Austin Office Market
Annual full-service class rental rates remain elevated at $38.98/SF, a 2.6% decrease year over year. Direct vacancies increased by 150 basis points on a quarterly basis, causing the overall vacancy rate to increase by 280 basis points year over year, to 22.5%. The under-construction pipeline has continued its five-quarter decline from the peak of 5.9 MSF recorded in the fourth quarter of 2022 and closed out the quarter with 3.8 MSF currently in progress. Total leasing activity closed the quarter at 1.0 MSF, well below the 16-year first-quarter average of 2.0 MSF.
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Austin Industrial Market
The market realized 3.0 MSF of positive absorption in the first quarter of 2024, the first time that demand outpaced supply since the first quarter of 2022. Overall rental rates grew 12.3% year over year to $14.83/SF, reaching a new historical high. The construction pipeline recorded deliveries of 2.5 MSF in the first quarter of 2024, with 16.3 MSF currently under construction. Following new deliveries outpacing yearly demand in 2023, vacancy increased by 380 basis points year over year to 9.1%.
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