Real estate research and brokerage firm Aquila Commercial in early May published its Austin Office Market Report from the first quarter of 2021. According to that report, the Northwest Austin office market—generally defined in the paper as an area west of MoPac and stretching as far north as Cedar Park—is reporting a 13.7% total vacancy rate, which combines both direct and sublease vacancy rates.
The sublease vacancy rate shows when companies pay rent on an office space and attempt to sublease out space they do not use.
The first quarter of 2021 is now the fifth straight quarter the Northwest Austin market has seen an increase in the office vacancy rate.
Some of that trend is driven by high-volume leases going on the market, according to the report. In Northwest Austin, vacation rental company VRBO in February 2020 put more than 100,000 square feet of its office space at Domain 2 on the sublease market.
Still, Northwest Austin’s vacancy rate is better than the citywide rate—which now sits at 14.7%—and Kirk Silas, a market research analyst at Aquila, said the market is beginning to see a turnaround.
“We are starting to see more activity on the sales front. It looks like Austin is going to be one of the better markets in the country post-COVID-19,” Silas told Community Impact Newspaper. “I’m expecting [Northwest Austin] to be one of the better submarkets going forward.”
More office space should be coming online in Northwest Austin in the next couple of years as well. While no new major office spaces opened in the market in early 2021, the Aquila report shows two office developments—Domain Tower II and Domain 2.5—are under construction and will deliver nearly 400,000 square feet of available office space combined.
“You’ve got Domain II under construction right now. That is 0% preleased, so we’ll see how that plays out. If that leases up pretty quickly, that will encourage other developers,” Silas said.
Beyond those two projects, Aquila reports there are still 11 more significant commercial office developments under proposal across Northwest Austin, including projects in the Four Points area, the Parmer Lane corridor and yet more towers in The Domain.
One project yet to break ground, the Broadmoor campus redevelopment, is designed to deliver up to 4.9 million square feet of available office space after its completion, according to the Aquila report.