Downtown office leasing beats pre-pandemic levels
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Austin's downtown commercial leasing surged well above pre-pandemic levels last year, and beat out Houston, Dallas and San Antonio for new leases and construction.
Why it matters: COVID surges and lockdowns have been particularly challenging for downtown business owners, but companies are expanding their footprint, bringing employees — and their wallets — to nearby restaurants and retail shops.
Driving the news: The Downtown Austin Alliance analyzed leasing and vacancies in the area for the group's annual state of downtown report.
- Much of the demand for downtown office leasing can be attributed to tech companies, including major investments from TikTok (126,000 square feet), Cirrus Logic (120,000 square feet) and Facebook's parent company Meta (589,000 square feet).
- Plus, 5.5 million square feet of office space is under construction as vacancy has stabilized, according to Downtown Austin Alliance.
What they're saying: Austin's office market has historically been tight, making it difficult for prospective new tenants to find what they need, according to Jenell Moffett, associate vice president of strategic initiatives for the Downtown Austin Alliance.
- With more space available now, more tenants are moving downtown.
- "It tells me that there's more opportunity for different types of businesses to be located in downtown," Moffett told Axios.
Yes, but: Despite the soaring number of new leases, employees have been slow to return to their offices.
- Remote work has become the norm for many companies and office unlocks — the number of times someone physically opens their business — remain slightly lower than pre-pandemic levels.
The bottom line: Remote work isn't preventing companies' investments downtown.
- "There's a lot of momentum that's not necessarily stopping or slowing down based off of the workforce or any trends that a hybrid work model may take," Moffett said.