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MARKET TAKEAWAYS
Despite growing concerns over the COVID-19 Delta variant, the Austin office market continues to regain momentum. Leasing activity continued at the same rate of the previous quarter at 1.5 million square feet (msf), well above the pandemic lows seen in 2020. Sublease supply has continued to decline since its peak in Q4 2020. Overall availability decreased by 100 basis points (bps) over the quarter. Asking rental rates continue to rise currently asking $45.07 per square foot (psf) overall.
As the COVID-19 delta variant accelerated, key technology companies including Microsoft, Amazon, Facebook, and Apple, pushed initial return-to-office plans from post-Labor Day to next year.
Notably, California-based Apple Inc. purchased its current Austin property, 320 South Capital of Texas Highway in the Southwest submarket. Additionally, it is rumored that Samsung will build a $17 billion semiconductor factory in Taylor Texas, within the Northeast submarket of Austin.
Facebook has expanded its existing Austin footprint by adding a full floor - 29,317 square feet (sf) at 300 West 6th Street in the Central Business District (CBD). Also, TikTok committed to a short-term flexible lease, taking 65,000 sf at the WeWork at Chase Tower (221 West 6th Street) in the CBD.