Austin Office Insight & StatisticsOffice Insight Austin’s office environment has remained stable from Q4 2017 into Q1 2018. An additional 156,049 s.f.delivered between MopacCentre

© 2018 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.

Q2 2018

AustinOffice Insight

Austin’s office environment has remained stable from Q1 2018 into Q2 2018. An additional 499,480 s.f. delivered between Westview (CBD – 100,00 s.f.), Springdale General (East – 165,000 s.f.), Upcycle (East – 64,400 s.f.), Westpark Professional I (FNW – 24,080 s.f.), 801 Barton Springs (South - 90,500 s.f.), and Walsh Tarlton Overlook (SW - 55,500 s.f.), bringing the total inventory to 52,268,327 s.f.

Construction activity remains robust around the city, with 4,161,008 s.f. under construction, approximately 52% of which is preleased. However, there is a clear concentration, with CBD, East, and NW making up more than 67% of all active construction. Of the citywide development underway, 1,023,127 s.f. is expected to deliver in the next quarter. Some of these buildings will deliver large chunks of inventory, including Third + Shoal (CBD – 345,000 s.f.), Preserve at 620 (FNW – 245,567 s.f.), and Parmer 3.4 (NE – 116,000 s.f.). In addition, two buildings broke ground in Q2 2018 – Block 71 (CBD – 678,923 s.f.) and Domain 12 (NW – 320,102 s.f.) – for a total of 999,025 s.f.

OutlookOverall, the Austin office market still remains stable over the last several quarters and we continue to have positive absorption and significant square footage under development. Large multi-national companies continue to invest in the city and it’s future, adding credibility to up and coming areas like the East submarket. With this said, rate growth is beginning to level off as Austin nears the peak of the economic cycle although there is no expectation for a downturn in the near future.

Other points to note: first, construction pricing is making the relocation justification a much more expensive endeavor; second, while large blocks tend to drive the market, they don’t always exist in areas where company’s want to be, thus smaller tenants have more optionality than vacancy might suggest.

Fundamentals Forecast

YTD net absorption 249,581 s.f. ▼Under construction 4,161,008 s.f. ▲Total vacancy 11.5% ▶Average asking rent (gross) $37.88 p.s.f. ▲Concessions Stable ▶

0

2,000,000

4,000,000

2015 2016 2017 Q2 2018

Supply and demand (s.f.) Net…

Robust construction activity continues citywide; 52% of future availabilities already preleased.

12.4%10.3% 10.8% 11.5%

2015 2016 2017 Q2 2018

Total vacancy

36.10 38.8344.23 45.78

25.68 28.85 29.11 28…

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

2015 2016 2017 Q2 2018

Average asking rents ($/s.f.) Class A

For more information, contact: Dustin Potter | [email protected]

• Austin’s inventory remains relatively the same at just over 52 million square feet across the MSA.

• Overall vacancy rates dropped to 11.5%, down from 11.6% in Q2 2017. • Austin’s overall average asking rent is $37.88, up 1.4% from $37.34 in Q2

2017.

Austin

Q2 2018

Office Statistics

Class Inventory (s.f.)Total net

absorption (s.f.)

YTD total net

absorption (s.f.)

YTD total net

absorption (%

of stock)

Direct vacancy

(%)

Total vacancy

(%)

Average

direct asking

rent ($ p.s.f.)

YTD

completions

(s.f.)

Under

construction

(s.f.)

Downtown Totals 10,205,498 91,050 229,924 2.3% 9.5% 10.8% $55.71 100,000 1,168,923

CBD Totals 10,205,498 91,050 229,924 2.3% 9.5% 10.8% $55.71 100,000 1,168,923

Central Totals 2,534,029 -13,092 -89,653 -3.5% 9.6% 10.2% $30.52 0 44,391East Totals 1,121,808 157,227 312,371 27.8% 26.6% 20.9% $27.71 229,400 641,755Far Northwest Totals 4,455,418 -12,011 -9,913 -0.2% 7.9% 8.9% $35.14 24,080 436,140

North Totals 1,273,917 -4,958 102,525 8.0% 8.6% 9.7% $23.75 0 0

Northeast Totals 1,978,515 -166,466 -238,258 -12.0% 11.2% 21.8% $20.46 0 307,430

Northwest Totals 15,340,533 1,691 -119,682 -0.8% 9.2% 10.2% $35.41 95,863 987,433

