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AUSTIN MARKET REP OR T 2Q 2015


AQUILA KNOWS AUSTIN KEEPING YOU INFORMED AQUILA Commercial is dedicated to

DISCLAIMER This report utilizes various

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We understand that real time market data

information contained herein is confidential

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updates, opt in at aquilacommercial.com.

Hartland Plaza; Photo by Scott Mason Photography


Not only is Austin’s population growing at an amazing rate, but so is its economy. These trends are reflected in the abundant volume of new construction taking place in The Capitol City. Accordingly, AQUILA’s Market Research team turns its attention to development this quarter. In addition to the Pipeline of Projects and submarket analyses we always provide, included in this quarterly report is AQUILA’s research showing the effects of new office construction on rental rates in existing buildings

VIEW FROM THE EAGLE’S NEST RYAN PARZICK Market Research Director AQUILA Commercial parzick@aquilacommercial.com

located in close proximity to new product. July 2014 saw Austin's Central Business District's (CBD) first office delivery of scale since Frost Tower’s completion in 2004. As the national and local economies expanded after the Great Recession, and in light of a dearth of new supply, a demand surplus was established for CBD office space. Colorado Tower and IBC Bank Plaza were the first beneficiaries of this demand, as both buildings were nearly 100% leased upon their completion. Shortly thereafter, the Seaholm power plant redevelopment and 501 Congress experienced similar successes. As has historically been the case in Austin, CBD trends percolate into the Northwest (NW) and Southwest (SW) submarkets. Over 1 million square feet of new office product across seven projects broke ground in the SW along with six projects consisting of over 700,000 square feet in NW Austin. Impressively, over 60% of this new inventory, defined as projects that broke ground between 1Q 2014 and 1Q 2015, was preleased. Since 1Q 2014, there has been over 1.4 million square feet of absorption in the three major submarkets justifying developer optimism to date. But what about the health of the existing pipeline? Will we see continued absorption at a comparable pace?

2Q 2015 Austin Market Report

3


AUSTIN BEATS THE STATE

AND THE NATION IN UNEMPLOYMENT

3.3.13.1%1%% 4.2% 4.2% 4.2% 5.3% 5.3% 5.3% AUSTIN

TEXAS

U.S.

Down from 4.1% in 1Q 2015

Down from 5% in 1Q 2015

Down from 6.1% in 1Q 2015

73% 73% 73%

67% 67% 67%

55% 55% 55%

As of the close of 2Q 2015, there was almost 3 million

new companies expanding or relocating to Austin in 2015,

square feet of new office product under construction

with eight of them headquartered here in Austin. For 2Q

across Austin—of which 34% is preleased—as well as

2015, the Austin housing market was ranked second in

a multitude

of other projects that are planned for all

the Large MSA category of the Leading Markets Index by

submarkets. Companies like Google, Apple, General

the National Association of Home Builders. According to

Motors, Main Street Hub and Amazon are all expanding

the Federal Reserve, Austin currently has a 5.3% annual

in Austin and committing to large blocks of space in the

job growth rate-well above what is needed to maintain

process. New companies are relocating to Austin to take

positive absorption. A compilation of forecasts predict

advantage of Texas's status as a Top 3 state with the most

over 3% job growth for the rest of the year, so we remain

competitive corporate tax environments1 and Austin's

bullish on the Austin market and believe the new product

reputation as the 12th Most Business-Friendly City in the

under construction will be absorbed while the overall

U.S. The Austin Chamber of Commerce has tracked 21

market will maintain healthy levels of vacancy.

2

HISTORICAL SNAPSHOT OF AUSTIN OFFICE SPACE Net Absorption*

Direct & Sublease Vacancy Rate

Average Class A Full Service Rental Rate

5,130,116

804,387

12.42%

$33.15

4,960,873

(14,664)

12.14%

$33.32

42,444,966

4,815,598

167,798

11.74%

$33.47

42,475,999

4,647,525

6,277

11.79%

$33.44

2014 Q3

42,720,370

4,373,103

377,613

11.41%

$33.67

2014 Q4

42,784,115

4,068,526

420,985

10.56%

$34.78

2015 Q1

43,665,210

4,612,974

383,535

11.49%

$36.27

2015 Q2

44,534,490

4,795,149

585,639

11.90%

$35.60

Quarter

Net Rentable Area

Direct Available SF

2013 Q3

42,600,634

2013 Q4

42,444,966

2014 Q1 2014 Q2

* Absorption includes sublease space.

Numbers based on CBRE statistics.

1

Bloomberg BNA. "When States Compete: How State Tax Climates Impact Corporate Investment." June 2015. Bloomberg BNA. White Paper. 12 July 2015.

2

Britt, Russ. America's Most Business-Friendly Cities. 22 May 2015. 12 July 2015.

4


LEASING ACTIVITY Vacancy rates increased again this quarter but only mini-

mally, moving from 10.56% to 10.77%. As was the case last

Net Absorption

quarter, a large volume of net rentable area came online that increased available space. Even with the 869,280 sf delivered, there was still significant positive absorption of 585,639 sf. Since the last quarter, full service asking rates

to $35.60. This decrease could be a correction stemming whereas most previous quarters experienced much smaller increases.

11.90% Direct & Sublease Vacancy Rate

across Class A buildings decreased by $0.67, from $36.27 from last quarter when rates jumped by almost $1.50/sf,

585,639 SF

$35.60 Avg. Class A Full Service Rental Rate

AUSTIN CITYWIDE

2Q UPDATE

2Q 2015 Austin Market Report

5


SNAPSHOT: CAPITAL MARKETS MAJOR SALES TRANSACTIONS Capital market activity remained hot in 2Q 2015 with Austin office assets continuing to fetch record pricing in both on and off market transactions.

SOLD

CITY VIEW PORTFOLIO

SOLD

PERRY BROOKS TOWER

Market

Southwest

Market

CBD

Market

CBD

Class

A

Class

A

Class

A-

Size

280,000 SF

Size

240,568 SF

Size

136,585 SF

Buyer

Dividend Capital Diversified Property Fund

Buyer

David Kahn

Buyer

Clarion Partners

Seller

DivcoWest

Seller

Barton Creek Ltd

Price

$84,046,680

Price

+/-$65,560,000

Price/SF

$349.37

Price/SF

$479.99

Notes

Two buildings

Notes

None

Market

Northwest

Class

A

Size

673,622 SF

This portfolio of eight buildings also

Buyer

Accesso Partners

includes a 5.64 acre parcel that is

Seller

Spear Street Capital

approved for development of a new

Price

+/- $165,037,390

64,550 sf office building.

Price/SF

+/- $245.00

Seller

Pearlmark Real Estate

Price

$68,750,000

Price/SF

$245.54

Notes

Four Buildings

SOLD

6

LITTLEFIELD & SCARBROUGH BUILDINGS

SOLD

RIATA CORPORATE PARK


MAJOR LEASES SIGNED Major leases signed this quarter over 25,000 sf:

SOUTHWEST •

Apple signed a lease to occupy the entire Capital Ridge development (218,000 sf), which just delivered this quarter.

SolarWinds expanded in The Summit at Lantana with an additional 64,947 sf. It had already been leasing 230,000 sf in the former AMD campus.

NORTHWEST •

Q2eBanking expanded and extended its lease at the still under construction Aspen Lake Two. In total, they will now occupy the whole building (128,900 sf).

Google expanded its presence in 7700 Parmer by signing an expansion for 63,948 sf.

An undisclosed tenant expanded by 39,330 sf in Research Park Plaza I.

RenewData renewed its existing 35,759 sf at 9500 Arboretum.

Rockwell Automation renewed 27,642 sf at 9500 Arboretum.

SOUTH •

Younicos opened its North American headquarters, signing a 32,500 sf lease in the newly completed 3100 Alvin Devane.

CENTRAL •

Snow Software signed a new lease for 27,149 sf at Capstar Plaza.

MOVING OUT The following large users left for new spaces or downsized.

AMD vacated 52,526 sf at The Summit at Lantana as their presence in the campus continues to decrease.

PUBLIC STRATEGIES moved out of 40,207 sf in San Jacinto Center and moved into 18,012 SF in IBC Bank Plaza (also within the CBD).

ATLASSIAN left 28,495 sf in 816 Congress and moved into 72,486 SF in Colorado Tower (also within the CBD).

SUBMARKET MAP CBD Central East/Northeast North Northwest Round Rock South/Southeast Southwest

2Q 2015 Austin Market Report

7


AUSTIN OFFICE DEVELOPMENT PIPELINE This timeline shows office projects over 30,000 SF that have either broken ground or will be breaking ground soon and the estimated year and quarter of delivery.

