February Sees Leasing Activity Heat Up
Austin Experiences lowest available sublease SF since late 2022, what does this mean for our 2025 outlook.
February freezes have come and gone and the Austin market is looking good heading into the last month of Q1. Hope you’re reading this enjoying your favorite caffeinated beverage and soaking up the 75 degree weather.
Opening Bell ??: February ended with the lowest available sublet SF since November of 2022, finishing at 4,565,523 SF. A big reason behind that was the 65,000 SF sublease signing of BigCommerce at Domain 11. More is coming available with Bondx and Papaya Global being the latest to put their spaces on the sublease market.
We saw 352,209 SF removed last month, with 242,951 SF (69%) coming from direct leasing.
Vacancy jumped to 34.3%, a historic high as the construction pipeline continues to deliver new product in large quantities.
Market Snapshot ??: Temps are rising in ATX and so is activity in the Southwest and CBD submarkets particularly. The below map showcases leasing activity across the city.
Dive Deeper ??: Southwest saw 28 leasing transactions with 111,951 SF removed while CBD came in second at 87,382 SF removed over 14 transactions.
CBD is getting larger deals done and remains a focal point for market activity. Sublease space around the city is being taken off the market at an increasing rapid pace. While companies continue to reassess their office needs, the dust is starting to settle on the most recent peak.
Following the transportation, activity remains strong along some of Austin’s largest highway arteries of 290 and MoPac especially.
Pro Insight ???? : All signs indicate that Austin is still poised for strong growth over the long term. With significantly lower unemployment rate vs the national average and companies like NinjaOne’s latest $500M round at $5B valuation, the future is bright. Local legislators continue to incentivize development with projects like 200 E Riverside’s rezoning for high-rise residential, West Campus’s height restrictions being raised to alleviate the housing shortage, and Endeavor’s Borden Dairy Co redevelopment plans getting cleared.
Beyond the data, the pulse on Austin’s economic heart is strong. Return-To-Office continues to gain momentum (highlighted by Google’s co-founder’s latest statements) and funding keeps pouring in to the city thanks in part to Texas CHIPS Act.
Final Buzzer ??: Despite a higher vacancy rate this month, we’re not pressing panic on our long term outlook of where the city is heading. There are strong indicators that Austin will continue to grow, with newer submarkets like Southwest and Southeast emerging as activity hubs to meet the demands of Austin’s unique landscape.