Round Rock Totals 968,692 31,526 -36,219 -3.7% 6.7% 9.5% $23.83 0 155,000

South Totals 1,257,297 6,220 -1,807 -0.1% 3.0% 3.7% $31.80 90,500 297,219

Southeast Totals 2,195,641 -12,260 25,596 1.2% 20.0% 21.6% $25.96 0 0

Southwest Totals 10,936,979 42,764 74,697 0.7% 9.7% 11.7% $40.04 115,686 122,717

Suburbs Totals 42,062,829 30,641 19,657 0.0% 10.1% 11.6% $33.46 555,529 2,992,085

Austin Totals 52,268,327 121,691 249,581 0.5% 10.0% 11.5% $37.60 655,529 4,161,008

Downtown A 8,049,297 82,525 238,764 3.0% 9.4% 10.5% $59.36 100,000 1,168,923

CBD A 8,049,297 82,525 238,764 3.0% 9.4% 10.5% $59.36 100,000 1,168,923

Central A 825,174 7,692 -37,694 -4.6% 9.5% 10.5% $48.08 0 44,391East A 247,112 0 4,866 2.0% 26.1% 0.0% $49.96 64,400 641,755Far Northwest A 3,252,390 -13,872 -20,276 -0.6% 9.3% 10.6% $36.82 24,080 436,140

Northeast A 558,373 -96,408 -58,998 -10.6% 2.1% 1.5% $28.81 0 307,430

Northwest A 9,327,198 52,453 -9,819 -0.1% 7.9% 9.0% $39.25 95,863 945,847

South A 375,451 0 0 0.0% 1.0% 1.0% $47.39 90,500 297,219

Southeast A 265,260 -3,842 27,326 10.3% 16.9% 19.3% $33.52 0 0

Southwest A 8,003,030 25,562 50,547 0.6% 10.2% 12.8% $42.04 115,686 84,269

Suburbs A 22,853,988 -28,415 -44,048 -0.2% 9.0% 10.7% $40.50 390,529 2,757,051

Austin A 30,903,285 54,110 194,716 0.6% 9.1% 10.7% $45.60 490,529 3,925,974

Downtown B 2,156,201 8,525 -8,840 -0.4% 9.7% 11.8% $42.49 0 0

CBD B 2,156,201 8,525 -8,840 -0.4% 9.7% 11.8% $42.49 0 0

Central B 1,708,855 -20,784 -51,959 -3.0% 9.7% 10.1% $22.16 0 0East B 874,696 157,227 307,505 35.2% 26.8% 26.8% $21.59 165,000 0Far Northwest B 1,203,028 1,861 10,363 0.9% 4.1% 4.1% $24.94 0 0North B 1,273,917 -4,958 102,525 8.0% 8.6% 9.7% $23.75 0 0Northeast B 1,420,142 -70,058 -179,260 -12.6% 14.8% 23.0% $19.98 0 0Northwest B 6,013,335 -50,762 -109,863 -1.8% 11.3% 12.0% $31.26 0 41,586Round Rock B 968,692 31,526 -36,219 -3.7% 6.7% 9.5% $23.83 0 155,000South B 881,846 6,220 -1,807 -0.2% 3.8% 4.9% $30.01 0 0Southeast B 1,930,381 -8,418 -1,730 -0.1% 20.4% 21.9% $25.10 0 0Southwest B 2,933,949 17,202 24,150 0.8% 8.6% 8.8% $33.58 0 38,448Suburbs B 19,208,841 59,056 63,705 0.3% 11.4% 12.7% $26.86 165,000 235,034

Austin B 21,365,042 67,581 54,865 0.3% 11.2% 12.6% $28.22 165,000 235,034

1703 West 6th Street, Suite 850, Austin, TX 78746 | tel +1 512 225 2716 | [email protected]

2018 Jones Lang LaSalle IP, Inc. All rights reserved.

Dustin Potter | Research Analyst


Q1 2018

Austin

Office Insight

Austin’s office environment has remained stable from Q4 2017 into Q1 2018. An additional 156,049 s.f. delivered between Mopac Centre (NW – 95,863 s.f.) and The Overlook at Barton Creek (SW – 60,168 s.f.), bringing the total inventory to 51,868,418 s.f.

