,459
4,814
16,005 ↑
$24.50
$13.22
78,352
0
0
$24.50
$13.22
109,175
10,987
0
$24.50
$13.22
76,793
5,646
0
$24.50
$13.22
Champion Office Park I & II
230,000
0
0
$26.50
$11.00
Four Points Centre I & II
192,396
0
0
$23.50
$13.44
Ladera Bend 1
56,466
0
0
$22.00
$16.34
Ladera Bend 2
45,732
0
0
$22.00
$14.10 ↑
Ladera Bend 3
56,196
0
27,980 ↑
$22.00
$14.67 ↑
Lakewood Center I
47,389
23,885 ↑
45,020
$22.50
$13.49
Lakewood Center II
44,611
0
0
$22.50
$13.49
Lakewood on the Park B
102,086
24,446 ↑
0
$21.50
$12.51
Lakewood on the Park C
78,596
14,573 ↑
0
$21.50
$12.51
Millennium Building
125,612
0
0
$24.00
$12.58
Park Centre Bldg 1
89,822
0↓
0
$18.00
$12.60
Park Centre Bldg 2
35,095
18,730
0
$18.00
$12.60
Park Centre Bldg 3
78,270
45,711 ↓
5,397
$18.00
$12.60
Reserve at Bull Creek A
43,867
11,365
0
$20.00
$12.20
Reserve at Bull Creek B
43,713
43,713
0
$20.00
$12.20
Reserve at Bull Creek C
43,695
43,695
0
$20.00
$12.20
River Place Corporate Park I
76,529
0
0
$22.00
$14.50
River Place Corporate Park II
114,491
9,616 ↓
16,662 ↑
$22.00
$14.12
River Place Corporate Park III
113,465
0
15,707
$22.00
$13.82
River Place Corporate Park IV
87,639
8,601
0
$22.00
$14.07
River Place Corporate Park V
67,601
0
0
$22.00
$14.21
River Place Corporate Park VI
62,037
0
0
$22.00
$14.13
River Place Corporate Park VII
69,119
0
0↓
$22.00
$14.39
Shepherd Mountain Plaza
100,937
4,995 ↑
983 ↑
$33.00
$12.39
Stone Cliff
66,027
10,715
0
$18.00
$12.46
52
COMPETITIVE SET
FAR NORTHWEST
FAR NORTHWEST COMPETITIVE SET
Quarter
Net
Rentable Area
Direct
Vacant SF
Sublease
Available SF
Net Absorption*
Direct & Sublease
Vacancy Rate
Service Rental Rate
2014 Q3
3,682,381
298,745
72,197
31,076
10.07%
$29.40
2014 Q4
3,682,182
362,094
72,197
(63,548)
11.79%
$30.26
2015 Q1
3,687,385
337,115
41,201
61,178
10.26%
$30.93
2015 Q2
3,687,385
326,153
67,899
(15,736)
10.69%
$31.66
2015 Q3
4,224,285
852,792
75,271
2,889
21.97%
$31.12
2015 Q4
4,526,637
964,028
62,303
204,084
22.67%
$32.36
2016 Q1
4,198,522
537,928
209,659
(49,371)
17.81%
$33.30
2016 Q2
4,198,522
490,723
186,650
70,214
16.13%
$33.73
24%
1,000
20%
800
16%
600
12%
400
8%
200
4%
0
2014
Q3
2014
Q4
Di rect Vacant SF
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
25%
20%
$32
15%
$30
10%
$28
5%
$26
2014
Q3
2014
Q4
2015
Q1
2015
Q2
53
2015
Q3
2015
Q4
2016
Q1
2016
Q2
0%
Vacancy Rate
Rental Rate
$34
96%
200
90%
100
84%
0
78%
(100)
0%
$36
300
2014
Q3
2014
Q4
Net Abs orption*
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
72%
Occupancy Rate
1,200
NET ABSORPTION
Vacancy Rate
COMPETITIVE SET
FAR NORTHWEST MICROMARKET COMPETITIVE SET BUILDINGS
Net Rentable
Area
Direct
Vacant SF
Sublease
Available SF
Asking
Rental Rate
Estimated
OpEx