2015

2016

3Q

1Q

Encino Trace I

160,849 SF

Southwest

5th + Colorado

179,000 SF

CBD

Encino Trace II

160,849 SF

Southwest

Eastside Village

94,500 SF

East

Paloma Ridge I

106,200 SF

Northwest

Paloma Ridge II

106,200 SF

Northwest

Parmer 3.2

192,000 SF

East

2Q Aspen Lake Two

129,000 SF

Northwest

Domain 5

74,787SF

Northwest

4Q Lakes at TechRidge - Phase I

137,000 SF

East

Lamar Central

131,722 SF

Central

NorthShore

22,326 SF

CBD

Domain 1

124,578 SF

Northwest

Quarry Oaks III

142,570 SF

Northwest

Research Park Plaza V

172,854 SF

Northwest

8

3Q The Diamond Bldg. at Mueller

35,015 SF

East

4Q Domain 8

255,000 SF

Northwest


2017

planned

1Q 500 W. 2nd Street

489,404 SF

Future Developments CBD

310 Comal

37,500 SF

East

604 W. 6th Street

31,035 SF

CBD

801 Barton Springs

90,000 SF

South

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

Austin Music Hall

-

CBD

Cityline at MLK

150,000 SF

East

Lantana Ridge I

87,500 SF

Southwest

Lantana Ridge II

87,500 SF

Southwest

Mueller Market District

3,500,000 SF

East

Paloma Ridge C

112,500 SF

Northwest

Rainey Gateway

355,000 SF

CBD

Regency Park

90,000 SF

Southwest

Shoal Creek Walk

210,000 SF

CBD

Terrace 3

203,130 SF

Southwest

Terrace 4

285,663 SF

Southwest

Terrace 5

218,809 SF

Southwest

The Backyard - Bldgs. B, J, &H

171,450 SF

Southwest

The Park @ Mueller

116,000 SF

East

The Waterfront

625,000 SF

South

Waller Park Place

325,000 SF

CBD

2Q 2015 Austin Market Report

9


HOW DO NEW OFFICE DEVELOPMENTS AFFECT SURROUNDING RENTAL RATES? 6.5 years to 15 months prior to new build: The starting average rental rate trend moves from about $4.00 below to about $1.25 above the average Austin rental rate. This rise in rates is likely due to the increasing demand in the area immediately surrounding a newly constructed building, which drives developers to build new product there.

$4

$3

Price Above/Below Average Austin Avg-As-Is NNN ($/sf)

9 months to 4.5 years after new build: Rates in the area surrounding the new development begin to fall with respect to the overall market. Surrounding buildings are now competing for tenants with the new office space. The leases that were signed at the new building have alleviated the increased demand.

$2

$1

$0 -30

-20

-10

0

10

20

30

-$1

15 months prior to 9 months after new build: Rental rates level off to about $1.25 above the average Austin market rate. This can be explained by the new supply catching up to the demand in the immediate area of the new construction during the lease up period, creating a temporary equilibrium. Preleasing generally begins during this time period coinciding with construction being far enough along to allow potential tenants to see the space, so the pent up demand starts to get addressed.

-$2

-$3

-$4

-$5

4.5 years and beyond: The difference in rates compared to the overall Austin market bottoms out and the cycle starts over. Leases are starting to expire from the new deals struck during the construction process, so demand is building again.

-$6

Quarters Before/After New Construction Average of New Construction Rental Price Compared to Austin Market

Trend Line

WHAT DOES THIS MEAN FOR YOU? Tenants: If you are looking at space or renewing in a location close to a new project, the ideal window of opportunity to negotiate a renewal is either as far prior to a new building's delivery or a couple of years after the new development has delivered. Landlords: If potential tenants are negotiating with you during the second or beginning of the third time period, it may behoove you to do what you can to secure as much term as possible. This may be in your best interest since your rental rates will likely have to drop by a dollar or more, relative to the rest of the market, the further away from the new construction you get. To see the methodology used for this report view page 50 in the Appendix.

10


CENTRAL BUSINESS DISTRICT

291,638 SF Net Absorption

10.20% Direct & Sublease Vacancy Rate

$41.90 Avg. Class A Full Service Rental Rate

2Q UPDATE Looking at all classes of buildings across

actually saw a slight increase in vacancy

the CBD, there was a significant decrease

rates, moving 51 basis points higher, from

in vacancy rates from 12.81% to 10.20%

7.52% to 8.03%. This increase is partially

between 1Q 2015 and 2Q 2015. This

attributable to the delivery of 501 Congress,

decrease reflects the high demand for

a 122,551 sf Class A building that is 81%

downtown office space. The competitive

occupied. Additionally, some of the lower

set of CBD buildings (Class A buildings

tier buildings—ones not included in the

located in, or near, the core of downtown)

competitive set—increased occupancy.

2Q 2015 Austin Market Report

11


RetailMeNot at 301 Congress; Photo by Third Eye Photography

The second quarter also saw

501 Congress was the sole

a decrease in Class A asking

new delivery in the CBD

rental rates for the overall CBD submarket,

dropping

from

$43.83 to $41.90. Last quarter it was suggested in this report that

the

non-competitive

set buildings in the CBD had

THE DEMAND FOR HIGHER QUALITY SPACE HAS ALLOWED LANDLORDS TO CONTINUE TO PUSH RATES WHILE INFERIOR BUILDINGS ADHERE TO A MORE COMPETITIVE SET OF MARKET FORCES.

this

quarter.

Its

major

tenants include Dropbox and Charles Schwab. No other Class A buildings are scheduled to deliver downtown until 1Q 2016,

higher vacancy rates partially

when

due to high full service rental

brings 179,000 sf online.

5th

+

Colorado

rates. It looks as though that issue was addressed this

Currently, this development has almost 17,000 sf pre-

quarter with lower asking rates in these spaces, pulling the

leased with a couple of other leases reportedly close to

overall submarket rates down with them. The competitive

being finalized.

set continues to see full service asking rates raised, though, as it remains a strong landlord’s market. The competitive set increased rates for the 13th straight quarter, as rates climbed from $47.28 to $47.74. It bears repeating, the demand for higher quality space has allowed landlords to continue to push rates while inferior buildings adhere to a more competitive set of market forces.

12

In the entire competitive set within the CBD, there are only five large blocks of available space for lease over 20,000 sf. This is very limiting to potential tenants who want to move or expand downtown. With the only large blocks available on the horizon belonging to the 5th + Colorado and 500 W 2nd developments, the CBD will continue to build pressure.


Office projects Under construction

Hotel/Residential Under construction Str

eet

Shoa Creekl Walk

N. L a

Existing Availabilities

Future Developments 11th

604 W Sixth .

5th & West

T Indepe he ndent Aus Music tin Hall 500 W . 2nd North shore

6th

Hotel Za Gable za/ s

5th Color + ado

Trav Count is y

Ces

ar C

e.

S. 1st

d.

801 Ba r Sprin ton gs

et

hav

ez S

t.

Walle Park r Place

ss A v

Str e

gs R

Con gre

et

Spr in

Stre

30 Congr 1 ess

San Ja c Cente into r

ton

t

Westin

Frost Bank Tower

On Congr e e Plaza ss

Bar

Stre e

60 Congr 0 ess

Nov Post Oare/ ffice

ma

r Blv

d.

5th

OFFICE UNDER CONSTRUCTION HOTEL/RESIDENTIAL UNDER CONSTRUCTION FUTURE DEVELOPMENTS EXISTING AVAILABILITIES

Aus Amer tin State ican sman

Fairm o Hotel nt Rain Gatewey ay

Hot Van Z el andt

CBD DEVELOPMENT & LARGE AVAILABILITY Building

Available SF/ % Preleased

Max. Contiguous

Total SF/ Units/Rooms

Estimated Delivery

Status

Use

1

600 Congress

42,985 SF

29,798 SF

-

-

Existing

Office

2

Frost Bank Tower

26,607 SF

26,607 SF

-

-

Existing

Office

3

One Congress Plaza

78,908 SF

23,479 SF

-

-

Existing

Office

4

301 Congress

73,352 SF

20,899 SF

-

-

Existing

Office

5

San Jacinto Center

83,639 SF

20,338 SF

-

-

Existing

Office

6

5th + Colorado

9%

19,000 SF

179,000 SF

1Q 2016

UC

Office

7

NorthShore

100%

-

23,592 SF

1Q 2015

UC

Office

8

500 West 2nd

43%

33,583 SF

489,404 SF

1Q 2017

UC

Office

9

Westin

-

-

326 Hotel Rooms

3Q 2015

UC

Hotel

10

Fairmont

-

-

1,066 Hotel Rooms

3Q 2017

UC

Hotel

11

Hotel Van Zandt

-

-

319 Hotel Rooms

3Q 2015

UC

Hotel

12

Hotel Zaza/Gables

-

-

226 MF Units, 160 Hotel Rooms

4Q 2016

UC

Hotel/MF

13

5th & West

-

-

154 MF Units

4Q 2017

UC

MF

14

Shoal Creek Walk

-

-

210,000 SF

-

Future

Office

15

604 W 6th

-

-

31,035 SF

-

Future

Office

16

Novare/Post Office

-

-

TBD

-

Future

Office

17

Austin Music Hall

-

-

TBD

-

Future

Office

18

801 Barton Springs

-

-

85,000 SF

-

Future

Office

19

Austin American Statesman

-

-

TBD

-

Future

Office

20

Waller Park Place

-

-

325,000 SF

-

Future

Office

21

Rainey Gateway

-

-

355,000 SF

-

Future

Office

22

The Independent

-

-

370 MF Units

-

Future

MF

23

Travis County

-

-

TBD

-

Future

Mixed Use

2Q 2015 Austin Market Report

13


CBD BY THE NUMBERS CBD SUBMARKET Quarter

Net Rentable Area

Direct Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Average Class A Full Service Rental Rate

2013 Q3

9,084,414

1,058,513

(26,803)

12.07%

$41.39

2013 Q4

9,084,414

1,045,081

6,826

12.00%

$41.61

2014 Q1

9,084,414

1,032,112

17,164

11.81%

$41.45

2014 Q2

9,084,414

1,021,461

(13,728)

11.96%

$40.88

2014 Q3

9,252,285

1,041,014

153,098

11.90%

$41.39

2014 Q4

9,252,285

802,517

227,661

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

Numbers based on CBRE statistics.

