The Pandemic Has Reshaped Office Space for Rent in Austin
Major cities throughout the world are reshaping themselves after the first year of the COVID-19 pandemic. Austin is no exception. One of the most visible trends is that the city is surely becoming a new tech hub, attracting individuals from Silicon Valley who work remotely and want to leverage the local vibe, plus the lower cost of living. Another one, especially for businesses of all sizes, is to look for the best option in office space for rent in Austin as employees start returning to work -totally or partially- outside of their homes.
CBRE, a reputable commercial real estate services and investment firm, pointed out in early 2020 that Austin had been consistent “year-over-year, at growing rents, keeping vacancy rates low and delivering high-quality new developments pre-leased to market.” The forecast, stated one official, was a growing demand in Austin for office products.
However, all of that changed after the virus. Let’s take a closer look at the current Austin office space market with some data.
A Slow Market… Aimed to Recovery
Colliers International, a real estate services and investment management firm, issued a report in January 2021 in which the office market was qualified as “incredibly slow” in Austin. The firm’s experts counted a 210% increase in subleases over 9 months, as well as an unlikely increase in in-office headcount for 2021 and 2022. The city reports that only around 45% of the total office space under construction is pre-leased. Austin’s citywide vacancy rate reached 15.2% in the third quarter of 2020.
But the report also sheds some light on Austin’s projected capability to come out of this situation: “Austin is resilient and is already showing signs that it will recover from this mess at a rate that will outpace most markets. We are experiencing a huge increase in demand from companies relocating from the West Coast and Northeastern markets (tech, financial, venture capital, etc.) with a staggering number of small and medium companies relocating to service expanding companies.”
You are probably wondering how has this outlook defined the prices of the office space for rent in Austin. Well, an earlier study from Colliers reported a citywide average rental rate of $36.41 per SF and an overall suburban Class A rental rate of $38.43 per SF in Q2 2020, which translated into a marginal increase compared to the previous period. Class B rental rates, on the other hand, decreased.
From “Workcation” Spots to Partially WFH: So Many Options!
Everyone’s mental health has been affected this past year, one of the causes being how work changed. For those who were able to maintain their jobs or ventures in a remote setting (many times this meant from home, with children, pets, and elderly parents included) now is the time to start balancing the best options to continue working.
Below, we point out some of the trends Austin started to experience in the past few months, which continue to be settling into the future. Are you already a part of any of them?
- Austin as a workcation spot: The pandemic made the concept of workcation even more accessible for people who work remotely and can basically choose any place in the world to live for periods of time throughout the year. Workcationers often think of saving money, being closer to nature, professional networking, or just being able to temporarily experience places they have always wanted to live. This applies to solo-workers, as well as couples and larger families.
- A hub for big names: Austin has become a hub for big tech companies, like Tesla and Apple, which decided to largely expand their operations here. But other companies are also willing to let employees relocate to the city, a decision that has been made also by smaller business owners in other industries. Austin is becoming an increasingly popular relocation spot.
- Beyond traditional office spaces: Some companies are evaluating the options of office space for rent in Austin, while entirely or partially letting their employees return to work outside of their homes. They find out that the “new normal” needs offices to fulfill not only furniture, equipment, accessibility, and technology requirements, but must also be COVID-19 compliant, while still fostering networking and creativity.
- Working from home, with a Plan B: Temporary workplace rental has become an option for solopreneurs, freelancers, and businesses (owners and employees) who are slowly returning to normal but are not quite ready to make a permanent transition, yet. These people and companies look for an option they can rent for flexible periods of time, price ranges, and settings.
Five Questions to Ask Before Renting an Office Space in Austin
After reviewing the market and the current trends in the Austin office space industry, these are some criteria to consider before making a final decision in terms of where to rent your next workspace:
1) For me or for my team?
This question might be obvious, but when looking for an office space to rent, you need to be aware of your personal needs as much as your team’s needs if you are not working solo. You might need a private and quiet space with not a lot of movement around, but your colleagues might require areas to collaborate as a team, for instance. Balance individual and collective needs when trying to find the right place.
2) Is safety first here?
By now, you already know the basics: Social distancing, ventilation, and crowd avoidance indoors are critical to maintaining safety in COVID-19 times. Can you see that happening in the office space you are considering? From elevators to restrooms, kitchenettes, desks, and other common areas; frequent cleaning schedules, proper furniture settings, visible mask-wearing, and hand-washing protocol signage, can draw the line between health and illness.
3) How flexible are they?
Financial projections for 2020 did not go as planned. Office space rental was one of the affected variables. Hence, flexibility became the norm for traditional office space landlords. But other, more flexible actors have risen in the market with accessible rates that start by the hour, day passes, monthly memberships, and other packages that adapt to different budgets or business models. Be sure to analyze what type of commitment you are looking for and stay with the one that fits your needs of office space for rent in Austin.
4) How does the place “feel”?
Companies and professionals of all walks of life require office spaces that can enable collaboration, imagination, and networking, especially after so many months of looking at each other through a screen. Is the place you’re considering one that motivates safe human connection?
5) What else am I getting?
Beyond the highly valued “location, location, location” of the real estate industry, you and/or your teammates not only need a desk, a chair, and power outlets to work. Take a close look at the perks and benefits you get for your rental fee. Amenities can mean a lot and add value to workplace wellbeing. Being able to bring your dog to work, having fresh coffee, and avoiding annoying extra parking fees are details that will add to your peace of mind and the work/life balance you sought (and probably found) during lockdown working months.
At Vuka, we are thrilled to be a part of what Austin has to offer to workers and small companies of all walks of life. Our two locations are waiting for you with plenty of workspace rental options available that will fulfill your new normal needs.