AUSTIN, TX—It's the Texas capital and tech center, and not Silicon Valley, that is home to the greatest number of startup businesses, 180 all told. So says Colliers International, citing the annual Kaufmann Index report, in its second-quarter roundup on the city's office sector.

The city's technology job base has grown by 17.8% since 2011, thanks in part to eastward migration by California-based companies. Austin's unemployment rate trended below both the state and national averages a year ago at 4.1%, and is now even lower at 3.1%.

All of the positive economic news is belied somewhat by the fact that Austin's office vacancy citywide has crept up over the past few quarters. It increased 20 basis points from 10.2% in Q1 to 10.4% this past quarter, although CBD vacancy is trending in the opposite direction, dropping 60 bps from 8.2 to 7.6%. Overall suburban vacancy increased 30 bps from 10.7% to 11.0% in Q2, due mainly to a 100-bp increase in class A suburban office vacancy.

Colliers is predicting a further vacancy increase and decrease in net absorption as more new space delivers in the year's second half, although it also expects the pace of new construction to slow down. Six buildings totaling 730,000 square feet were delivered in Q2, and another 2.2 million square feet of office is now under construction.

Among the projects delivered in Q2 include Capital Ridge, a 217,000-square-foot development in southwest Austin that is fully leased to Apple Inc. San Clemente At Davenport also delivered in Q2 and remains only 38.1% leased, with Spiceworks Inc. its sole tenant to date.

The city's average rental rate increased by 3.7% from $28.16 per square foot to $29.20 over the course of Q2. The average CBD class A rental rate decreased from $42.64 per square foot to $41.58, and the average suburban class A rental rate increased from $31.54 per square foot in Q1 to $32.87.