* Absorption includes sublease space.

350,000

91%

12%

300,000

90%

10%

250,000

89%

200,000

88%

150,000

87%

100,000

86%

50,000

85%

800,000

8%

600,000

6%

400,000

4%

200,000

2%

-

0% Sublease Available SF

(50,000)

$44.00

15%

$43.00

12%

$42.00

9%

$41.00

6%

$40.00

3%

$39.00

0% 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 Average Class A Full Service Rental Rate

14

Direct & Sublease Vacancy Rate

Vacancy Rate

Rental Rate

VACANCY RATES VS. RENTAL RATES 18%

2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 Net Absorption*

Direct & Sublease Vacancy Rate

$45.00

84%

-

2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 Direct Available SF

Absorption (SF)

14%

1,200,000

Vacancy Rate

1,400,000

1,000,000 Availability (SF)

NET ABSORPTION

Direct & Sublease Occupancy Rate

83%

Occupancy Rate

AVAILABLE SF VS. VACANCY RATE


AUSTIN CBD OFFICE RENTAL RATE PROJECTIONS $50 3% Job Growth

Full Service Rental Rates ($)

$45

1% Job Growth

$40 $35 $30 $25 $20 $15 2004

2005

2006

2007

2008

Historic Rental Rate

2009

2010

2011

AQUILA Model

2012

2013

2014

1% Job Growth

2015

2016

2017

3% Job Growth

AUSTIN CBD OFFICE VACANCY RATE PROJECTIONS 11.0

35% 500 W 2nd 5th + Colorado

30%

10.5

25%

10.0

20%

9.5

9.0

15% 1% Job Growth

8.5

10% 3% Job Growth

5%

0% 2004

Market Size (Millions of SF)

Total Vacancy Rate (%)

NorthShore

8.0

7.5 2005

Market Size

2006

2007

2008

2009

Historic Vacancy Rate

2010

2011

2012

AQUILA Model

2013

2014

2015

1% Job Growth

2016

2017

3% Job Growth

2Q 2015 Austin Market Report

15


16

7700 Parmer, Building A; Photo by Third Eye Photography


LEASING ACTIVITY The vacancy rate decreased slightly in the Northwest

submarket last quarter, moving from 11.65% to 11.56%

Net Absorption

across all building classes. Our competitive set of buildings (newer suburban office buildings that typically have structured parking, amenities such as conference rooms, workout facilities and/or delis) saw its vacancy rate shrink

reduction in vacancy rates in the competitive set continues demand and continue to attract tenants looking for nicer

11.56% Direct & Sublease Vacancy Rate

even further, lowering from 9.93% to 9.00%. This larger to further the notion that higher end buildings are in

116,457 SF

$32.74 Avg. Class A Full Service Rental Rate

NORTHWEST SUBMARKET

2Q UPDATE

2Q 2015 Austin Market Report

17


NORTHWEST SUBMARKET UPDATE

3305 Steck; Photo by Scott Mason Photography

space. Overall asking rental rates of Class A buildings in the Northwest submarket climbed for the 6th consecutive quarter, moving up to $32.74 from $32.06 last quarter.

set this quarter due to its sole tenant, Harcourt, announcing it will relocate to La Frontera in July of 2016. The currently 100% leased building is being marketed to potential tenants to backfill Harcourt.

The competitive set of buildings increased at a slower rate,

Domain 5 broke ground this quarter and is slated to bring

albeit still making a large gain of $0.44 from last quarter.

74,787 sf to the NW Arboretum/Domain micromarket

As with almost all of Austin, the NW submarket remains a

in March of 2016. This adds to the already underway

landlord’s market.

Domain 1 (124,557 sf; 0% preleased - delivers December

A correction to last quarter’s report regarding Apple’s purchase of Riata Crossing Buildings 1-4 has been made in this quarter’s report. Apple did, in fact, purchase the 357,375 sf of office space they already leased from Spear Street Capital, but they then resold the buildings to DivcoWest days later. Apple is still the tenant in all four buildings. The correction is reflected in the 1Q 2015 Competitive Set numbers. Braker Pointe III (195,230 rsf), was added to the competitive

18

of 2015), Research Park Plaza V (172,854 sf; 0% preleased – delivers November 2015), Quarry Oaks III (137,615 sf; 100% preleased by Bazaarvoice – delivers December 2015), Aspen Lake Two (129,000 sf; 100% preleased by Q2eBanking – delivers May 2016), and the Paloma Ridge development (212,400 sf split between two buildings; 0% preleased – delivers August 2015). Domain 8 is close to starting construction, which will be the largest office project in the Domain with 255,000 sf of office space and is pegged to come online in December of 2016.


NORTHWEST MICRO MARKETS Arboretum/Domain Far Northwest/Round Rock Shepherd Mountain

As has historically been

The

the case, the Arboretum/

micromarket

Domain

micromarket

outperformed other

two

the Northwest

micromarkets in terms of rental rates and vacancy rates.

This

micromarket

is

high

demand

in

THE OVERALL ASKING RENTAL RATES OF CLASS A BUILDINGS IN THE NORTHWEST SUBMARKET CLIMBED FOR THE 6TH CONSECUTIVE QUARTER, MOVING UP TO $32.74 FROM $32.06 LAST QUARTER.

as

Far

Northwest continues

to

raise its asking full service rental rates, even with the slight increase in vacancy rate. This increase in vacancy rates is deceptive since direct available

space

declined

but

actually sublease

Austinites flock to live, work, and play in the area. In

availability rose. Speculative buildings under construction

addition to the Domain developments mentioned earlier,

in this micromarket (Paloma Ridge and Research Park

Brandywine Realty Trust is in the process of bringing to

Plaza V) are yet to sign leases, although large blocks of

market two existing office buildings (345,000 sf) adjacent

available space grow increasingly scarcer.

to the Domain on the IBM Broadmoor campus that will be available in April 2016. The vacancy rate in the Shepherd Mountain competitive set continued to decrease and is now down to 12.41%, which is in line with traditional levels in this micromarket. With the recent strong absorption in the buildings belonging to this set, rental rates continue to climb higher as well.

2Q 2015 Austin Market Report

19


NORTHWEST BY THE NUMBERS NORTHWEST OVERALL SUBMARKET PERFORMANCE Quarter

Net Rentable Area

Direct Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Average Class A Full Service Rental Rate

2013 Q3

16,747,039

1,914,000

682,711

11.77%

$29.09

2013 Q4

16,747,039

1,745,316

158,788

10.82%

$27.33

2014 Q1

16,747,039

1,635,834

102,128

10.21%

$29.20

2014 Q2

16,697,337

1,493,813

(12,658)

10.02%

$29.89

2014 Q3

16,697,337

1,566,544

(103,939)

10.64%

$30.65

2014 Q4

16,817,337

1,540,054

137,486

10.46%

$30.83

2015 Q1

17,154,310

1,879,975

98,887

11.65%

$32.06

2015 Q2

17,269,310

1,819,734

116,457

11.56%

$32.74

Numbers based on CBRE statistics.

* Absorption includes sublease space.

2,500,000

15%

1,000,000

6%

500,000

3%

-

12.0%

$32.00

11.5%

$31.00

11.0%

$30.00

10.5%

$29.00

10.0%

$28.00

9.5% 9.0% 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 Direct & Sublease Vacancy Rate

Vacancy Rate

Rental Rate

$33.00

20

91.0%

500,000

90.5%

400,000

90.0%

300,000

89.5%

200,000

89.0%

100,000

88.5% 88.0% 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2

87.5% 87.0%

Net Absorption*

VACANCY RATES VS. RENTAL RATES

Average Class A Full Service Rental Rate

91.5%

600,000

(200,000)

Direct & Sublease Vacancy Rate

$27.00

92.0%

700,000

(100,000)

0% Sublease Available SF

800,000

-

2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 Direct Available SF

Absorption (SF)

9%

1,500,000

Vacancy Rate

12%

2,000,000 Availability (SF)

NET ABSORPTION

Direct & Sublease Occupancy Rate

Occupancy Rate

AVAILABLE SF VS. VACANCY RATE


NORTHWEST SUBMARKET OFFICE RENTAL RATE PROJECTIONS $40

Full Service Rental Rates ($)

$35

3% Job Growth

$30

1% Job Growth

$25

$20

$15 2004

2005

2006

2007

2008

Historic Rental Rate

2009

2010

2011

AQUILA Model

2012

2013

2014

1% Job Growth

2015

2016

2017

3% Job Growth

NORTHWEST SUBMARKET OFFICE VACANCY RATE PROJECTIONS

Total Vacancy Rate (%)

30%

Domain 8

20.0

Paloma Ridge A & B

25%

18.3

20%

16.7 1% Job Growth

15%

10%

15.0

Market Size (Millions of SF)

905 & 906 Broadmor Quarry Oaks III Aspen Lake Two Domain 1 Domain 5 Research Park Plaza V

