Downtown Aren't Dead

Opening Bell 🔔: April 5th, 2020 I went for a run I’d never forget. Living in Arlington, VA at the time I decided to go for a 10 miler to the footsteps of The White House and back. While the streets of NOVA were less busy than usual, the apocalyptic feeling started to set in when I made a turn on Pennsylvania Ave and there wasn’t a car, person, or sign of life in sight. I was experiencing something I never thought I’d witness in the Nation’s Capital, a seemingly Dead Downtown. A city normally energized with the heartbeat of the Country, I felt like I was in a spinoff of I Am Legend, only I had no Sam at my side to keep me company.

Five years later, downtown’s aren’t dead, they’ve been reimagined as we bring revitalized new life to the heartbeat of our cities. Corporate relocations, civil improvement projects, and new developments have been the AED Defibrillator we desperately needed. Austin has rebounded with the best of them, posting a steady 60.9% weekly city average occupancy, well above the 10 city average of 53.1%.

Today we explore why that is and what that means for your future real estate decision needs. Let’s dive into it.

Market Snapshot 📸: Texas boomed since 2018 with relocations with Realtor.com becoming the latest to join the likes of Oracle and X here in Austin.

Dive Deeper 🤿: Austin’s benefited from easier permitting processes compared to other parts of the nation. Since 2018, the downtown office inventory has transformed by a 32.8% increase. And more is on the way, from Rainey St (aka Craney St) almost being finished, the Old Sixth redevelopment efforts, and most recently the convention center revamp, Austin’s CBD is going through a transformative decade.

Despite the boom in relocations, development has grown at an even faster pace, leaving us with a historical high vacancy rate.

Pro Insight 🧑‍🏫 : While on paper vacancy has reached it’s highest peak of Austin’s downtown, currently at 22.8% for office according to CoStar, there is an abundance of opportunities to find the right fit beyond just today’s market. Vacancy rate isn’t the only vital we should be paying attention to when looking at the health of a market.

With a new tower being capped out nearly everywhere you look, historical properties like Scarbrough, Littlefield, and Norwood Tower become an attractive option that won’t have you financing your companies future to occupy.

When we look at leasing activity, deals are still getting done. Peachtree Capital’s deal at 100 Congress is the perfect example of this. The ATL based investment firm took 4,900 SF of space in 100 Congress, a building that just completed renovations geared to improving the overall downtown experience.

Austin has continued to offer flexibility (a wide variety of coworking and sublease space on the market) and functionality (amenities and accessibility to where employees are living) better than most cities during this time, two key reasons employers see an elevated occupancy rate.

It has continued to stay a very tenant friendly market during this time too. You can get primetime real estate at a fraction of what it would normally cost you just a few years ago. Those cost savings can be what allows your company to continue to innovate and invest in the people that move you forward.

Final Buzzer 🚨: The reimaging of our downtown spaces doesn’t just end at 35 anymore. Thanks to the latest $104 million city council approval for the I-35 Cap and Stitch project, we should see a more connected Austin in the coming years, with more green space and public safety as a focal point.

I Am Legend, while a great film, thankfully won’t be becoming a realty to a downtown near you anytime soon thanks to all the efforts above.

If you need help finding your ideal Austin office space, let our team of experts help you. We’ll leverage market research and wellness expertise to match you with the perfect workspace for your team’s productivity, budget, and employee wellbeing.

Until next time,

Cory