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Rent growth likely to slow as uncertainty from COVID-19 looms over the market
Prior to the March onset of the COVID-19 pandemic, and related virus control measures bringing business across the state to a halt, the Austin office market witnessed some softening in availability as asking rents continued to push higher. At the end of the first quarter, the overall average asking rent stood at $39.28 per square foot (psf), reflecting annual (9.2%) and quarterly (2.4%) increases. Class A asking rents increased by 5.8% over the year to $42.93 psf. Central Business District and suburban asking rents increased by 6.7% and 7.7% year over year through the first quarter, respectively. As the market adjusts itself to the shifts that COVID-19 has created, rental rate growth is expected to slow. Downward pressure is likely to come from an influx of sublease space on the market as venture-capitalfunded technology companies implement cost-saving measures.