Construction activity remains robust around the city, with 3,330,927 s.f. under construction, approximately 50% of which is preleased. However, there is a clear concentration, with CBD, East, and NW making up nearly 70% of all active construction. Of the citywide development underway, 800,960 s.f. is expected to deliver in the next quarter. Some of these buildings will deliver large chunks of inventory, including Westview (CBD – 100,000 s.f.), The Summit II at La Frontera (Round Rock – 95,000 s.f.), and 801 Barton Springs (S - 90,500 s.f.). In addition, two buildings broke ground in Q1 2018 – Davenport 360 (SW –33,911 s.f.) and The Foundry (E – 95,000 s.f.) – for a total of 128,911 s.f.

Austin’s absorption levels remained positive for another quarter, coming in at 127,890 s.f. across all submarkets, accounting for 1.4% of the total inventory.

OutlookOverall, the Austin office market has remained stable over the last several quarters and we continue to have positive absorption and significant square footage under development. Large multi-national companies continue to invest in the city and it’s future, adding credibility to up and coming areas like the East submarket. With this said, rate growth is beginning to level off as Austin nears the peak of the economic cycle although there is no expectation for a downturn in the near future.

Other points to note: while large blocks tend to drive the market, they don’t always exist in areas where company’s want to be, thus smaller tenants have more optionality than vacancy might suggest.


YTD net absorption 127,890 s.f. ▼Under construction 3,330,927 s.f. ▲Total vacancy 10.7% ▶Average asking rent (gross) $38.65 p.s.f. ▲Concessions Stable ▶

0

1,000,000

2,000,000

3,000,000

2015 2016 2017 Q1 2018

Supply and demand (s.f.) Net absorptionDeliveries

Austin office vacancy stabilizes as construction pipeline remains robust.

12.4%10.3% 10.8% 10.7%

2015 2016 2017 Q1 2018

Total vacancy

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

2015 2016 2017 Q1 2018

Average asking rents ($/s.f.) Class AClass B

For more information, contact: Dustin Potter| [email protected]

• Austin’s inventory remains relatively the same at just under 52 million square feet across the MSA.

• Overall vacancy rates dropped to 10.7%, down from 11.7% in Q1 2017. • Austin’s overall average asking rent is $38.65, up 2.1% from $37.84 in Q1

2017.

Austin

Q1 2018

Office Statistics

ClassInventory

(s.f.)

Total net

absorption

(s.f.)

YTD total net

absorption

(s.f.)

YTD total net

absorption (%

of stock)

Direct vacancy

(%)

Total

vacancy (%)

Average

direct asking

rent ($ p.s.f.)

YTD

Completions

(s.f.)

Under

Development

(s.f.)CBD Totals 10,105,498 138,874 138,874 1.4% 9.3% 10.8% $56.16 0 590,000CBD Totals 10,105,498 138,874 138,874 1.4% 9.3% 10.8% $56.16 0 590,000Central Totals 2,534,029 -76,561 -76,561 -3.0% 9.4% 9.7% $37.35 0 98,391East Totals 892,408 155,144 155,144 17.4% 8.4% 8.4% $21.27 0 756,155Far Northwest Totals 4,455,418 2,098 2,098 0.0% 7.7% 8.6% $35.02 0 437,314North Totals 1,273,917 107,483 107,483 8.4% 7.7% 9.3% $26.20 0 0Northeast Totals 1,978,515 -71,792 -71,792 -3.6% 11.0% 13.4% $22.33 0 0Northwest Totals 15,339,596 -121,373 -121,373 -0.8% 8.8% 10.2% $35.63 95,863 945,840Round Rock Totals 989,620 -67,745 -67,745 -6.8% 10.5% 11.5% $28.83 0 95,000South Totals 1,166,797 -8,027 -8,027 -0.7% 4.4% 4.5% $33.41 0 318,816Southeast Totals 2,195,641 37,856 37,856 1.7% 14.5% 15.8% $26.01 0 0Southwest Totals 10,936,979 31,933 31,933 0.3% 9.3% 12.1% $39.29 60,186 89,411Suburbs Totals 41,762,920 -10,984 -10,984 0.0% 9.1% 10.7% $34.36 156,049 2,740,927Austin Totals 51,868,418 127,890 127,890 0.2% 9.2% 10.7% $38.65 156,049 3,330,927

