Austin is one of the fastest growing cities in the United States, with hundreds of people moving to Texas’ Capital every week. Known as the “Live Music Capital of the World” and the birthplace of Whole Foods, Austin is also home to a growing tech hub and startup culture. The city is a popular destination for post-grads and young professionals searching for employment among the Silicon Hills.
In addition to tech, thriving industries in the area include construction, hospitality, media, biotech, education, and various professional services. In Austin, office space is mainly clustered downtown, while the suburbs offer options with more flexible designs and uses.
Office Space | Austin Lease Data & Trends
|Office space for lease||Class A||Class B||Vacancy Rate|
Based on SquareFoot’s local commercial real estate data, the Austin market boasts nearly 55 million square feet of office space. Austin has nearly 35 million square feet of Class A inventory, with asking rents of around $48 per square foot. Asking rents for Class B spaces average closer to $35 per square foot. Lease prices vary significantly by submarket, with a significant divide between Downtown and Suburban office options.
In exchange for all the comfort and amenities of being downtown, office space in the Austin Central Business District tend to lease for 50% more than those in the suburbs. Outside of Downtown Austin, commercial tenants can expect to pay an average of $40 per square foot for Class A office space and $27 per square foot for Class B. The eastern suburbs generally have the lowest asking rents.
Nearly all of the more than 4 million square feet of Austin office space currently under construction will be Class A assets. Construction is centralized in the Downtown, Northwest, South, and East submarkets. The overall vacancy rate in Austin currently sits just above 10%.
Popular Neighborhoods to Lease Austin Office Space
Located on the north bank of the Colorado River, the Downtown Austin is bordered by Lamar Boulevard, Martin Luther King, Jr. Boulevard, Interstate 35, and Lady Bird Lake. The University of Texas at Austin campus is in the north part of the district. Downtown is the main center of business, government, and technology in Austin. Fortune 500 companies in the area include Google, Facebook, Indeed, and Deloitte, while well-known startups include Distractify, Bigcommerce, StitchFix, and HomeAway. The Red Line runs to the Downtown CapMetro Station. Class A office space in Downtown Austin costs around $60 per square foot to lease, while office space in a Class B building costs closer to $42 per square foot.
The Central Austin submarket includes the Hancock, North University, Heritage, and West Campus neighborhoods as well as part of The Drag. Only minutes away from Downtown, Central Austin is home to the Seton Medical Center, St.David’s Medical Center, and the headquarters of Texas Perinatal Group, making this submarket ideal for companies in the medical and biotech industries. The University of Texas is also located in Central Austin. The Interregional Highway is the main thoroughfare for drivers in Central Austin, and the district is just a short drive from the MoPac Expressway. The MetroRapid rapid transit bus service runs on Guadalupe Street in The Drag.
Just north of Downtown, North Central Austin contains the smaller neighborhoods of Allandale, Brentwood, Crestview, Highland, North Shoal Creek, and Wooten. The area provides excellent office space options for the legal, real estate, insurance, and business industries at some of the lowest rents in Austin. North Central also attracts a variety of companies in the technology sector, including medical animation and digital marketing company Swift Kick Media, mobile app developer Phunware, virtual reality game developer Foundry, and artificial intelligence company MythicAI. The area has plenty of public transit options and local bus routes, and drivers can access North Central via the Interregional Highway, MoPac, or US-183.
Shaped like a triangle, East Austin is bordered by the Interregional Highway on the west, Airport Boulevard on the east, and Colorado River to the south. Underneath the hipster surface of rapidly multiplying restaurants and boutiques exists a tight-knit community with many local Austin offices and headquarters. East Austin’s artsy, laid-back character continues to attract new residents, making it one of the fastest growing neighborhoods in Austin. Support Ninja, Cultivate PR, and Rocksauce all rent office space in East Austin, along with many real estate developers, channel data management groups, and policy developers.
Office space in Northeast Austin rents at a low average of $22 per square foot, which makes the area very appealing for young startups that want proximity to Downtown while paying almost $30 less per square foot than Downtown office space. Dell Children’s Medical Center of Central Texas is located in Northeast Austin, as well as the Thinkery children’s museum and many elementary schools, creating an ideal neighborhood for companies with a focus in childhood education or medicine. Taking the bus is one of the easiest ways to get around Northeast Austin, and drivers have access to major roadways including I-35, Highway 183, and Highway 130.
South Central lies below downtown, across Lady Bird Lake. South Congress Avenue (“SoCo”), South First Street (“SoFi”), and South Lamar Boulevard (“SoLa”) are the most popular corridors in the area and have the highest concentrations of mixed-use developments. Industries with corporate offices in South Central include hospitality, beverage production, technology and information, and more. Ten buses serve the area, as well as the MetroRapid bus along both South Lamar Boulevard and South Congress Avenue.
Southeast Austin is home to both Texas Health and Human Services and Texas Workforce Solutions. The district is composed of smaller neighborhoods like Colorado Crossing, McKinney, and Franklin Park. Vital Farms and Pirch have headquarters in the area, which is also favored by production, supply, and distribution industries. The Austin-Bergstrom International Airport lies just across from Southeast Austin on the other side of South Highway 183.
One of the more expensive submarkets, Southwest Austin office space is the ideal location for companies in the energy, medical, and technology industries who don’t want to pay Downtown prices. The area is home to Intel’s corporate campus and Whole Foods’ global office. The district is contained above the intersection of South MoPac Expressway and South Capital of Texas Highway.
Companies who don’t mind a little extra distance from Downtown Austin will find themselves in excellent company among Round Rock tenants such as Dell, Emerson Automation Solutions, and Trellis Company. Major industries in the area include clean energy, manufacturing, life sciences, and software development. The district is located above the intersection of US-45 and I-35. Four bus routes provide transportation within Round Rock and connect to multiple CapMetro routes heading into Austin.
Austin Office Space | Market Outlook
Overall, the Austin office market should continue to grow in terms of tenant demand and new construction, largely driven by the influx of tech companies. 2018 construction activity was up more than 30% year-over-year, which was a main driver in the increase in asking rents.
Because the unemployment rate is near historical lows, employees are changing jobs more often, and employers are using office space as one of many initiatives to attract and retain top talent. Office space and employer brand continue to overlap, which has driven businesses to splurge on higher-end offices. We expect this trend to continue.
Getting to, From, and Around Austin
Heavy traffic can be a nuisance, especially at rush hour, but the majority of Austinites still prefer to drive to work over any other form of transportation. I-35 and the MoPac Expressway are the two main traffic arteries heading running north to south, with US-183 crossing through the north side of Austin and Ben White Boulevard running east to west through the southern side.
Austin’s Capital Metro system is often referred to as CapMetro. CapMetro operates over 50 bus routes in the area, as well as MetroExpress commuter buses, MetroRapid rapid bus services, and the MetroRail with nine stations between Leander and Downtown Austin. Park & Ride lots help connect the outer suburbs to Austin’s Central Business District, as well as Amtrak and intercity buses.
The individual neighborhoods are very walkable, especially Downtown Austin. Austinites who live within walking distance to work can take scenic routes through the numerous parks that are scattered throughout the city. Austin is also very bike-friendly, and Austin “B-cycle” kiosks are located throughout Downtown.
Austin-Bergstrom International Airport is located about 10 miles east of Downtown and has about 300 flights per day, both incoming and outgoing. Southwest Airlines, American Airlines, and United Airlines have the most passenger traffic.