Amber Oaks A
78,164
0
0
$19.50
$11.67
Amber Oaks B
44,184
0
0
$19.50
$8.30
Amber Oaks C
44,184
0
0
$19.50
$8.60
Amber Oaks D
28,733
0
0
$19.50
$10.45
Building Name
Amber Oaks E
63,111
0
0
$19.50
$8.03
Amber Oaks F
79,732
60,652 ↓
0
$19.50
$11.64
Amber Oaks G
106,455
4,572
0
$19.50
$11.61
Amber Oaks H
101,045
0
0
$19.50
$10.93
Amber Oaks I
50,313
10,828
0
$19.50
$13.03
Amber Oaks J
50,111
6,245
33,147
$19.50
$12.14
Aspen Lake One
204,940
0
0
$22.00 ↑
$13.26
Aspen Lake Two
129,000
0
0
$24.50
$10.00
Crossings at Lakeline I
114,726
0
6,612 ↓
$21.50
$11.83 ↓
Crossings at Lakeline II
118,046
6,788 ↓
2,189 ↑
$21.50
$12.03
Paloma Ridge A
106,200
106,200
0
$19.00 ↑
$9.50
Paloma Ridge B
106,200
83,915 ↓
0
$19.00 ↑
$9.50
Parmer Business Park 7, 8, 9
123,731
0
0
$18.50
$5.60
Parmer Business Park D, E, F
107,283
0
0
$18.50
$5.60
Pecan Park I
136,444
0
0
$22.50 ↑
$11.91 ↑
Pecan Park II
136,245
0
0
$19.50
$9.45
125,701
0↓
2,799
$23.00 ↑
$13.20 ↑
125,700
33,518
0
$23.00 ↑
$13.20 ↑
Research Park Plaza I
135,541
11,747
0
$23.00
$14.98
Research Park Plaza II
131,027
0
0
$23.00
$14.98
Research Park Plaza III
173,530
0
0
$24.00
$13.08
Research Park Plaza IV
184,114
3,355
96,334
$24.00
$14.93
Research Park Plaza V
172,854
72,709 ↓
0
$24.00
$11.06
63,372
7,054
9,767 ↑
$22.00
$13.65 ↑
63,849
0
0
$22.00
$13.65 ↑
93,737
57,188 ↑
0
$22.00
$13.65 ↑
93,828
6,215 ↓
0
$22.00
$13.65 ↑
93,835
0
0
$22.00
$13.65 ↑
92,719
0
21,477
$22.00
$13.65 ↑
93,718
0
14,325 ↓
$22.00
$13.65 ↑
92,973
0
0
$22.00
$13.65 ↑
81,775
0
0
N/A
N/A
114,906
0
0
N/A
N/A
81,229
0
0
N/A
N/A
79,465
0
0
N/A
N/A
Tower of the Hills/Tower Point
175,802
25,383 ↑
0
$26.00 ↑
$12.82 ↓
54
COMPETITIVE SET
NEAR SOUTHWEST
NEAR SOUTHWEST COMPETITIVE SET
Quarter
Net
Rentable Area
Direct
Vacant SF
Sublease
Available SF
Net Absorption*
Direct & Sublease
Vacancy Rate
Service Rental Rate
2014 Q3
2,712,851
174,207
126,557
56,791
11.09%
$37.06
2014 Q4
2,713,137
158,703
124,248
18,099
10.43%
$37.50
2015 Q1
2,711,340
143,863
125,110
12,181
9.92%
$38.69
2015 Q2
2,925,937
110,815
101,710
271,045
7.26%
$38.96
2015 Q3
2,925,937
105,532
175,528
(68,535)
9.61%
$39.31
2015 Q4
2,925,937
149,170
165,733
(33,843)
10.76%
$40.02
2016 Q1
2,926,017
137,847
113,003
64,133
8.57%
$40.53
2016 Q2
2,926,017
185,286
85,148
(19,584)
9.24%
$40.93
16%
300
12%
200
8%
100
4%
0
2014
Q3
2014
Q4
Di rect Vacant SF
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
0%
$41
15%
$39
12%
$37
9%
$35
2014
Q3
2014
Q4
2015
Q1
2015
Q2
55
2015
Q3
2015
Q4
2016
Q1
2016
Q2
6%
Vacancy Rate
Rental Rate
18%
100%
200
96%
100
92%
0
88%
(100)
$43
300
2014
Q3
2014
Q4
Net Abs orption*
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
84%
Occupancy Rate
400
NET ABSORPTION
