Austin's Available Direct Space Doubles; Vacancy Now 24.3%

AUSTIN-The amount of vacant office space in Austin jumped 52.8% in 2002, led by a near doubling in the amount of direct-lease space on the market. As vacancies grew, rents shrank to a market average of $21.45 per sf from $24.84 per sf, a 13.6% drop.

The Austin office market ends 2002 with a 24.32% vacancy rate, according to the Staubach Co.’s fourth-quarter report. The direct-lease vacancy rate was 16.39% and the sublease vacancy rate was 7.93%, the report said. That compares to a 9.06% direct-lease vacancy rate at the end of 2001 and a 7.55% sublease vacancy rate.

Some of the biggest changes during the year came in the CBD. The overall vacancy rate rose to 20.26% from 12.96%. The amount of vacant space available straight from the building owner more than doubled to 1.5 million sf as the amount of space available through sublease decreased by 34% to 192,387 sf.

CBD rents dropped 18.9% to an average of $24.51 per sf from $30.25 per sf at the end of 2001, according to Staubach. Direct-lease rent pitched 22% while sublease rents were reduced by 18%. The average rent for class A space fell 21.5% to $25.27 per sf from $32.18 per sf.

In the southwest submarket, an inventory increase of more than 800,000 sf and the addition of buildings such as the two Las Cimas buildings Dell Computer Corp. has on the sublease market pushed up the vacancy rate to 23.15% from 13.22%. The average rents dropped to $21.81 per sf from $25.21 per sf.

The amount of available direct space increased to 827,238 sf at the end of 2002 from 332,599 sf a year earlier and available sublease space increased to 792,071 sf from 485,314 sf.

The far northwest submarket continued to post the highest vacancy rates although there was a positive change in the sublease market. Sublease space in the submarket decreased in 2002, falling just a bit, but staying at the 1.3-million-sf range, according to Staubach. The sublease vacancy rate decreased to 19.06% from 23.78%. The amount of available direct space, however, rose to 1.2 million sf from 442,472 sf and the vacancy rate rose to 18.37% from 7.92%. Overall, the far northwest submarket had a 37.44% vacancy rate at the end of 2002, up from 31.7% at the end of 2001. The overall average rent dropped to $20.08 per sf from $23.70 per sf.