NEW YORK – (Realty News Report) – Texas and Florida led the rankings of the nation’s strongest office markets, according to the National Association of Realtors’ Commercial Market Insights report released Monday.
Since the second quarter of 2020, vacancy rates have fallen across multifamily, industrial and retail sectors.
Year-over-year asking rents increased for multifamily (11%), industrial (7%) and retail (2%) properties, while office asking rents edged down (-0.4%).
NAR noted that Texas and Florida account for a sizable share of the strongest commercial markets in the third quarter.
The Top Ten
In alphabetical order, the Top 10 markets are:
- Austin, Texas
- Boise, Idaho
- Chattanooga, Tennessee
- Daytona Beach, Florida
- Miami, Florida
- Myrtle Beach, South Carolina
- Omaha, Nebraska
- Palm Beach, Florida
- Provo, Utah
- San Antonio, Texas
Austin’s Boom
Houston-based developer Hines recently announced several projects planned for Austin, including T3 Eastside, a mass-timber mixed-use building that will comprise approximately 92,000 square feet of office space and 9,200 square feet of residential area with 15 loft-style units.
Austin’s New Google Building Designed by Pelli Clarke Pelli
“Hines is a strong believer in Austin’s economy, talented workforce, cost competitiveness and quality of life, and leading innovative companies recognize this and will seek office buildings that reflect their culture and standards,” said John Mooz, senior managing director and Austin city head at Hines.
“Hines brings more than 64 years of experience in Texas, and we look forward to expanding our Austin presence with several projects to be announced in the coming months across multiple product types,” Mooz added.
In Austin, Trammell Crow is developing a 35-story tower that is fully leased by Google. Lincoln Property Company and Stream Realty also have major towers underway in downtown Austin.
In a notable transaction, Kilroy Realty Corp. recently acquired Indeed Tower in downtown Austin for $580 million. Completed in May, the 36-story, 730,000-square-foot office project was developed by Trammell Crow and occupies a full city block bounded by West Sixth, West Seventh, Colorado and Lavaca streets.
Stronger Rents
For its national survey, NAR analyzed 390 commercial real estate markets and found a broad recovery characterized by positive net absorption and rent gains across multifamily, industrial and retail sectors as economic output moved back toward pre-pandemic levels. Apartments and industrial properties, in particular, show historically low vacancy rates, while retail has recovered more gradually as shoppers steadily return to brick-and-mortar locations.
The office sector continues to lag: absorption and asking rents have declined and many occupied office spaces still have far fewer on-site workers than before the pandemic. However, smaller and mid-sized metropolitan areas are showing stronger office occupancy gains that outpace many large cities and the national average.
Office Market Lagging, Says NAR Chief Economist Lawrence Yun
“Even as the economy recovers steadily, the sector still trailing is the office market,” said NAR Chief Economist Lawrence Yun. “Work-from-home flexibility appears to be the defining shift of the post-pandemic economy.”
“Despite these challenges, some local markets are bucking the trend with higher office occupancy and rising rents. A combination of strong in-migration and relatively lower business costs is fueling growth in these markets,” Yun added.
Sept. 27, 2021 Realty News Report Copyright 2021
For those interested in Texas real estate, consider the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins.
Images: High-rise construction in downtown Austin. Photos by Ralph Bivins/Realty News Report, Copyright 2021.
Caption (top photo): 6 x Guadalupe, under construction at 400 West Sixth in Austin, will be among the tallest buildings in Texas. Developed by Lincoln Property Company with Kairoi Residential, the 66-story tower will include about 590,000 square feet of office space, 389 multifamily units and 10,000 square feet of ground-floor retail.
File: Top Ten Markets Ranked