Vacancy Rate
COMPETITIVE SET
NEAR SOUTHWEST MICROMARKET COMPETITIVE SET BUILDINGS
Net Rentable Area
Direct
Vacant SF
Barton Creek Plaza I
72,974
Barton Creek Plaza II
64,718
Barton Creek Plaza III
64,842
Building Name
Sublease
Available SF
Asking
Rental Rate
Estimated
OpEx
9,875 ↑
0
$24.00 ↑
$13.65
6,466
8,929 ↑
$24.00
$12.83 ↑
0
0
$24.00
$12.83 ↑
Barton Oaks Plaza I
99,404
4,901
0
$27.00
$15.98
Barton Oaks Plaza II
116,448
18,226 ↑
0
$26.50
$15.56
Barton Oaks Plaza III
121,467
11,174 ↑
0
$26.50
$14.59
Barton Oaks Plaza IV
112,000
0
0
$26.27
$14.73
Barton Oaks Plaza V
119,549
3,647
2,762 ↑
$27.00
$14.47
Barton Skyway I
195,324
3,240
3,596
$26.50 ↑
$14.95
Barton Skyway II
195,639
5,896 ↓
24,275
$26.50 ↑
$14.61
Barton Skyway III
173,302
9,303 ↑
0↓
$26.50 ↑
$14.52
Barton Skyway IV
222,580
0
0
$26.50 ↑
$13.86
Centre I
39,903
1,525 ↑
0
$20.50 ↓
$12.50
Centre II
54,610
11,083 ↓
0
$19.50
$12.47
Mira Vista
121,147
0
4,125 ↑
$27.50
$14.02
Overlook at Gaines Ranch
50,725
10,949 ↑
0
$26.50
$14.61 ↓
Rollingwood Center I & II
214,587
0
31,000 ↓
$30.00 ↑
$12.00
Spyglass Point
58,576
0
0
$22.00
$13.45
102,608
21,262
2,203
$25.00
$14.02
102,587
38,991 ↑
0
$25.00
$14.47
The Terrace 1
115,460
10,194 ↓
0↓
$25.50 ↑
$15.99
The Terrace 2
114,635
3,447
0
$25.50 ↑
$15.65
The Terrace 6
196,717
13,055 ↓
8,258
$28.50 ↑
$15.92
The Terrace 7
196,215
2,052
0
$28.50 ↑
$15.99
56
COMPETITIVE SET
FAR SOUTHWEST
FAR SOUTHWEST COMPETITIVE SET
Quarter
Net
Rentable Area
Direct
Vacant SF
Sublease
Available SF
Net Absorption*
Direct & Sublease
Vacancy Rate
Service Rental Rate
2014 Q3
4,390,023
120,380
43,047
75,909
3.72%
$34.16
2014 Q4
4,389,410
227,630
58,229
(123,045)
6.51%
$34.86
2015 Q1
4,389,410
256,056
63,503
(33,700)
7.28%
$35.57
2015 Q2
4,856,527
317,790
112,102
356,784
8.85%
$36.39
2015 Q3
5,023,388
248,093
88,817
259,843
6.71%
$36.31
2015 Q4
5,232,935
485,156
80,759
(19,458)
10.81%
$36.75
2016 Q1
5,235,126
542,462
82,635
(56,991)
11.94%
$37.28
2016 Q2
5,235,126
511,330
114,978
(1,211)
11.96%
$37.58
12%
450
9%
300
6%
150
0
3%
2014
Q3
2014
Q4
Di rect Vacant SF
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
$36
12%
$34
8%
$32
4%
$30
2014
Q3
2014
Q4
2015
Q1
2015
Q2
57
2015
Q3
2015
Q4
2016
Q1
2016
Q2
0%
Vacancy Rate
Rental Rate
16%
450
99%
300
96%
150
93%
0
90%
(150)
0%
$38
15%
Vacancy Rate
600
NET ABSORPTION
2014
Q3
2014
Q4
Net Abs orption*
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
87%
Occupancy Rate
COMPETITIVE SET
FAR SOUTHWEST MICROMARKET COMPETITIVE SET BUILDINGS
Net Rentable Area
Direct
Vacant SF
Sublease
Available SF
Asking
Rental Rate
Estimated
OpEx
3600 San Clemente Bldg B
90,267
0
0
$26.50
$15.63
3700 San Clemente
249,870
70,192 ↓
0
