BYLINE: Shonda Novak American-Statesman
STAFF
DATE: July 3, 2007
PUBLICATION: Austin American-Statesman (TX)
EDITION: Final
SECTION: BUSINESS
PAGE: D01
The Austin-area office market continued its healthy run in the second
quarter, with rents for top-tier space hitting their highest level since early
2001, according to Oxford Commercial. And though vacancies for first-class
space rose from the previous quarter, when they reached their lowest level in
six years, they were still down from the same year-ago quarter.
The market continues to get a lift from a "strong national economics,
robust local hiring and our region's increasing draw as a sought-after location
for national and international firms," said Brett Arabie, a senior vice
president with Oxford Commercial, which tracks the market.
Rents
for first-class, or Class A, space averaged $29.52 a square foot in the second
quarter of 2007, up 23 percent from $23.92 a year ago. Class A vacancy dipped
to 11 percent from 15.9 percent during that same time.
Rents
for all types of office space continued ticking up, as they had been since
early 2005, hitting an average of $24.68 a square foot in the second quarter.
The
overall vacancy rate stood at 13.6 percent, up from 11.8 percent in the
previous quarter but still down from 17.4 percent in mid-2006. The vacancy rate
increase was the first after three consecutive quarterly declines. Arabie said
the increase was a result of several projects that opened in the second quarter
that were not fully leased.
Central
Texas' strong job growth, which was at a 4.1 percent annual rate in May,
continues to fuel demand for office space in a tightening market where several
new projects are under construction. Those projects will add more than 1.3
million square feet of space this year.
Regional
economic development officials are working with more than 100 companies that
are scouting Central Texas for possible expansion or relocation. Those
companies include several that could bring between 500 and 1,000 employees,
said Dave Porter, senior vice president of economic development for the Greater
Austin Chamber of Commerce. A number of the companies looking to expand are
seeking 15,000 to 50,000 square feet of Class A space, he said.
"There's
a lot going on in the technology world, a lot of consolidations and,
fortunately, Austin is on a short list for many of these projects," Porter
said in a recent interview. "A lot are fairly large," he said, adding
that no decisions are imminent.
Porter's
comments came as Internet search leader Google Inc. said in separate postings
that it was seeking software engineers and an engineering director in Austin to
lead 100 engineers.
"We're
seeing a big increase in clean-energy type of companies," Porter said.
Digital media, gaming and financial services also are among the type of
companies adding jobs in the region, he said.
Porter
said California continues to be one of the best sources for corporate relocations,
as employers seek to reduce costs.
snovak@statesman.com;
445-3856