CBD A 7,949,297 156,239 156,239 2.0% 8.8% 10.2% $59.60 0 590,000CBD A 7,949,297 156,239 156,239 2.0% 8.8% 10.2% $59.60 0 590,000Central A 825,174 -45,386 -45,386 -5.5% 10.5% 11.4% $48.25 0 72,000East A 182,712 4,866 4,866 2.7% 0.0% 0.0% $0.00 0 591,155Far Northwest A 3,252,390 -6,404 -6,404 -0.2% 9.2% 10.2% $36.68 0 437,314Northeast A 558,373 37,410 37,410 6.7% 1.5% 1.5% $25.38 0 0Northwest A 9,327,198 -62,272 -62,272 -0.7% 7.9% 9.5% $39.07 95,863 945,840South A 284,951 0 0 0.0% 1.4% 1.4% $45.14 0 318,816Southeast A 265,260 31,168 31,168 11.7% 17.8% 17.8% $33.10 0 0Southwest A 8,003,030 24,985 24,985 0.3% 9.6% 13.1% $41.11 60,186 89,411Suburbs A 22,699,088 -15,633 -15,633 -0.1% 8.6% 10.7% $39.72 156,049 2,454,536Austin A 30,648,385 140,606 140,606 0.5% 8.7% 10.6% $44.96 156,049 3,044,536

CBD B 2,156,201 -17,365 -17,365 -0.8% 11.0% 12.9% $46.03 0 0CBD B 2,156,201 -17,365 -17,365 -0.8% 11.0% 12.9% $46.03 0 0Central B 1,708,855 -31,175 -31,175 -1.8% 8.8% 8.8% $31.12 0 26,391East B 709,696 150,278 150,278 21.2% 10.5% 10.5% $21.27 0 165,000Far Northwest B 1,203,028 8,502 8,502 0.7% 3.5% 4.3% $23.28 0 0North B 1,273,917 107,483 107,483 8.4% 7.7% 9.3% $26.20 0 0Northeast B 1,420,142 -109,202 -109,202 -7.7% 14.8% 18.1% $22.21 0 0Northwest B 6,012,398 -59,101 -59,101 -1.0% 10.2% 11.2% $31.49 0 0Round Rock B 989,620 -67,745 -67,745 -6.8% 10.5% 11.5% $28.83 0 95,000South B 881,846 -8,027 -8,027 -0.9% 5.4% 5.6% $32.45 0 0Southeast B 1,930,381 6,688 6,688 0.3% 14.1% 15.5% $24.78 0 0Southwest B 2,933,949 6,948 6,948 0.2% 8.6% 9.4% $33.70 0 0Suburbs B 19,063,832 4,649 4,649 0.0% 9.8% 10.8% $28.73 0 286,391Austin B 21,220,033 -12,716 -12,716 -0.1% 9.9% 11.0% $30.69 0 286,391

Confidential and proprietary to JLL


Q4 2017

Austin

Office Insight

After a spike in vacancy earlier this year, thanks in part to several large buildings such as 500 West 2nd Street and Domain 8 delivering, total vacancy has continued last quarter’s trend, falling slightly to 10.8%. Citywide absorption will come in slightly lower than last year’s 1,619,185 s.f., totaling 1,570,567 s.f. in 2017. The average rental rate has gone up 9.2% year-over-year, increasing from $34.08 this time last year to $37.24 presently. The average Class A rate saw an annual increase of 13.9%, reaching $44.23 this quarter from $38.83 in Q4 2016, while Class B rates increased 5.9% from $27.47 to $29.11.

Construction activity remains robust around the city, with two more projects breaking ground this quarter. 1400 Lavaca (CBD – 145,000 s.f.) and the Music Lane project (South – 32,872 s.f.) both began construction, bringing the construction pipeline to over 2.9 million s.f. Current product under construction sits at 36% preleased with an average rental rate of $42.78 full service.

The fourth quarter of 2017 experienced a significant dip in the amount of vacant sublet space on the market. The 707,496 s.f. of vacant space during the fourth quarter is 14.6% lower than the third quarter, which measured at 828,672 s.f. There were four large blocks of sublet space greater than 20,000 s.f. that were leased during the fourth quarter. These large blocks were located at Rollingwood Center (Southwest - 27,000 s.f.), University Park (Central - 25,000 s.f.), Domain 3 (Northwest - 20,000 s.f.) and Riata Corporate Park (Northwest -21,000 s.f.).