$29.50
$13.27
3900 San Clemente
251,146
135,366 ↑
0
$24.50
$13.81
5000 Plaza on the Lake
118,063
9,560 ↑
9,980
$27.50
$15.85
7000 West at Lantana 1 & 2
136,075
0
0
DND
DND
Canyon at Wild Basin
74,580
11,207 ↑
0
$24.50
$12.04 ↑
Capital Ridge
216,511
0
0
$30.00
$10.56
Cielo Center
270,711
6,292 ↑
0↓
$19.50
$13.32
Cityview 1
46,702
0
0
$22.00 ↑
$13.55
Cityview 2
47,809
0
0
$22.00 ↑
$13.55
Cityview 3
48,044
0
2,015
$22.00 ↑
$13.55
Cityview Center
137,763
0
24,478
$26.00
$11.79
Crystal Mountain 1, 2 & 3
61,762
17,544 ↑
1,590
$26.00
$9.41
Dimensional Place I
220,000
0
0
$24.00
$12.42
Dimensional Place II
156,000
0
0
$24.00
$12.42
Encino Trace I
161,606
0
0
$23.50
$13.15
Encino Trace II
158,137
101,822 ↓
0
$23.50
$13.15
Escalade Bldg A
58,344
9,440
0
$19.50
$13.46
Escalade Bldg B
57,142
4,621
0
$19.50
$13.46
Lake Pointe II
42,933
5,489
0
$14.00
$10.09
Las Cimas I
85,000
3,700 ↓
0
$23.50 ↓
$14.29
Las Cimas II
156,069
19,402
6,641 ↑
$26.50
$14.92
Las Cimas III
157,418
9,218 ↑
0
$26.50
$14.73
Las Cimas IV
138,008
0
14,373 ↑
$27.00
$14.58
Lost Creek Point
73,026
4,695 ↑
0
$18.00
$12.29
Parkway at Oak Hill I & II
145,475
6,021 ↓
0
$24.00
$13.84 ↑
Plaza 290
63,163
3,585 ↑
0
$18.50
$12.50
Plaza on the Lake I
122,530
8,936
0
$28.50 ↑
$15.35
Plaza on the Lake II
111,166
0
0
$28.50 ↑
$14.96
Rialto I
77,755
11,003 ↑
3,892 ↑
$23.50
$13.64
Rialto II
77,732
0
36,421
$23.50
$13.64
The Enclave Bldgs 1-4
44,704
2,781 ↑
0
$19.00
$9.97
The Summit at Lantana Bldgs
1-5
865,832
52,934
0
$25.00
$13.06
Travis Oaks
123,434
0↓
0
$24.00 ↑
$13.30
Vista Ridge I
75,131
2,199
0
$19.00
$11.00
Westlake Place
61,184
5,608
0↓
$20.00
$13.39
Wild Basin Atrium Bldg A & B
118,910
6,859
0
$18.00
$9.40 & ↑
Wild Basin I
60,498
2,856
1,004 ↑
$19.00
$11.81
Wild Basin II
74,626
0
14,584 ↑
$19.00
$10.87
Building Name
58
LONG TERM PERFORMANCE
OF SUBMARKETS
Numbers based on CBRE statistics.
20%
6
15%
4
10%
2
5%
0
0%
Citywide Sublease Vacancy
5
40%
4
32%
3
24%
2
16%
1
8%
0
0%
$45
$40
$35
$30
$25
$20
Southwest
Northwest
12%
6%
0%
2,500
30%
2,000
24%
1,500
18%
1,000
12%
500
6%
0
0%
Southwes t Di rect Avai lability
Southwes t Vacancy Rate
Southwes t Su blease Availability
Citywide Vacancy Rate
ABSORPTION & OCCUPANCY RATE
*Absorption includes sublease space.
4
95%
3
90%
2
85%
1
80%
0
75%
-1
70%
-2
65%
Citywide
CBD
59
CBD Sublease Availability
SOUTHWEST AVAILABLE SF VS. VACANCY RATE
Year Over Year Direct & Sublease
Absorption (Millions of SF)
$50
CBD
18%
CBD Dire ct Availability
CBD Vacancy Rate
Northwest Sublease Availabi lity
CITYWIDE AVERAGE CLASS A ASKING RATES
Full Service Rental Rate
Availability (Millions of SF)
NORTHWEST AVAILABLE SF VS. VACANCY RATE
Northwest Direct Availability
