2201 Bee Creek rd
Spicewood, TX 78669
Land For Sale · 5.43 AC

The Austin office market has been one of the healthiest in the country in this cycle. Job growth, as well as absorption, remains strong, though developers are well aware of Austin’s terrific story. Nearly 4 million SF has delivered over the past year ending in February, and about 5 million is currently underway. There’s some argument to be made that this construction is necessary. Vacancies are around as low as they’ve been since the tech boom in the early 2000s, and there just isn’t a large amount of high-end space on the market today. That’s led companies like Google, Facebook, and Indeed to pre-commit to large spaces in new developments, rather than leasing a number of smaller spaces throughout the metro. And reportedly, those companies are heavy users of the growing amount of WeWork space around the market as well. Healthy fundamentals have caused rents to grow at a break-neck pace this cycle. They’ve approached 8% annual growth at multiple points but have backed off more recently, registering about 4% over the past year. Even still, as leases roll over, NOIs should get a sizable pop, which may keep cap rates relatively stable even with interest rates headed up. This explains the strong investor interest in the office market; record level pricing has been registered over the past few years, and continued portfolio acquisitions bolster sales volume. But tech is ever the wild card here—if the nation enters a tech-driven recession, the office market would feel the burn as businesses across the country cut IT spending.