13.3 3% Job Growth

5%

0% 2004

11.7

10.0 2005

2006

Market Size

2007

2008

2009

Historic Vacancy Rate

2010

2011

2012

AQUILA Model

2013

2014

2015

1% Job Growth

2016

2017

3% Job Growth

2Q 2015 Austin Market Report

21


Round Rock

Cedar Park

17

1 2

6

LAKE TRAVIS

3 4

5

7

9

Arboretum

16

8

DOMAIN

12 15 10

Shepherd mountain

14

13

11

NORTHWEST AUSTIN LARGE OFFICE AVAILABILITY Building Name

22

1

Amber Oaks F

2 3

Total Available Space

Percent Subleasable

78,034 SF

-

7700 Parmer A

62,000 SF

-

7700 Parmer B

155,774 SF

-

4

7700 Parmer A

50,000 SF

-

5

Research Park Five

39,237 SF

-

6

Research Park Place 8

33,518 SF

-

7

Riata Corporate Park 4

93,737 SF

-

8

Domain 7

45,000 SF

-

9

Braker Pointe I

25,694 SF

-

10

Atrium Office Center

42,740 SF

-

11

UFCU Plaza

25,161 SF

-

12

Prominent Pointe I

27,727 SF

-

13

Lakewood Center I

47,389 SF

95%

14

Ladera Bend 3

56,196 SF

100%

15

Park Centre 3

34,761 SF

-

16

River Place Corporate Park VII

32,664 SF

100%

17

Travesia Corporate Park 3

33,555 SF

-

Pflugerville


NORTHWEST AUSTIN OFFICE DEVELOPMENT Building

Total SF

Percent Preleased

Estimated Delivery

Status

1

Paloma Ridge A & B

212,400 SF

0%

3Q 2015

Under Construction

2

Aspen Lake Two

129,000 SF

100%

2Q 2016

Under Construction

3

Research Park Plaza V

172,854 SF

0%

4Q 2015

Under Construction

4

Quarry Oaks III

137,615 SF

100%

4Q 2015

Under Construction

5

Domain 1

124,578 SF

0%

4Q 2015

Under Construction

6

Domain 5

74,787 SF

0%

2Q 2016

Under Construction

7

Amber Oaks Phase I

90,300 SF

0%

-

Planned

8

Amber Oaks Phase II

90,300 SF

0%

-

Planned

9

Amber Oaks Phase III

45,000 SF

0%

-

Planned

10

Aspen Lake Three

128,700 SF

0%

11

Domain 8

255,000 SF

0%

Under Construction

Planned 4Q 2016

Planned

Planned Round Rock

Cedar Park 1

2 10

Pflugerville

7 8 9

3

4

LAKE TRAVIS

Arboretum

11 6 5

DOMAIN Shepherd mountain 2Q 2015 Austin Market Report

23


24


2Q UPDATE

SOUTHWEST SUBMARKET

2Q 2015 Austin Market Report

25


SOUTHWEST SUBMARKET UPDATE

Treemont Plaza; Photo by Scott Mason Photography

The vacancy rate across all buildings in the Southwest submarket are deceptively high this quarter, climbing up to 12.21% from 7.98% last quarter. This is due to the

Net Absorption

methodology CBRE employs when collecting vacancy data, which counts leased space that has not been moved into as vacant, hence “available.” Since we use CBRE’s data for the overall market performance analysis, this contradicts the dataset for the competitive set buildings (newer

182,561 SF

12.21% Direct & Sublease Vacancy Rate

suburban office buildings that typically have structured parking, amenities such as conference rooms, workout facilities and/or delis) due to the following: Capital Ridge, Rollingwood I & II and 3700 San Clemente all delivered this quarter in the SW submarket. Capital Ridge was fully leased by Apple, Rollingwood has 206,709 sf of 214,587 sf leased, and 3700 San Clemente has 38% of 249,870 sf leased. All of these leased spaces are considered vacant by CBRE’s data until the tenants move in, but we do not

26

$33.76 Avg. Class A Full Service Rental Rate


SOUTHWEST MICRO MARKETS Far Southwest Near Southwest

consider these spaces as available in our competitive set.

The Near Southwest micromarket has much higher

In fact, our competitive set of SW buildings saw vacancy

asking rental rates than the Far Southwest micromarket,

rates decrease from 8.29% to 8.25% due to preleasing

though both continue to rise. The vacancy rates for both

activity.

micromarkets remain low, even with the delivery of

Overall asking rates for Class A buildings in the Southwest submarket decreased by $0.59 since last quarter, whereas our competitive set of buildings increased by $0.57. This occurrence can be explained by the high demand for higher quality space, allowing landlords to continue to push rates while inferior buildings adhere to a more competitive set of market forces.

multiple buildings this quarter. To further highlight the low level of vacancy in the historically tight Far Southwest micromarket, consider the following example. If 3700 San Clemente were taken out of the equation (currently only 42% leased), there would be a 5.98% vacancy rate instead of an 8.85% rate in the micromarket. One building represents almost a 3% change in vacancy rates.

FEATURED LEASING OPPORTUNITY: TREEMONT PLAZA Treemont Plaza, located at 3001 Bee Caves Road and just minutes from downtown Austin, features newly demoed, white walled first floor space with up to 15,287 SF of availability and its own private entrance.

2Q 2015 Austin Market Report

27


SOUTHWEST OFFICE BY THE NUMBERS SOUTHWEST OVERALL SUBMARKET PERFORMANCE Net Absorption*

Direct & Sublease Vacancy Rate

Average Class A Full Service Rental Rate

722,668

(28,352)

8.06%

$32.15

734,638

(204,816)

8.42%

$32.50

(22,457)

8.66%

$31.19

(150,296)

10.26%

$30.72

164,619

9.24%

$31.38

42,081

8.41%

$34.87

589,875

66,172

7.98%

$34.35

1,070,609

182,561

12.21%

$33.76

Quarter

Net Rentable Area

Direct Available SF

2013 Q3

9,568,412

2013 Q4

9,382,293

2014 Q1

9,382,293

703,789

2014 Q2

9,382,293

853,812

2014 Q3

9,458,793

653,880

2014 Q4

9,418,793

640,998

2015 Q1

9,446,430

2015 Q2

10,109,725

Numbers based on CBRE statistics.

* Absorption includes sublease space.

1,400,000

14%

1,200,000

12%

1,000,000 800,000

8%

600,000

6%

400,000

4%

200,000

2%

-

0% 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2

Direct Available SF

Sublease Available SF

16%

$35.00

14%

$34.00

12%

$33.00

10%

$32.00

8%

$31.00

6%

$30.00

4%

$29.00

2% 0% 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 Direct & Sublease Vacancy Rate

Vacancy Rate

Rental Rate

$36.00

28

93%

200,000

92%

150,000

91%

100,000

90%

50,000

89% 88%

(50,000)

2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2

87%

(100,000)

86%

(150,000)

85%

(200,000)

84% 83% Net Absorption*

VACANCY RATES VS. RENTAL RATES

Average Class A Full Service Rental Rate

250,000

(250,000)

Direct & Sublease Vacancy Rate

$28.00

Absorption (SF)

10% Vacancy Rate

Availability (SF)

NET ABSORPTION

Direct & Sublease Occupancy Rate

Occupancy Rate

AVAILABLE SF VS. VACANCY RATE


SOUTHWEST SUBMARKET OFFICE RENTAL RATE PROJECTIONS $40

3% Job Growth

Full Service Rental Rates ($)

$35

1% Job Growth $30

$25

$20

$15 2004

2005

2006

2007

2008

Historic Rental Rate

2009

2010

2011

AQUILA Model

2012

2013

1% Job Growth

2014

2015

2016

2017

3% Job Growth

SOUTHWEST SUBMARKET OFFICE VACANCY RATE PROJECTIONS 25%

Total Vacancy Rate (%)

20%

9.9

15%

8.8 1% Job Growth

10%

Market Size (Millions of SF)

11.0 Encino Trace I & II

7.7 3% Job Growth

5%

6.6

0% 2004

5.5 2005

Market Size

2006

2007

2008

2009

Historic Vacancy Rate

2010

2011

2012

AQUILA Model

2013

2014

1% Job Growth

2015

2016

2017

3% Job Growth

2Q 2015 Austin Market Report

29


1

West Lake Hills Bee cave

2

Barton Creek TH SOU TP ES W

K

W

Y

5 4 3

SOUTHWEST AUSTIN LARGE OFFICE AVAILABILITY Building Name

30

Total Available Space

Percent Subleasable

1

3700 San Clemente

154,602 SF

-

2

CityView Center

43,819 SF

100%

3

The Park on Barton Creek 1

63,622 SF

100%

4

7500 Rialto

41,002 SF

88%

5

The Summit at Lantana

52,939 SF

-


SOUTHWEST AUSTIN OFFICE DEVELOPMENT Total SF

Percent Preleased

Estimated Delivery

Status

1

Building Encino Trace I

161,606 SF

100%

3Q 2015

Under Construction

2

Encino Trace II

158,137 SF

15%

3Q 2015

Under Construction

3

The Terrace 3

203,130 SF

0%

-

Planned

4

The Terrace 4

285,663 SF

0%

-

Planned

5

The Terrace 5

218,809 SF

0%

-

Planned

6

Lantana Ridge

175,000 SF

0%

-

Planned

7

Regency Park

90,000 SF

0%

-

Planned

Under Construction

Planned

West Lake Hills Bee cave

Barton Creek TH SOU TP ES W

K

W

Y

3 5 4

6 1

2

7

2Q 2015 Austin Market Report

31


32


THE APPENDIX Long Term Performance of Submarkets Long Term Performance: CBD vs. Suburban Central Business District Competitive Set Performance Competitive Set Buildings Northwest Submarket Competitive Set Performance Micromarket Performance Micromarket Buildings Southwest Submarket Competitive Set Performance Micromarket Performance Micromarket Buildings

35 36 37 38 39 40 42 45 46 48

2Q 2015 Austin Market Report

33


LONG TERM PERFORMANCE OF SUBMARKETS Numbers based on CBRE statistics.

