Much of the nation is looking longingly at Austin for its incredible economic growth of late and for good reason. In just under a decade, Austin has solidified its place as an economic powerhouse and an important tech hub thanks to the Austin tech sector. The State Capital is consistently listed on “best of” lists that praise its economic stability, affordability and favorable lifestyle options. A big factor in the recent success that Austin has enjoyed is the tech presence in the metro, which appears to make up about a quarter of all its office-jobs.
Started at the Bottom
Years ago, Austin was regarded as little more than a town where up-and-coming musicians could cut their teeth at local dives and where some decent semi-conductors and processors were made. Now, Austin tech is a buzzword getting regular play in top media outlets and the post-graduate plans of tech students everywhere. Not only that, but Silicon Hills has effectively proven to be the top relocation destination of employees and executives from its top competitor and namesake – Silicon Valley.
Dominating the Market
As CBRE’s 2018 Tech 30 Report shows, Austin tech sector jobs now make up almost a whopping 25 percent of all office-using jobs in the area. Specifically, the high-tech software and services jobs have been found to make up approximately a quarter of all office-using jobs. This is up from just 16 percent in 2011, researchers found.
Not only that, but it’s the large tech firms – and not just startups – that have a strong presence in the market. In a report about the research, Troy Holme, executive vice president at CBRE in Austin pointed out how this is affecting the Austin commercial real estate market.
“What this research shows is that tech is driving a tight, competitive office market here in Austin,” he explained. “Large tech firms now make up the top users in Austin’s CBD, and they are still expanding. We expect the percentage of office-using jobs from the tech sector to continue to rise.”
A Growing Need for Office Space
CBRE revealed that the high-tech and software services industry represents one-fifth of the North American office-leasing activity. Although that percentage is puny in comparison to Austin’s 25 percent, it’s still an outsized portion of the office-leasing market. Among the top 30 tech markets in North America – what CBRE refers to as the Tech-30 – Austin ranks No. 6 for overall office net absorption growth. Continued high demand for commercial office space means that the Live Music Capital needs to work faster at creating more office space to accommodate high demand.
“One of the unique aspects of the Austin market is that the office sector development cycle this time around has been very controlled,” Holme said. “Despite high demand, we are not seeing much office space being built on spec. Instead, office developments often have a pre-leasing commitment (20-50 percent leased) before they break ground and are at stability (90-100 percent leased) when they deliver to the market. In this environment, as landlords continue to do well, they keep pushing the envelope of higher rents and fewer concessions.”
Future Outlook for Austin Tech
Austin’s future outlook for tech jobs continues to look bright, according to CBRE. Their 2018 Tech-30 trends report showed that Austin is also considered a growth leader market in the U.S. Researchers credit their projection on Austin’s overall tight office market and high-potential for job strength in the tech industry. In fact, they predict that tech job growth will continue into 2020.
Read more about the Austin economy.
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