Buoyed by expected job growth of 5.6 percent, Austin reigns as the country’s No. 1 office market for 2022, according to a new report.
The report, published by commercial real estate services provider Marcus & Millichap, cites Austin’s position as a magnet for tech employers as one of the reasons for the bullish outlook regarding this year’s local office market.
Marcus & Millichap anticipates net absorption this year of more than 4 million square feet of office space in the Austin area. That would bring the region’s two-year net absorption total to more than 9 million square feet of office space, Marcus & Millichap says.
Net absorption refers to the amount of square feet that became occupied during a certain period, subtracted by the amount of square feet vacated during that period.
Of course, tech companies are spurring much of this activity. Office tenants in the tech sector are drawn to Austin for several reasons, such as a relatively low cost of doing business, an abundance of skilled workers, and opportunities to collaborate with related businesses, according to the report.
“This trend is not novel for the [Austin] market. However, location preferences are shifting,” the report says.
As a result, tech employers are filling up space in places such as downtown Austin and East Austin, the report says. Marcus & Millichap cites recent office leasing deals signed by Atlassian, Cloudfare, Facebook, and TikTok. The report also mentions the ripple effect of Tesla’s expanding presence in the Austin area.
These and other employers are fueling job growth in Austin. The report predicts Austin will see 5.6 percent employment growth this year, compared with 4 percent in Dallas-Fort Worth, 3.4 percent in San Antonio, and 3.1 percent in Houston.
In light of the anticipated employment growth, Marcus & Millichap expects Austin to post a 15.8 percent office vacancy rate this year, compared with 13.6 percent in San Antonio, 20.9 percent in DFW, and 23.1 percent in Houston.
As determined by Marcus & Millichap, here are the top 10 U.S. office markets for 2022:
- Tampa, Florida.
- Raleigh, North Carolina.
- Orlando, Florida.
- Salt Lake City.
- West Palm Beach, Florida.
- Fort Lauderdale, Florida.
Elsewhere in Texas, DFW ranks 11th, San Antonio ranks 15th, and Houston ranks 41st. The report covers 46 major office markets in the U.S.