8,000,000

20%

6,000,000

15%

4,000,000

10%

2,000,000

5%

0

0%

Citywide Direct Availability

2,500,000

30%

2,000,000

24%

1,500,000

18%

1,000,000

12%

500,000

6%

0

0%

Direct & Sublease Vacancy Rate

25%

Availability (SF)

30%

10,000,000 Availability (SF)

12,000,000

CBD AVAILABLE SF VS. VACANCY RATE

Direct & Sublease Vacancy Rate

CITYWIDE AVAILABLE SF VS. VACANCY RATE

Citywide Sublease Availability

Citywide Vacancy Rate

CBD Direct Availability

CBD Sublease Availability

CBD Vacancy Rate

Citywide Vacancy Rate

36%

4,000,000

32%

3,500,000

28%

3,000,000

24%

2,500,000

20%

2,000,000

16%

1,500,000

12%

1,000,000

8%

500,000

4%

0

0%

2,500,000

35%

2,000,000

28%

1,500,000

21%

1,000,000

14%

500,000

7%

0

0%

Northwest Direct Availability

Northwest Sublease Availability

Southwest Direct Availability

Southwest Sublease Availability

Northwest Vacancy Rate

Citywide Vacancy Rate

Southwest Vacancy Rate

Citywide Vacancy Rate

CITYWIDE AVERAGE CLASS A ASKING RATES

Vacancy Rate

40%

4,500,000

Availability (SF)

5,000,000

Vacancy Rate

Availability (SF)

NORTHWEST AVAILABLE SF VS. VACANCY RATE SOUTHWEST AVAILABLE SF VS. VACANCY RATE

ABSORPTION & OCCUPANCY RATE Year Over Year Direct & Sublease Absorption (SF)

Full Service Rental Rate

$45.00 $40.00 $35.00 $30.00 $25.00 $20.00 $15.00

4,000,000

95%

3,000,000

90%

2,000,000

85%

1,000,000

80%

0

75%

-1,000,000

70% 65%

-2,000,000 CBD

34

Northwest

Southwest

Citywide

CBD

Northwest

Southwest

Citywide Occupancy Rate

Direct & Sublease Occupancy Rate

*Absorption includes sublease space. $50.00


LONG TERM PERFORMANCE CBD VS. SUBURBAN Numbers based on CBRE statistics.

AVERAGE CLASS A ASKING RATES

DIRECT & SUBLEASE VACANCY RATES 30% Direct & Sublease Vacancy Rate

50 40 35 30 25 20 15 10 5 0

CBD

Suburban

20% 15% 10% 5% 0%

Suburban Vacancy Rate

Citywide Vacancy Rate

SF UNDER CONSTRUCTION

12,000,000

30%

10,000,000

25%

8,000,000

20%

6,000,000

15%

4,000,000

10%

2,000,000

5%

0

0%

Direct & Sublease Vacancy Rate

DIRECT & SUBLEASE AVAILABILITY Direct & Sublease Availability (SF)

25%

CBD Vacancy Rate

Citywide

3,500,000

Area Under Construction (SF)

Full Service Rental Rate

45

3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0

CBD

Suburban

Citywide Vacancy Rate CBD

Northwest

Southwest

2Q 2015 Austin Market Report

35


CENTRAL BUSINESS DISTRICT COMPETITIVE SET PERFORMANCE CBD COMPETITIVE SET Quarter

Net Rentable Area

Direct Available SF

Sublease Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Avg. Class A Full Service Rental Rate

2013 Q3

5,639,134

690,990

17,977

(23,578)

12.57%

$43.24

2013 Q4

5,636,079

690,237

17,977

(2,302)

12.57%

$43.51

2014 Q1

5,637,136

618,961

4,210

86,100

11.05%

$44.03

2014 Q2

5,637,136

576,465

25,189

21,517

10.67%

$44.81

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

700,000

94%

14%

600,000

93%

600,000

12%

500,000

92%

500,000

10%

400,000

91%

400,000

8%

300,000

90%

300,000

6%

200,000

4%

200,000

89%

100,000

2%

100,000

88%

2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 Direct Available SF

Sublease Available SF

(100,000)

Direct & Sublease Vacancy Rate

$47.00

13%

$46.00

11%

$45.00

9%

$44.00

7%

$43.00

5% 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 Average Class A Full Service Rental Rate

36

Direct & Sublease Vacancy Rate

Vacancy Rate

Rental Rate

15%

2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 Net Absorption*

VACANCY VS. RENTAL RATES $48.00

87%

-

0%

-

Absorption (SF)

16%

700,000

Vacancy Rate

Availability (SF)

800,000

Direct & Sublease Occupancy Rate

86%

Occupancy Rate

NET ABSORPTION

AVAILABLE SF VS. VACANCY RATE


CBD COMPETITIVE SET BUILDINGS Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

100 Congress

411,536

19,050

923

$35.00

$17.64

300 West 6th

454,225

6,494

0

$34.00

$18.42

301 Congress

418,338

73,352

0

$31.50

$17.95

400 West 15th

281,196

24,252

17,218

$24.50

$14.65

501 Congress

122,551

22,889

0

$32.00

$15.23

515 Congress

258,176

13,519

3,254

$32.00

$15.95

600 Congress Ave.

503,951

42,985

0

$33.00

$15.80

816 Congress

434,081

19,936

0

$27.50

$16.59

Austin Centre

326,335

17,780

5,520

$26.00

$15.88

Capitol Center

164,044

4,647

5,559

$26.00

$17.08

Capitol Tower

172,837

0

0

$27.00

$14.67

Chase Tower

389,503

0

0

$31.00

$17.90

Colorado Tower

373,334

5,948

0

$34.00

$14.49

Frost Bank Tower

535,078

26,607

0

$37.50

$19.25

IBC Bank Plaza

194,749

2,055

0

$30.00

$13.60

Lavaca Plaza

118,635

1,070

0

$29.50

$17.54

Littlefield Building

109,779

30,424

1,045

$29.00

$14.32

One Congress Plaza

518,385

72,848

6,060

$30.00

$16.69

San Jacinto Center

406,279

83,639

0

$32.00

$17.15

Scarbrough Building

130,789

11,597

830

$29.00

$12.75

Seaholm

143,151

0

0

$28.00

$12.00

Building Name

2Q 2015 Austin Market Report

37


NORTHWEST SUBMARKET COMPETITIVE SET PERFORMANCE NORTHWEST COMPETITIVE SET Quarter

Net Rentable Area

Direct Available SF

Sublease Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Avg. Class A Full Service Rental Rate

2013 Q3

12,292,011

1,109,885

161,848

170,517

10.35%

$30.12

2013 Q4

12,293,184

1,114,662

127,432

30,812

10.10%

$30.54

2014 Q1

12,293,184

1,050,027

135,810

56,257

9.65%

$31.21

2014 Q2

12,242,690

1,030,332

246,257

(141,246)

10.43%

$31.61

2014 Q3

12,389,252

911,833

321,739

189,579

9.96%

$32.12

2014 Q4

12,845,611

1,197,426

320,587

171,918

11.82%

$32.93

2015 Q1

12,931,909

992,203

292,334

319,774

9.93%

$33.39

2015 Q2

13,120,924

897,208

284,035

292,309

9.00%

$33.83

*Absorption includes sublease space.

NET ABSORPTION 14%

1,200,000

12%

1,000,000

10%

800,000

8%

600,000

6%

400,000

4%

200,000

2%

-

400,000

95%

2013 Q4

Direct Available SF

93%

200,000

92% 91%

100,000

90% 89%

2013 Q3

2013 Q4

2014 Q1

2014 Q2

2014 Q3

2014 Q4

2015 Q1

2014 Q1

2014 Q2

2014 Q3

Sublease Available SF

2014 Q4

2015 Q1

(200,000)

12%

$33.00

10%

$32.00

8%

$31.00

6%

$30.00

4%

$29.00

2% 0% 2013 Q3

2013 Q4

2014 Q1

2014 Q2

Average Class A Full Service Rental Rate

2014 Q3

2014 Q4

2015 Q1

2015 Q2

Direct & Sublease Vacancy Rate

Vacancy Rate

14%

$28.00

85% Net Absorption*

Direct & Sublease Vacancy Rate

$34.00

88%

86%

2015 Q2

$35.00

2015 Q2

87%

(100,000)

VACANCY VS. RENTAL RATES Rental Rate

94%

0% 2013 Q3

38

96%

300,000

Direct & Sublease Occupancy Rate

Occupancy Rate

16%

1,400,000

Absorption (SF)

1,600,000

Vacancy Rate

Availability (SF)

AVAILABLE SF VS. VACANCY RATE


ARBORETUM/DOMAIN MICROMARKET PERFORMANCE ARBORETUM/DOMAIN COMPETITIVE SET Quarter

Net Rentable Area

Direct Available SF

Sublease Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Avg. Class A Full Service Rental Rate

2013 Q3

6,105,279

422,229

46,693

109,758

7.68%

$31.41

2013 Q4

6,106,452

433,941

35,988

166

7.70%

$32.00

2014 Q1

6,106,452

433,079

55,206

(18,356)

8.00%

$32.55

2014 Q2

6,106,452

476,360

109,332

(97,407)

9.59%

$33.04

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

*Absorption includes sublease space.

