June 9, 2017
According to CBRE’s Q1 2017 metrics, total vacancy for Austin CBD space was at 7.9%, with the average asking rent at $49.32 per square foot, well above the region’s average of $33.89 per square foot. Connect Media talked with CBRE’s Will Douglas about challenges occupiers face when it comes to Austin’s downtown space.
Q. Austin’s office growth is humming along. What challenge is this bringing, especially to downtown occupiers?
A. While the growth is good news, there are some issues that occupiers, especially those in the CBD, need to think about. For one thing, operating expenses are huge in downtown Austin, due to property taxes, which are the majority of the expense. Higher property taxes mean that building owners and managers are passing that along through increased lease rates. Other expenses are kicking in as well, such as parking.
Q. How does parking become an expense?
A. There isn’t much parking available. And, the lack of availability means landlords can increase rental rates, which adds to the total occupancy expense. Because of this, some companies are challenging their workforce to use alternate forms of transportation. Others are passing some, or all, of the parking expense to employees in order to financially justify remaining in the CBD. My advice to occupiers is to weigh talent recruitment and retention against the submarket location.
Q. How else are occupiers trying to save costs?
A. Companies are more focused on space efficiencies in an effort to save costs. At CBRE, we’re working to stay in tune with industry trends focused on maximizing space use, while reducing footprints, while keeping in mind amenities that are needed for talent recruitment and retention.
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