Austin Industrial Quarterly Market Report

Austin Industrial Q3

Key Takeaways

• Net Absorption: 35,779 square feet, a decrease from Q2’s 1.5 million square feet, but still a strong result for maintaining market momentum.

• Overall Vacancy: The vacancy rate edged down to 13.3% from 13.4% in the previous quarter, while warehouse vacancy remains elevated at 14.8%.

• Under Construction: Q3 reached a new milestone with 13.1 million square feet of space under development, setting a record for the market.

• Asking Rents: After hitting a record high of $14.16 in Q1 2024, asking rates have dropped for the second quarter in a row, now reported at $13.02.

Great

Opportunity for Industrial Tenants

In Q3 2024, Austin’s industrial real estate market continued to shine with optimism, as total inventory surged to 91.8 million square feet—a testament to the city’s dynamic growth. Developers, emboldened by the city’s burgeoning economic activity, are actively ramping up supply to keep pace with rising demand. Tenant interest is robust, with a solid 535,779 square feet of net absorption this quarter, outpacing the 500,000 square feet of new space delivered. However, the development pipeline is swelling, with 13.1 million square feet under construction—up from 10.8 million in Q2—indicating that a short-term oversupply may be on the horizon before the market stabilizes. Despite softening asking rents, there is a golden window of opportunity for tenants in search of prime, affordable industrial space. Austin’s business-friendly climate continues to lure new talent and new companies because the market remains an attractive hub for growth.

Market Trends

Since 2020, more than 31 million square feet of new space has been introduced to the market, marking a 51% growth in inventory.

At the end of third quarter 2024, building inventory in the Austin Warehouse/Distribution Market consisted of 68,231,655 square feet in 690 properties.

Net absorption year-to-date through third quarter 2024 was 4,448,231 square feet. The vacancy rate stood at 14.8%, an increase from the rate of 13.4% reported at this time last year. Quoted rental rates averaged $11.78 NNN per square foot, which is up 7.9% compared to the rate of $10.92

NNN from the same quarter last year. As of end of Q3 2024, 32 properties were delivered year-to-date, totaling 4,624,296 square feet, and 11,618,793 square feet in 78 properties were under construction.

At the end of third quarter 2024, building inventory in the Austin Flex Market consisted of 15,732,018 square feet in 229 properties. Net absorption year-to-date through third quarter 2024 was negative 680,339 square feet. The vacancy rate stood at 12.7%, an increase from the rate of 7.2% reported at this time last year. Quoted rental rates averaged $21.46 NNN per square foot, which is relatively flat compared to the rate of $21.37 NNN from the same quarter last year. As of end of Q3 2024, 2 properties were delivered year-to-date, totaling 115,000 square feet, and 316,363 square feet in 8 properties were under construction.