300,000

95%

12%

250,000

94%

500,000

10%

200,000

93%

150,000

92%

100,000

91%

50,000

90%

400,000

8%

300,000

6%

200,000

4%

100,000

2%

2013 Q4

Direct Available Sqft

2014 Q1

2014 Q2

2014 Q3

2014 Q4

Sublease Available SF

2015 Q1

89%

(50,000)

2013 Q3

2013 Q4

2014 Q1

2014 Q2

2014 Q3

2014 Q4

2015 Q1

2015 Q2

2015 Q2

86%

(150,000) Net Absorption*

Direct & Sublease Vacancy Rate

88% 87%

(100,000)

0% 2013 Q3

Absorption (SF)

14%

600,000

Vacancy Rate

Availability (SF)

700,000

Occupancy Rate

NET ABSORPTION

AVAILABLE SF VS. VACANCY RATE

Direct & Sublease Occupancy Rate

$35.00

10.0%

$34.50

9.5%

$34.00

9.0%

$33.50

8.5%

$33.00

8.0%

$32.50

7.5%

$32.00

7.0%

$31.50

Vacancy Rate

Rental Rate

VACANCY VS. RENTAL RATES

6.5%

$31.00

6.0% 2013 Q3

2013 Q4

2014 Q1

2014 Q2

Average Class A Full Service Rental Rate

2014 Q3

2014 Q4

2015 Q1

2015 Q2

Direct & Sublease Vacancy Rate

2Q 2015 Austin Market Report

39


SHEPHERD MOUNTAIN/2222 MICROMARKET PERFORMANCE SHEPHERD MOUNTAIN/2222 COMPETITIVE SET Quarter

Net Rentable Area

Direct Available SF

Sublease Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Avg. Class A Full Service Rental Rate

2013 Q3

2,453,857

271,916

40,399

41,015

12.73%

$29.93

2013 Q4

2,453,857

274,295

40,399

(2,379)

12.82%

$30.16

2014 Q1

2,453,857

276,447

29,559

8,688

12.47%

$31.43

2014 Q2

2,453,857

241,923

46,956

17,127

11.77%

$31.95

2014 Q3

2,453,857

211,437

92,007

(14,565)

12.37%

$32.28

2014 Q4

2,688,442

389,788

127,233

21,008

19.23%

$33.10

2015 Q1

2,690,750

207,238

179,538

132,553

14.37%

$34.17

2015 Q2

2,690,750

181,807

152,245

52,724

12.41%

$34.45

*Absorption includes sublease space.

20%

400,000

16%

300,000

12%

200,000

8%

100,000

4%

Absorption (SF)

24%

500,000

Vacancy Rate

Availability (SF)

600,000

2013 Q3

2013 Q4

Direct Available Sqft

2014 Q1

2014 Q2

2014 Q3

2014 Q4

Sublease Available SF

2015 Q1

Direct & Sublease Vacancy Rate

21%

$33.00

18%

$32.00

15%

$31.00

12%

$30.00

9%

$29.00

6%

$28.00

3% 0% 2014 Q2

Average Class A Full Service Rental Rate

40

2014 Q3

2014 Q4

2015 Q1

2015 Q2

Direct & Sublease Vacancy Rate

Vacancy Rate

Rental Rate

24%

$34.00

2014 Q1

87%

60,000

85%

40,000

83%

20,000

81% 79% 2013 Q3

2013 Q4

2014 Q1

2014 Q2

2014 Q3

2014 Q4

2015 Q1

2015 Q2

77% 75%

Net Absorption*

$35.00

2013 Q4

89%

80,000

(40,000)

VACANCY VS. RENTAL RATES

2013 Q3

91%

100,000

(20,000)

2015 Q2

$27.00

93%

120,000

-

0%

-

140,000

Direct & Sublease Occupancy Rate

Occupancy Rate

NET ABSORPTION

AVAILABLE SF VS. VACANCY RATE


FAR NORTHWEST MICROMARKET PERFORMANCE FAR NORTHWEST COMPETITIVE SET Quarter

Net Rentable Area

Direct Available SF

Sublease Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Avg. Class A Full Service Rental Rate

2013 Q3

3,732,875

415,740

74,756

19,744

13.14%

$28.14

2013 Q4

3,732,875

406,426

51,045

33,025

12.26%

$28.41

2014 Q1

3,732,875

340,501

51,045

65,925

10.49%

$28.88

2014 Q2

3,682,381

312,049

89,969

(60,966)

10.92%

$29.02

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

*Absorption includes sublease space.

NET ABSORPTION 15%

400,000

12%

300,000

9%

200,000

6%

100,000

3%

2013 Q4

Direct Available Sqft

2014 Q1

2014 Q2

2014 Q3

2014 Q4

Sublease Available SF

2015 Q1

94%

60,000

93% 92%

40,000

91%

20,000

90%

(20,000)

2013 Q3

2013 Q4

2014 Q1

2014 Q2

2014 Q3

2014 Q4

2015 Q1

2015 Q2

87%

(60,000)

2015 Q2

86%

(80,000)

Direct & Sublease Vacancy Rate

89% 88%

(40,000)

0% 2013 Q3

80,000

Occupancy Rate

18%

500,000

Absorption (SF)

600,000

Vacancy Rate

Availability (SF)

AVAILABLE SF VS. VACANCY RATE

85% Net Absorption*

Direct & Sublease Occupancy Rate

VACANCY VS. RENTAL RATES $32.00

14%

$31.00

12%

Rental Rate

8% $29.00 6% $28.00

Vacancy Rate

10%

$30.00

4%

$27.00

2%

$26.00

0% 2013 Q3

2013 Q4

2014 Q1

2014 Q2

Average Class A Full Service Rental Rate

2014 Q3

2014 Q4

2015 Q1

2015 Q2

Direct & Sublease Vacancy Rate

2Q 2015 Austin Market Report

41


ARBORETUM/DOMAIN MICROMARKET COMPETITIVE SET BUILDINGS Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

Northland Office Bldg.

98,888

9500 Arboretum

182,331

5,654

0

$16.50

$10.24

0

18,319

$22.00

Arboretum Atrium

$13.00

90,280

2,515

0

$21.00

$14.27

Arboretum Plaza One

146,347

0

0

$26.00

$14.23

Arboretum Plaza Two

98,828

0

0

$26.00

$14.23

Arboretum Point

150,033

0

0

$23.00

$13.44

Atrium Office Centre

119,858

42,740

0

$17.50

$9.32

Austin Oaks (12 Bldg. Office Park)