OutlookOutlookOutlookOutlookLooking ahead to 2018, Austin is expected to introduce another half-million square feet across 6 buildings in the city’s more popular submarkets: CBD, Northwest, South and East.


YTD net absorption 1,570,567 s.f. ▼Under construction 2,900,835 s.f. ▲Total vacancy 10.8% ▶Average asking rent (gross) $37.24 p.s.f. ▲Concessions Stable ▶

0

500,000

1,000,000

2014 2015 2016 2017


Austin continues to experience robust growth as sublet space hits 2017 low

13.8%12.4%

10.3% 10.8%

2014 2015 2016 2017

Total vacancy

$20.00

$30.00

$40.00

$50.00

2014 2015 2016 2017


For more information, contact: Dustin Potter | [email protected]

• Shoal Creek Walk delivered this quarter, adding over 218,000 s.f. to theCBD submarket

• 1400 Lavaca in the CBD submarket and Music Lane Building 1 in theSouth submarket broke ground this quarter.

• There are approximately 280 tenants in the market looking for 8.2 millions.f. of office space.

Austin

Q4 2017

Office Statistics

ClassInventory

(s.f.)

Total net

absorption

(s.f.)

YTD total net

absorption

(s.f.)

YTD total net

absorption

(% of stock)

Direct

vacancy (%)

Total

vacancy (%)

Average

direct asking

rent ($ p.s.f.)

YTD

completions

(s.f.)

Under

construction

(s.f.)Downtown Totals 10,105,498 82,130 151,465 1.5% 10.9% 11.3% $54.64 712,712 590,000

CBD Totals 10,105,498 82,130 151,465 1.5% 10.9% 11.3% $54.64 712,712 590,000

Central Totals 2,534,029 -40,484 11,969 0.5% 6.3% 6.2% $32.81 0 0East Totals 892,408 27,134 42,435 4.8% 25.7% 25.9% $23.48 0 681,524

Far Northwest Totals 4,455,418 30,547 103,822 2.3% 7.8% 8.7% $33.45 0 413,234

North Totals 1,273,917 -123,830 -121,726 -9.6% 16.2% 17.7% $24.30 0 0

Northeast Totals 1,978,515 -5,057 132,369 6.7% 8.0% 9.8% $21.77 0 0

Northwest Totals 15,243,733 264,176 505,787 3.3% 8.0% 9.4% $33.32 0 725,000

Round Rock Totals 989,620 11,987 35,642 3.6% 4.7% 4.7% $31.49 0 95,000

South Totals 1,166,797 63,259 23,583 2.0% 3.8% 3.9% $31.17 0 225,977

Southeast Totals 2,195,641 45,793 177,483 8.1% 17.5% 17.5% $25.19 115,200 114,600

Southwest Totals 10,936,979 52,510 507,738 4.6% 9.4% 12.4% $38.29 0 55,500

Suburbs Totals 41,667,057 326,035 1,419,102 3.4% 9.2% 10.7% $32.23 115,200 2,310,835

Austin Totals 51,772,555 408,165 1,570,567 3.0% 9.5% 10.8% $37.24 827,912 2,900,835

Downtown A 7,949,297 142,442 197,486 2.5% 10.9% 12.2% $56.94 712,712 590,000

CBD A 7,949,297 142,442 197,486 2.5% 10.9% 12.2% $56.94 712,712 590,000

Central A 825,174 -8,601 -5,492 -0.7% 5.0% 4.5% $49.84 0 0East A 182,712 33,745 59,828 32.7% 2.7% 2.7% $38.50 0 434,813Far Northwest A 3,252,390 39,054 116,319 3.6% 9.1% 10.0% $34.39 0 413,234