Northwest Vacancy Rate
24%
Citywide Direct Vacancy
30%
8
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
25%
Direct & Sublease Occupancy Rate
30%
10
12
CBD AVAILABLE SF VS. VACANCY RATE
Availability (Millions of SF)
CITYWIDE AVAILABLE SF VS. VACANCY RATE
Northwest
Southwes t
Citywide Occupancy Rate
LONG TERM PERFORMANCE
CBD VS. SUBURBAN
DIRECT & SUBLEASE VACANCY RATES
30%
$50
25%
$40
20%
Vacancy Rate
$60
$30
$20
$10
10%
5%
$0
0%
CBD
Su burban
CBD Vacancy Rate
Citywide
12
30%
10
25%
8
20%
6
15%
4
10%
2
5%
0
0%
CBD
Su burban
Su burban Vacancy Rate
SF UNDER CONSTRUCTION
DIRECT & SUBLEASE AVAILABILITY
Direct & Sublease Availability (Millions of
SF)
15%
Area Under Construction (Millions of SF)
Full Service Rental Rate
AVERAGE CLASS A ASKING RATES
4
3
2
1
0
CBD
Northwest
Southwes t
60
CBD
OVERALL PERFORMANCE
CBD SUBMARKET
Quarter
Net Rentable Area
Direct Vacant SF
Net Absorption*
Direct & Sublease
Vacancy Rate
Service Rental Rate
2014 Q3
9,252,285
1,041,014
185,807
11.90%
$41.39
2014 Q4
9,252,285
802,517
176,610
9.44%
$43.13
2015 Q1
9,768,770
1,135,835
139,236
12.81%
$43.83
2015 Q2
9,809,755
870,240
291,638
10.20%
$41.90
2015 Q3
9,809,755
672,222
135,085
7.83%
$44.17
2015 Q4
9,732,884
631,228
83,341
7.07%
$43.64
2016 Q1
9,732,884
565,112
88,208
5.94%
$47.52
2016 Q2
9,954,349
706,027
25,998
7.80%
NET ABSORPTION
1,500
15%
300
95%
1,200
12%
250
93%
600
6%
300
3%
0
0%
2014
Q3
2014
Q4
Di rect Vacant SF
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
VACANCY RATES VS. RENTAL RATES
24%
$48
21%
$47
18%
$46
15%
$45
12%
$44
9%
$43
$42
6%
$41
3%
$40
2014
Q3
2014
Q4
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
Vacancy Rate
Rental Rate
$49
0%
91%
89%
150
87%
100
85%
50
0
83%
2014
Q3
2014
Q4
Net Abs orption*
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
81%
Occupancy Rate
9%
200
900
Vacancy Rate
61
$47.93
AUSTIN CBD OFFICE RENTAL RATE PROJECTIONS
$60
3% Job Growth
$55
Full Service Rental Rates
$50
1% Job Growth
$45
$40
$35
$30
$25
$20
$15
2004
2005
2006
2007
2008
2009
Historic Rental Rate
2010
2011
AQUILA Model
2012
2013
3% Job Growth
2014
2015
2016
2017
2018
1% Job Growth
AUSTIN CBD OFFICE VACANCY RATE PROJECTIONS
35%
11.0
Shoal Creek Walk
10.5
25%
10.0
20%
9.5
15%
9.0
10%
8.5
Market Size (Millions of SF)
Total Vacancy Rate
500 W 2nd
30%
1% Job Growth
5%
0%
2004
8.0
3% Job Growth
2005
2006
2007
Market Size
2008
2009
2010
Historic Vacancy Rate
2011
2012
AQUILA Model
2013
2014
3% Job Growth
2015
2016
2017
2018
7.5
1% Job Growth
62
NORTHWEST
OVERALL PERFORMANCE
NORTHWEST OVERALL SUBMARKET PERFORMANCE
Net Rentable Area
Direct Vacant SF
Net Absorption*
Direct & Sublease
Vacancy Rate
2014 Q3
16,697,337
1,566,544
(78,989)
10.64%
$30.65