445,240

17,423

2,215

$18.00

$10.90

Balcones Centre

74,876

3,919

0

$24.00

$9.86

Braker Pointe I

77,454

25,694

0

$21.00

$13.16

Braker Pointe II

103,114

0

17,112

$21.00

$12.89

Braker Pointe III

195,230

0

0

$24.00

$12.84

Campus @ Arboretum 1

60,059

11,590

0

$22.00

$13.78

Campus @ Arboretum 2

33,135

0

0

$22.00

$13.85

Campus @ Arboretum 3

32,765

0

0

$22.00

$14.53

Campus @ Arboretum 4

85,916

6,447

0

$22.00

$14.17

Campus @ Arboretum 5

105,000

5,585

0

$22.00

$14.12

Colina West

69,299

0

0

$19.75

$10.71

Domain 2

143,331

0

0

$30.00

$11.00

Domain 3

179,006

0

20,816

$25.50

$10.34

Domain 4

152,012

0

0

$24.00

$11.16

Domain 7

221,973

45,000

0

$27.00

$11.33

Domain Gateway

173,962

0

0

$21.00

$14.95

Great Hills Corporate Center I

56,200

1,689

0

$26.50

$10.95

Great Hills Corporate Center II

57,988

0

0

$26.50

$10.95

Great Hills Corporate Center III

85,061

16,044

0

$26.50

$10.95

Great Hills Plaza

139,252

16,006

0

$20.00

$11.23

Greystone Plaza

78,248

14,395

0

$27.50

$12.63

Heritage Plaza

74,736

9,209

0

$28.00

$11.29

Kaleido I & II

73,149

3,282

0

$25.00

$8.77

Lakeview Plaza

120,956

6,266

0

$20.00

$10.73

Northpoint Centre I & II

151,126

5,556

0

$22.00

$11.22

Offices at the Domain - Phase I

92,955

0

0

$26.50

$14.75

Offices at the Domain - Phase II

75,509

0

0

$26.50

$13.59

One Far West

70,642

1,753

0

$23.50

$12.92

Park North I & II

133,568

6,069

0

$18.00

$11.62

Plaza 7000

155,076

3,869

0

$23.50

$10.25

Prominent Pointe I

150,149

27,727

0

$24.50

$13.65

Prominent Pointe II

102,567

0

0

$24.50

$14.70

Quarry Lake Business Center

117,512

5,048

0

$20.00

$11.08

Quarry Oaks Atrium I

165,435

7,155

0

$24.00

$11.82

Quarry Oaks Atrium II

126,000

0

0

$25.00

$11.48

Reunion Park

118,142

14,631

0

$19.50

$11.16

Stone Creek I

76,860

0

0

$22.00

$0.00

Stone Creek II

162,723

6,687

0

$22.00

$12.60

Stone Creek Park

77,185

0

0

$20.00

$13.45

Stonebridge Plaza I

193,200

0

0

$26.00

$14.40

Building Name

42


Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

Stonebridge Plaza II

192,864

0

0

$26.00

$13.98

Stratum Exec Center - A

61,000

0

5,429

$20.00

$12.00

Stratum Exec Center - B

61,000

1,788

0

$20.00

$12.00

Stratum Exec Center - C

61,000

12,344

0

$20.00

$12.00

Stratum Exec Center - D

61,000

0

0

$20.00

$12.00

The Park at 8300 N. MoPac

93,317

6,911

0

$22.00

$13.40

UFCU Plaza

246,869

25,161

0

$20.00

$12.15

Westech 360 Bldgs. 1-4

175,529

26,044

0

$20.00

$11.93

Westpark Office 1-4

97,034

5,047

0

$28.00

$9.66

Building Name

SHEPHERD MOUNTAIN/2222 MICROMARKET COMPETITIVE SET BUILDINGS Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

Bridgepoint Square I

84,692

11,991

0

$23.00

$12.43

Bridgepoint Square II

92,459

16,391

0

$23.00

$12.43

Bridgepoint Square III

78,352

0

0

$23.00

$12.43

Bridgepoint Square IV

109,175

0

0

$23.00

$12.43

Bridgepoint Square V

76,793

3,220

0

$23.00

$12.43

Bridgepointe Plaza I

105,333

0

0

$23.00

$12.81

Bridgepointe Plaza II

72,640

6,617

0

$23.00

$12.81

Champion Office Park I & II

230,000

0

0

$26.50

$11.00

Four Points Centre I & II

192,396

0

0

$23.50

$12.62

Ladera Bend 1

56,466

0

0

$21.50

$16.34

Ladera Bend 2

45,732

2,900

0

$21.50

$13.88

Ladera Bend 3

56,196

0

56,196

$21.50

$13.83

Lakewood Center I

47,389

47,398

45,020

$20.00

$13.20

Lakewood Center II

44,611

0

13,206

$20.00

$13.20

Lakewood in the Park B

102,086

11,998

0

$19.50

$9.60

Lakewood in the Park C

78,596

0

0

$19.50

$11.80

Millennium Building

125,612

0

0

$22.00

$11.94

Park Centre Bldg.. 1

89,822

13,005

0

$18.00

$11.75

Park Centre Bldg.. 2

35,095

0

0

$18.00

$11.75

Park Centre Bldg.. 3

78,270

34,761

0

$18.00

$11.75

Reserve at Bull Creek A

43,782

7,622

0

$18.00

$12.28

Reserve at Bull Creek B

43,713

0

0

$20.00

$10.86

Reserve at Bull Creek C

43,695

0

0

$20.00

$11.44

River Place Corp. Park Bldg. 1

76,529

0

0

$21.00

$12.79

River Place Corp. Park Bldg. 2

114,491

9,987

0

$21.00

$12.43

River Place Corp. Park Bldg. 3

113,465

4,339

0

$21.00

$12.50

River Place Corp. Park Bldg. 4

87,639

0

0

$21.00

$13.53

River Place Corp. Park Bldg. 5

67,601

0

0

$21.00

$12.01

River Place Corp. Park Bldg. 6

62,037

0

0

$21.00

$13.33

River Place Corp. Park Bldg. 7

69,119

0

32,664

$21.00

$14.15

Shepherd Mountain Plaza

100,937

0

5,159

$33.00

$11.28

Stone Cliff

66,027

11,578

0

$18.00

$12.73

Building Name

2Q 2015 Austin Market Report

43


FAR NORTHWEST MICROMARKET COMPETITIVE SET BUILDINGS Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

Amber Oaks A

78,164

0

0

$19.00

$10.94

Amber Oaks B

44,184

0

0

$19.00

$8.30

Amber Oaks C

44,184

0

0

$19.00

$8.60

Amber Oaks D

28,733

0

0

$19.00

$10.45

Amber Oaks E

63,111

0

0

$19.00

$8.03

Amber Oaks F

78,034

78,034

0

$19.00

$10.09

Amber Oaks G

106,455

9,923

14,730

$19.00

$10.01

Amber Oaks H

101,045

0

0

$19.00

$10.93

Amber Oaks I

50,313

10,828

0

$19.00

$11.63

Amber Oaks J

50,111

6,245

33,147

$19.00

$10.90

Aspen Lake

204,940

0

0

$18.50

$13.26

Crossings at Lakeline I

114,726

4,078

0

$21.00

$10.98

Crossings at Lakeline II

117,548

10,645

0

$21.00

$11.10

Parmer Business Park A, B, C

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

4,603

0

$21.50

$10.69

Pecan Park II

136,245

0

0

$19.50

$9.45

Research Park Place 7

125,701

3,790

3,500

$22.00

$11.55

Research Park Place 8

125,700

33,518

0

$22.00

$11.55

Research Park Plaza I

136,068

15,962

0

$22.50

$13.96

Research Park Plaza II

135,813

0

0

$22.50

$13.96

Research Park Plaza III

173,530

0

0

$23.00

$13.08

Research Park Plaza IV

184,114

0

0

$23.00

$13.08

Riata Corporate Park Bldg. 2

63,372

16,821

0

$22.00

$12.33

Riata Corporate Park Bldg. 3

63,849

3,039

0

$22.00

$12.33

Riata Corporate Park Bldg. 4

93,737

93,737

0

$22.00

$12.33

Riata Corporate Park Bldg. 5

93,828

23,703

0

$22.00

$12.33

Riata Corporate Park Bldg. 6

93,835

0

0

$22.00

$12.33

Riata Corporate Park Bldg. 7

92,719

0

0

$22.00

$12.33

Riata Corporate Park Bldg. 8

93,718

0

16,522

$22.00

$12.33

Riata Corporate Park Bldg. 9

92,973

0

0

$22.00

$12.33

Riata Crossing Bldg. 1

81,775

0

0

$19.00

$8.00

Riata Crossing Bldg. 2

114,906

0

0

$19.00

$8.00

Riata Crossing Bldg. 3

81,229

0

0

$19.00

$8.00

Riata Crossing Bldg. 4

79,465

0

0

$19.00

$8.00

Tower of the Hills/Tower Point

175,802

11,227

0

$19.50

$12.60

Building Name

44


SOUTHWEST COMPETITIVE SET PERFORMANCE SOUTHWEST COMPETITIVE SET Quarter

Net Rentable Area

Direct Available SF

Sublease Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Avg. Class A Full Service Rental Rate

2013 Q3

7,108,521

609,436

91,892

(47,365)

9.87%

$33.51

2013 Q4

7,108,930

552,899

97,634

51,204

9.15%

$33.82

2014 Q1

7,102,874

480,177

202,095

(37,795)

9.61%

$34.71

2014 Q2

7,102,874

387,913

208,978

85,381

8.40%

$35.06

2014 Q3

7,102,874

294,587

169,604

132,700

6.54%

$35.47

2014 Q4

7,102,547

386,333

182,477

(104,946)

8.01%

$36.07

2015 Q1

7,100,750

399,919

188,613

(21,519)

8.29%

$36.98

2015 Q2

7,782,464

428,605

213,812

627,829

8.25%

$37.55

*Absorption includes sublease space.

700,000

96%

14%

600,000

95%

600,000

12%

500,000

94%

500,000

10%

400,000

93%

400,000

8%

300,000

92%

300,000

6%

200,000

91%

200,000

4%

100,000

90%

100,000

2%

2013 Q4

Direct Available SF

2014 Q1

2014 Q2

2014 Q3

Sublease Available SF

2014 Q4

2015 Q1

89%

(100,000)

0% 2013 Q3

Absorption (SF)

16%

700,000

Vacancy Rate

Availability (SF)

800,000

2015 Q2

2013 Q3

2013 Q4

2014 Q1

2014 Q2

2014 Q3

2014 Q4

2015 Q1

2015 Q2

88% 87%

(200,000) Net Absorption*

Direct & Sublease Vacancy Rate

Occupancy Rate

NET ABSORPTION

AVAILABLE SF VS. VACANCY RATE

Direct & Sublease Occupancy Rate

$38.00

10%

$37.00

9%

$36.00

8%

$35.00

7%

$34.00

6%

$33.00

Vacancy Rate

Rental Rate

VACANCY VS. RENTAL RATES

5% 2013 Q3

2013 Q4

2014 Q1

2014 Q2

Average Class A Full Service Rental Rate

2014 Q3

2014 Q4

2015 Q1

2015 Q2

Direct & Sublease Vacancy Rate

2Q 2015 Austin Market Report

45


NEAR SOUTHWEST MICROMARKET PERFORMANCE NEAR SOUTHWEST COMPETITIVE SET Quarter

Net Rentable Area

Direct Available SF

Sublease Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Avg. Class A Full Service Rental Rate

2013 Q3

2,718,247

252,847

30,712

22,236

10.43%

$35.83

2013 Q4

2,718,656

228,673

41,301

13,994

9.93%

$35.99

2014 Q1

2,712,851

209,356

143,888

(89,075)

13.02%

$37.18

2014 Q2

2,712,851

191,624

165,931

(4,311)

13.18%

$37.40

2014 Q3

2,712,851

174,207

126,557

56,791

11.09%

$37.59

2014 Q4

2,713,137

158,703

124,248

18,099

10.43%

$38.03

2015 Q1

2,711,340

143,863

125,110

12,181

9.92%

$39.26

2015 Q2

2,925,937

110,815

101,710

271,045

7.26%

$39.49

*Absorption includes sublease space.