Northeast A 558,373 4,640 148,233 26.5% 2.6% 8.2% $23.03 0 0

Northwest A 9,086,517 173,952 426,922 4.7% 6.2% 7.8% $37.12 0 725,000

South A 284,951 0 0 0.0% 1.4% 1.4% $42.75 0 225,977

Southeast A 265,260 -2,761 19,613 7.4% 29.6% 29.6% $31.13 0 0

Southwest A 8,003,030 24,217 480,458 6.0% 9.7% 13.4% $40.37 0 55,500

Suburbs A 22,458,407 264,246 1,245,881 5.5% 7.9% 10.1% $38.02 0 1,854,524

Austin A 30,407,704 406,688 1,443,367 4.7% 8.7% 10.7% $44.23 712,712 2,444,524

Downtown B 2,156,201 -60,312 -46,021 -2.1% 10.7% 7.9% $46.00 0 0

CBD B 2,156,201 -60,312 -46,021 -2.1% 10.7% 7.9% $46.00 0 0

Central B 1,708,855 -31,883 17,461 1.0% 7.0% 7.0% $27.01 0 0East B 709,696 -6,611 -17,393 -2.5% 31.7% 31.8% $23.16 0 246,711Far Northwest B 1,203,028 -8,507 -12,497 -1.0% 4.3% 5.0% $28.07 0 0North B 1,273,917 -123,830 -121,726 -9.6% 16.2% 17.7% $24.30 0 0Northeast B 1,420,142 -9,697 -15,864 -1.1% 10.2% 10.4% $21.64 0 0Northwest B 6,157,216 90,224 78,865 1.3% 10.5% 11.9% $30.02 0 0Round Rock B 989,620 11,987 35,642 3.6% 4.7% 4.7% $31.49 0 95,000South B 881,846 63,259 23,583 2.7% 4.5% 4.7% $30.04 0 0Southeast B 1,930,381 48,554 157,870 8.2% 15.9% 15.9% $23.67 115,200 114,600Southwest B 2,933,949 28,293 27,280 0.9% 8.7% 9.6% $32.01 0 0Suburbs B 19,208,650 61,789 173,221 0.9% 10.7% 11.4% $27.20 115,200 456,311

Austin B 21,364,851 1,477 127,200 0.6% 10.7% 11.0% $29.11 115,200 456,311



Dustin Potter| Research Analyst


Q3 2017


After a spike in vacancy earlier this year, thanks in part to several large buildings such as 500 West 2nd Street and Domain 8 delivering, total vacancy has started to go back down reaching 10.9% this quarter. Citywide absorption is on track to reach a similar level as last year, surpassing one million square feet this quarter. The average rental rate has gone up 10.1% year-over-year increasing from $34.05 this time last year to $37.49 presently. The average Class A rate saw an annual increase of 11.2% reaching $43.88 this quarter from $39.46 in Q3 2016, while Class B rates went up 6.2% from $27.75 to $29.48.

Construction in Austin isn’t slowing down anytime soon. This quarter alone, more than one and a half million square feet of new office developments broke ground bringing the total amount of construction activity to over 3.3 million square feet. These buildings are 1400 Lavaca (CBD – 145,000 s.f.), Plaza Saltillo (East – 140,000 s.f.), 6th & Chicon (East – 135,000 s.f.), The Foundry (East – 75,369 s.f.), Preserve at 620 renovation (Far Northwest – 245,267 s.f.), Four Points Center 3 (Far Northwest – 167,667 s.f.), Domain 11 (Northwest – 315,000 s.f.), The Summit II @ La Frontera (Round Rock – 95,000 s.f.), 2010 South Lamar (South –78,005 s.f.), MetCenter 14 (Southeast – 57,600 s.f.), MetCenter 15 (Southeast –57,600 s.f.). The East submarket, currently the smallest out of Austin’s 11 submarkets, will nearly double in size by the time the 726,000 square feet under construction delivers. In addition to what is currently being built, there is still an additional 500,000 square feet planned to break ground on the East side, eventually making it the sixth largest submarket in Austin. Pre-leasing for new construction projects around Austin continues to be very active and the new buildings that broke ground this quarter are no exception. Between these 11 new projects, 42% of the space was already spoken for by the time construction commenced.

OutlookLooking ahead to closing out 2017, Austin can expect another temporary spike in vacancy similar to what we saw at the beginning of the year as 1.1 million square feet is planned to deliver in Q4 between 13 projects.

Fundamentals ForecastYTD net absorption 1,162,402 s.f. ▲Under construction 3,326,030 s.f. ▶Total vacancy 11.6% ▶Average asking rent (gross) $37.49 p.s.f. ▲Concessions Decreasing ▼

0

1,000,000

2,000,000

2013 2014 2015 2016 2017


Construction in Austin reaches 10-year highForecast

14.2%12.7% 12.0%

10.3% 10.9%

2013 2014 2015 2016 Q3 2017

Total vacancy

$0.00

$20.00

$40.00

2013 2014 2015 2016 Q3 2017


For more information, contact: Emily Hunt | [email protected]

• Southwest Crossing is the only building to deliver this quarter, adding 27,000 s.f. to the Southwest submarket

• Large vacant blocks continue to tighten citywide, shrinking from 43 available blocks down to 39

• There are 260 tenants in the Austin market looking for more than 8.2 million square feet of office or industrial space

Austin

Q3 2017

Office Statistics

ClassInventory

(s.f.)

