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Austin declared top market for commercial real estate investors in 2018

Austin top market for commercial real estate investors in 2018

Austin skyline
Austin will add about 1.8 million square feet of commercial office space this year. Photo courtesy of Metropia

With all this HQ2 conversation heating up, it seems Amazon isn't the only company who is moving to Austin. A new study based on Bureau of Labor statistics and the Yardi matrix has determined that Austin is one of the top markets for commercial office real estate investors in 2018. 

To determine these hot markets, analysts looked employment numbers, vacancy rates, lease rates, and the office construction pipeline. With a 2.7 percent unemployment rate, Austin ranks among the top cities in the U.S. for job seekers. And, as Commercial Cafe points out, the city maintained a low 11-15 percent office vacancy rate throughout 2017.

Where the city seems to be bucking the trend, however, is in future construction. After a banner year in 2017 (Austin saw construction of more than 2.5 million square feet of office space last year), the Capital City is actually poised to slow down on construction projects over the next 12 months. Though only 1.8 million square feet of commercial office space is on the docket for 2018, it does represent a 3 percent growth in available inventory, making it a prime spot to invest.

It's not just those downtown high-rises or suburban office parks that are growing, either. The study noted that a boom in smaller co-working spaces is rapidly expanding, providing companies more flexibility for their employees, which in turn is impacting construction trends. 

So who is using all that space? The overwhelming majority of Austin office space is used by the technology sector, about 34 percent. 

Other cities poised to see an increase in commercial office investment are Boston, San Francisco, Seattle, Atlanta, and Nashville.