16%

300,000

94%

350,000

14%

250,000

93%

300,000

12%

200,000

92%

250,000

10%

150,000

91%

200,000

8%

100,000

90%

150,000

6%

50,000

89%

100,000

4%

50,000

2%

-

Absorption (SF)

Vacancy Rate

Availability (SF)

400,000

(50,000)

2013 Q4

Direct Available SF

2014 Q1

2014 Q2

2014 Q3

Sublease Available SF

2014 Q4

2015 Q1

2015 Q2

17%

$39.00

15%

$38.00

13%

$37.00

11%

$36.00

9%

$35.00

7% 5% 2014 Q1

2014 Q2

Average Class A Full Service Rental Rate

46

2014 Q3

2014 Q4

2015 Q1

2015 Q2

Direct & Sublease Vacancy Rate

Vacancy Rate

Rental Rate

$40.00

2013 Q4

2014 Q1

2014 Q2

2014 Q3

2014 Q4

2015 Q1

2015 Q2

87% 86% 85%

Net Absorption*

VACANCY VS. RENTAL RATES

2013 Q3

2013 Q4

(150,000)

Direct & Sublease Vacancy Rate

$34.00

88% 2013 Q3

(100,000)

0% 2013 Q3

-

Direct & Sublease Occupancy Rate

Occupancy Rate

NET ABSORPTION

AVAILABLE SF VS. VACANCY RATE


FAR SOUTHWEST MICROMARKET PERFORMANCE FAR SOUTHWEST COMPETITIVE SET Quarter

Net Rentable Area

Direct Available SF

Sublease Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Avg. Class A Full Service Rental Rate

2013 Q3

4,390,274

356,589

61,180

(69,601)

9.52%

$32.07

2013 Q4

4,390,274

324,226

56,333

37,210

8.67%

$32.48

2014 Q1

4,390,023

270,821

58,207

51,280

7.49%

$33.19

2014 Q2

4,390,023

196,289

43,047

89,692

5.45%

$33.62

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

*Absorption includes sublease space.

9%

400,000

8%

350,000

7%

300,000

6%

250,000

5%

200,000

4%

150,000

3%

100,000

2%

50,000

100%

300,000

98%

200,000

96%

100,000

94%

-

92% 2013 Q3

2013 Q4

2014 Q1

2014 Q2

2014 Q3

2014 Q4

2015 Q1

2015 Q2

(100,000)

1%

-

400,000

Occupancy Rate

10%

450,000

Vacancy Rate

Availability (SF)

500,000

Absorption (SF)

NET ABSORPTION

AVAILABLE SF VS. VACANCY RATE

90%

0% 2013 Q3

2013 Q4

Direct Available SF

2014 Q1

2014 Q2

2014 Q3

Sublease Available SF

2014 Q4

2015 Q1

2015 Q2

(200,000)

Direct & Sublease Vacancy Rate

88% Net Absorption*

Direct & Sublease Occupancy Rate

$37.00

16%

$36.00

14%

$35.00

12%

$34.00

10%

$33.00

8%

$32.00

6%

$31.00

4%

$30.00

2%

Vacancy Rate

Rental Rate

VACANCY VS. RENTAL RATES

0%

$29.00 2013 Q3

2013 Q4

2014 Q1

2014 Q2

Average Class A Full Service Rental Rate

2014 Q3

2014 Q4

2015 Q1

2015 Q2

Direct & Sublease Vacancy Rate

2Q 2015 Austin Market Report

47


NEAR SOUTHWEST MICROMARKET COMPETITIVE SET BUILDINGS Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

Barton Creek Plaza I

72,974

24,336

0

$22.00

$12.53

Barton Creek Plaza II

64,718

2,688

0

$22.00

$11.69

Barton Creek Plaza III

64,842

6,413

0

$22.00

$11.83

Barton Oaks Plaza I

99,404

0

0

$26.00

$14.68

Barton Oaks Plaza II

116,368

11,073

0

$26.00

$14.37

Barton Oaks Plaza III

121,467

2,400

3,303

$26.00

$13.41

Barton Oaks Plaza IV

112,000

0

0

$40.00

$13.86

Barton Oaks Plaza V

119,549

5,562

4,189

$26.00

$13.80

Barton Skyway I

195,324

3,596

3,596

$25.50

$13.40

Barton Skyway II

195,639

5,639

0

$25.50

$13.79

Barton Skyway III

173,302

2,716

0

$25.50

$13.70

Barton Skyway IV

222,580

0

0

$25.50

$12.86

Centre I

39,903

1,479

0

$18.00

$12.00

Centre II

54,610

4,999

0

$19.50

$11.82

Mira Vista

121,147

0

0

$27.00

$14.09

Overlook at Gaines Ranch

50,725

0

0

$26.50

$14.17

Rollingwood Center I & II

214,587

7,878

8,000

$28.00

$12.00

Spyglass Point

58,576

0

0

$21.00

$13.45

The Park on Barton Creek 1

102,608

0

63,622

$24.50

$13.33

The Park on Barton Creek 2

102,587

0

0

$24.50

$13.33

The Terrace 1

115,460

6,354

0

$23.50

$14.90

The Terrace 2

114,635

3,232

0

$23.50

$15.03

The Terrace 6

196,717

22,450

0

$26.50

$15.62

The Terrace 7

196,215

0

19,000

$26.50

$15.59

Building Name

48


FAR SOUTHWEST MICROMARKET COMPETITIVE SET BUILDINGS Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

3700 San Clemente

249,870

154,602

0

$29.00

$11.50

3900 San Clemente

251,146

0

0

$25.00

$13.93

5000 Plaza on the Lake

118,063

1,086

9,980

$26.00

$14.57

7000 West at Lantana 1 & 2

136,075

0

0

$24.50

$12.13

Canyon at Wild Basin

74,580

9,755

1,283

$23.00

$11.60

Capital Ridge

216,511

0

0

$30.00

$10.56

Cielo Center

270,711

5,353

3,371

$19.50

$12.55

CityView 1

46,702

2,301

0

$20.50

$10.55

CityView 2

47,809

0

0

$20.50

$10.55

CityView 3

48,044

6,629

0

$20.50

$10.55

CityView Center

137,763

0

43,819

$24.00

$11.79

Crystal Mountain 1, 2 & 3

56,507

10,112

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

Escalade Bldg. A

56,701

9,440

0

$19.00

$11.92

Escalade Bldg. B

56,701

12,428

0

$19.00

$11.92

Lake Pointe Center 2

42,933

2,840

0

$27.00

$7.71

Las Cimas I

85,000

3,700

0

$24.50

$14.18

Las Cimas II

156,069

0

2,947

$26.00

$13.83

Las Cimas III

157,418

0

3,718

$26.00

$13.93

Las Cimas IV

138,008

0

2,587

$26.50

$14.47

Lost Creek Point

73,026

5,308

0

$29.00

$12.37

Parkway at Oak Hill I & II

145,475

1,779

0

$23.50

$13.07

Plaza 290

63,163

2,192

4,002

$17.50

$10.81

Plaza on the Lake I

122,530

8,936

0

$25.50

$13.84

Plaza on the Lake II

111,166

0

0

$25.50

$14.96

Rialto I

77,872

2,220

0

$22.00

$11.63

Rialto II

77,508

4,581

36,421

$22.00

$11.63

San Clemente Bldg. B

90,267

0

0

$26.50

$14.05

The Enclave

44,704

0

0

$17.00

$8.37

The Summit 1-5 (formerly AMD campus)

865,832

52,939

0

$25.00

$11.84

Travis Oaks

123,434

3,373

2,384

$22.50

$12.09

Vista Ridge I

75,131

11,837

0

$17.50

$11.33

Westlake Place

61,184

6,379

0

$20.00

$10.50

Wild Basin Atrium Park A

67,500

0

0

$16.50

$9.31

Wild Basin I

60,498

0

0

$19.00

$11.40

Wild Basin II

74,626

0

0

$19.00

$11.37

Building Name

2Q 2015 Austin Market Report

49


HOW DO NEW OFFICE DEVELOPMENTS AFFECT SURROUNDING RENTAL RATES? METHODOLOGY The following methodology was used to derive the data featured in the special report on page 10 of this publication.

Step 1:

Lease data was collected in the Austin suburban markets for buildings constructed near new developments from 2002 to 2013.

This yielded 42

developments to analyze.

Step 2:

The developments were plotted on a map. For each new development, a fixed radius was drawn so that all existing buildings within this ring at the time of the development were identified for analysis.

Step 3:

Starting rental rates were tracked on a quarterly basis for each of the marked existing properties. Using the delivery of the new development as time “0,” the tracked starting rental rates were assigned a time relative to the delivery date (i.e. “-4” would represent the starting rental rate 4 quarters prior to delivery).

Step 4:

The tracked rental rates in Step 3 were compared to the average starting rental rates throughout Austin at the same relative time to each of the new building deliveries. The differences of these 2 geographies were the metric used in the study. For example, if the average starting rental rate at the time “-4” near the new development was $30/sf and the average starting rental rate in Austin was $28/sf at that time, then the rate above the average Austin rate was $2/sf. This methodology normalizes the data to account for economic forces that occur over time.

Step 5:

This process was repeated for all 42 tracked buildings, and the differences between the starting rates for the buildings close to new developments and the overall Austin market were averaged together for each time period. The results are displayed in the graph.

50


YOUR NOTES:

2Q 2015 Austin Market Report

51


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AQUILA Austin Market Report 2Q 2015