Total net

absorption

(s.f.)

YTD total net

absorption

(s.f.)

YTD total net

absorption

(% of stock)

Direct

vacancy (%)

Total

vacancy (%)

Average

direct asking

rent ($ p.s.f.)

YTD

completions

(s.f.)

Under

construction


CBD Totals 9,893,298 33,359 69,335 0.7% 9.8% 11.1% $55.20 500,512 802,200

Central Totals 2,534,029 6,851 52,453 2.1% 4.9% 5.1% $34.31 0 0East Totals 892,408 21,305 15,301 1.7% 28.8% 28.8% $25.43 59,958 726,524

Far Northwest Totals 4,455,418 -41,958 73,275 1.6% 8.3% 9.4% $33.40 0 413,234

North Totals 1,273,917 23,575 2,104 0.2% 7.2% 8.0% $24.74 0 0

Northeast Totals 1,978,515 -35,144 137,426 6.9% 7.5% 9.5% $22.83 0 0

Northwest Totals 15,243,733 183,587 241,611 1.6% 9.0% 11.4% $34.10 291,000 865,681

Round Rock Totals 989,620 26,606 23,655 2.4% 5.9% 5.9% $30.25 0 95,000

South Totals 1,166,797 7,835 -39,676 -3.4% 9.2% 9.3% $29.24 0 193,105

Southeast Totals 2,080,441 16,506 131,690 6.3% 14.6% 15.2% $25.70 29,205 114,600


Suburbs Totals 41,436,171 385,925 1,093,067 2.6% 9.2% 10.9% $32.98 731,426 2,523,830

Austin Totals 51,329,469 419,284 1,162,402 2.3% 9.3% 10.9% $37.49 1,231,938 3,326,030

Downtown A 7,737,097 30,653 55,044 0.7% 10.5% 11.6% $56.92 500,512 802,200

CBD A 7,737,097 30,653 55,044 0.7% 10.5% 11.6% $56.92 500,512 802,200

Central A 825,174 4,572 3,109 0.4% 4.3% 4.9% $49.92 0 0East A 182,712 28,388 26,083 14.3% 21.1% 21.1% $38.50 37,198 479,813Far Northwest A 3,252,390 -41,471 77,265 2.4% 9.8% 11.2% $34.31 0 413,234

Northeast A 558,373 -23,578 143,593 25.7% 3.4% 9.0% $24.72 0 0

Northwest A 9,086,517 133,817 252,970 2.8% 7.4% 9.7% $38.10 291,000 865,681

South A 284,951 0 0 0.0% 1.4% 1.4% $44.95 0 193,105

Southeast A 265,260 17,535 22,374 8.4% 25.2% 28.5% $31.85 29,205 0

Southwest A 7,887,344 193,751 456,241 5.8% 8.8% 11.4% $40.35 351,263 115,686

Suburbs A 22,342,721 313,014 981,635 4.4% 8.3% 10.5% $38.18 708,666 2,067,519

Austin A 30,079,818 343,667 1,036,679 3.4% 8.9% 10.8% $43.88 1,209,178 2,869,719

Downtown B 2,156,201 2,706 14,291 0.7% 7.5% 9.3% $46.63 0 0

CBD B 2,156,201 2,706 14,291 0.7% 7.5% 9.3% $46.63 0 0

Central B 1,708,855 2,279 49,344 2.9% 5.1% 5.1% $27.93 0 0East B 709,696 -7,083 -10,782 -1.5% 30.8% 30.8% $23.12 22,760 246,711Far Northwest B 1,203,028 -487 -3,990 -0.3% 4.3% 4.3% $27.81 0 0North B 1,273,917 23,575 2,104 0.2% 7.2% 8.0% $24.74 0 0Northeast B 1,420,142 -11,566 -6,167 -0.4% 9.1% 9.7% $22.55 0 0Northwest B 6,157,216 49,770 -11,359 -0.2% 11.4% 13.9% $30.25 0 0Round Rock B 989,620 26,606 23,655 2.4% 5.9% 5.9% $30.25 0 95,000South B 881,846 7,835 -39,676 -4.5% 11.7% 11.8% $28.64 0 0Southeast B 1,815,181 -1,029 109,316 6.0% 13.1% 13.2% $23.97 0 114,600Southwest B 2,933,949 -16,989 -1,013 0.0% 9.8% 10.6% $32.84 0 0Suburbs B 19,093,450 72,911 111,432 0.6% 10.3% 11.4% $28.06 22,760 456,311