2014 Q4
16,817,337
1,540,054
93,312
10.46%
$30.83
2015 Q1
17,154,310
1,879,975
138,145
11.65%
$32.06
2015 Q2
17,269,310
1,819,734
180,936
11.56%
$32.74
2015 Q3
17,269,310
1,665,124
237,697
9.96%
$33.26
2015 Q4
17,535,625
1,283,335
311,312
8.99%
$34.14
2016 Q1
18,039,828
1,868,483
136,576
11.17%
$33.77
2016 Q2
18,114,632
1,788,996
167,959
10.60%
$34.62
2,500
15%
2,000
12%
1,500
9%
1,000
6%
500
3%
0
2014
Q3
2014
Q4
Di rect Vacant SF
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
0%
$34
13%
$32
10%
$30
7%
$28
2014
Q3
2014
Q4
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
4%
Vacancy Rate
Rental Rate
16%
600
95%
450
93%
300
91%
150
89%
0
87%
(150)
$36
NET ABSORPTION
Vacancy Rate
63
Service Rental Rate
2014
Q3
2014
Q4
Net Abs orption*
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
85%
Occupancy Rate
Quarter
NORTHWEST SUBMARKET OFFICE RENTAL RATE PROJECTIONS
$40
3% Job Growth
$35
1% Job Growth
$30
$25
$20
$15
2004
2005
2006
2007
2008
2009
2010
2011
AQUILA Model
2012
2013
3% Job Growth
2014
2015
2016
2017
2018
1% Job Growth
NORTHWEST SUBMARKET OFFICE VACANCY RATE PROJECTIONS
30%
20.0
Domain 8
Braker Pointe III
19.0
25%
17.0
Total Vacancy Rate
20%
16.0
1% Job Growth
15%
15.0
14.0
10%
3% Job Growth
13.0
18.0
12.0
5%
11.0
0%
2004
2005
2006
2007
Market Size
2008
2009
2010
2011
2012
AQUILA Model
2013
2014
3% Job Growth
2015
2016
2017
2018
10.0
1% Job Growth
64
SOUTHWEST
OVERALL PERFORMANCE
SOUTHWEST OVERALL SUBMARKET PERFORMANCE
Quarter
Net Rentable Area
Direct Vacant SF
Net Absorption*
Direct & Sublease
Vacancy Rate
Service Rental Rate
2014 Q3
9,458,793
653,880
187,746
9.24%
$31.38
2014 Q4
9,418,793
640,998
29,201
8.41%
$34.87
2015 Q1
9,446,430
589,875
66,172
7.98%
$34.35
2015 Q2
10,109,725
1,070,609
21,626
12.21%
$33.76
2015 Q3
10,257,625
1,192,565
200,870
12.29%
$35.03
2015 Q4
10,484,922
769,552
131,055
9.80%
$35.85
2016 Q1
10,484,886
777,581
80,164
9.25%
$36.65
2016 Q2
10,484,886
985,849
(90,753)
11.40%
NET ABSORPTION
12%
900
9%
600
6%
300
3%
2014
Q3
2014
Q4
Di rect Vacant SF
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
400
$38
16%
$36
12%
$34
8%
$32
4%
$30
2014
Q3
2014
Q4
2015
Q1
2015
Q2
65
2015
Q3
2015
Q4
2016
Q1
2016
Q2
0%
Vacancy Rate
Rental Rate
92%
200
90%
0
(200)
0%
94%
88%
2014
Q3
2014
Q4
Net Abs orption*
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
86%
Occupancy Rate
15%
1,200
1,500
Vacancy Rate
0
$37.18
SOUTHWEST SUBMARKET OFFICE RENTAL RATE PROJECTIONS
$40
3% Job Growth
1% Job Growth
$35
$30
$25
$20
$15
2004
2005
2006
2007
2008
2009
2010
2011
AQUILA Model
2012
2013
2014
3% Job Growth
2015
2016
2017
2018
1% Job Growth
SOUTHWEST SUBMARKET OFFICE VACANCY RATE PROJECTIONS
25%
12.0
