New Speculative office building decreases rates
It has started! We just got wind of the first price drop in one newly constructed, speculative office development in northwest Austin. The project is dropping their quoted price $2.00. All the brokers here at Austin Office Space have been expecting this drop to happen for a while now. With all the new projects coming out of the ground and no true absorption, something has to give. We anticipate similar drops in many of the other newly constructed class A office projects in the next 6 months.
Our Austin vacancy rate city wide is still healthy but in order to fill up a brand new project you need 5-10 year leases with tenants who want to take whole floors or buildings. Rumor has it, there are not a lot of those type of tenants looking around the market right now.
We think the existing Class A and B market should remain fairly stable because 2nd generation spaces can be carved into much smaller chunks and can be easily occupied by a wide range of companies for shorter terms.
chadjewell @ February 18, 2008