AUSTIN MARKET REP OR T 2Q 2015
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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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