The Overlook at Barton Creek
11.0
Total Vacancy Rate
10.0
15%
9.0
1% Job Growth
8.0
10%
3% Job Growth
7.0
20%
5%
6.0
0%
2004
2005
2006
2007
2008
Market Size
2009
2010
2011
2012
AQUILA Model
2013
2014
3% Job Growth
2015
2016
2017
2018
5.0
1% Job Growth
66
THE AQUILA
METHODOLOGY
CHANGES THIS QUARTER
•
All submarket, micromarket and individual property materials, tables and graphs prior to the appendix are
based on AQUILA research unless otherwise noted. Historically, submarket statistics have been based on
CBRE statistics. CBRE-based submarket statistics have been moved to the appendix.
•
The figures on the title pages for each of the submarkets (pages 24, 31, 37) are now based on AQUILA
research. Historically, they have been based on CBRE statistics. The figures on the title page for the citywide
update (page 18) is still based on CBRE statistics.
•
Absorption figures based on CBRE statistics have historically been our calculation of the difference of total
occupied square feet (Absorption = (NRA2 – Total Vacant SF2) – (NRA1 – Total Vacant SF1)). This differs
from CBRE’s calculation, which is measured as changes on physically occupied space — amount occupied
compared and measured to amount occupied. As of 2016 Q1, CBRE no longer discloses Total Vacant SF.
Therefore, on the datasets that are based on CBRE statistics, the absorption figures now directly reflect those
provided by CBRE, rather than on our calculation.
DEFINITIONS
CBD Competitive Set Buildings – Class A buildings located in, or near, the core of downtown
Suburban Competitive Set Buildings – newer suburban office buildings that typically have structured
parking and amenities such as conference rooms, workout facilities and/or delis
Direct Vacant SF – space that is currently vacant and immediately available to lease
Sublease Available SF – space that is currently available to sublease
Direct & Sublease Vacancy Rate = (Direct Vacant SF + Sublease Available SF)/(Net Rentable Area)
Absorption = (NRA2 – Direct Vacant SF2 – Sublease Available SF2) – (NRA1 – Direct Vacant SF1 – Sublease
Available SF1)
67
YOUR
NOTES:
68
1717 W. Sixth Street, Suite 400
Austin, Texas 78703
512 684-3800
aquilacommercial.com
1

AUSTIN MARKET REPORT 2Q 2016

Transcription

Similar documents

I`m helping to end MS by participating in the 2016 Jayman BUILT MS

The Board of Directors of Qatar Fuel (WOQOD) is pleased to invite

2016 MW Alliance Raffle - Manitowish Waters Alliance LTD

Annonce S1

Rush Hour Rewards can save you money Join us for

Hancock Center - Regency Centers

waiver guidelines jakarta incident

2016 Winter Newsletter

Please join us on Facebook: www.facebook.com/einsteinaward

Flyer! - Cruzzin` Dreams