Austin B 21,249,651 75,617 125,723 0.6% 10.0% 11.2% $29.48 22,760 456,311



Emily Hunt | Research Analyst


Q2 2017


Uber and Lyft made their triumphant return, a major acquisition of Austin-based Whole Foods was announced and the city approved its first economic incentive agreement in years for Merck to build an IT facility. All in all, Austin had a good second quarter and it doesn’t stop at the news headlines. More than 275,000 square feet delivered this quarter, all of which are on the south side of the market. These buildings are Yeti’s build to suit project Lantana Ridge I & II (175,000 s.f. – Southwest), Galleria Oaks II (74,532 s.f. – Southwest) and 2301 E Riverside (29,205 s.f. – Southeast). There is still almost 1.9 million square feet under construction around the market, 32 percent of which has already been pre-leased.

Tenants in the market are still extremely active, with more than 12 million square feet of active requirements throughout the city. While a majority of this demand continues to focus on the CBD, Northwest and Southwest submarkets, many tenants have set their sights on smaller, secondary submarkets such as the East, South and North. These submarkets offer discounted asking rates and less competition for space while still being within close proximity to the urban core. Technology-related tenants are the most active, accounting for nearly one third of all active tenants in the market.

OutlookConstruction activity slowed slightly this quarter following a robust start during the first few months, but things are projected to pick back up during the second half of the year. There is nearly 1.5 million square feet between 10 projects that is planned to break ground by year end while more than 1.1 million square feet is projected to deliver throughout the remainder of this year. Though overall vacancy has increased since 2016, nearly 1 million square feet of pre-leased new construction is expected to be absorbed over the course of the next few quarters. This paired with high demand from tenants should keep the overall vacancy rate stable for the foreseeable future.

Fundamentals ForecastYTD net absorption 743,118 s.f. ▲Under construction 1,892,932 s.f. ▲Total vacancy 11.6% ▶Average asking rent (gross) $37.34 p.s.f. ▲Concessions Decreasing ▼

0

1,000,000

2,000,000

2013 2014 2015 2016 2017


Technology users continue to drive demand12 Month Forecast

14.2%12.7% 12.0%

10.3%11.6%

2013 2014 2015 2016 Q2 2017

Total vacancy

$0.00

$20.00

$40.00

2013 2014 2015 2016 Q2 2017



• Austin has added over 1.2 million square feet of new office product so far this year, 77 percent of which was pre-leased upon completion

• Large available blocks tick up in the CBD and Southwest submarkets• 60 percent of all tenants actively seeking space in the Austin market are

targeting the CBD, Northwest and Southwest submarkets

AustinQ2 2017

Office Statistics

ClassInventory

(s.f.)

Total net absorption

(s.f.)

YTD total net absorption

(s.f.)


(% of stock)

Direct vacancy (%)

Total vacancy (%)

Average direct asking rent ($ p.s.f.)

YTD completions

(s.f.)

Under construction

(s.f.)Downtown Totals 9,893,298 136,302 35,976 0.4% 10.0% 11.4% $54.64 500,512 666,069CBD Totals 9,893,298 136,302 35,976 0.4% 10.0% 11.4% $54.64 500,512 666,069Central Totals 2,534,029 7,820 45,602 1.8% 5.0% 5.7% $34.90 0 0East Totals 892,408 -5,898 -6,004 -0.7% 31.8% 31.8% $27.91 59,958 421,155Far Northwest Totals 4,443,616 37,938 115,233 2.6% 7.3% 8.4% $32.37 0 0North Totals 1,273,917 -11,836 -21,471 -1.7% 9.0% 9.9% $24.57 0 0Northeast Totals 1,978,515 -3,271 172,570 8.7% 7.6% 7.7% $22.51 0 0Northwest Totals 15,243,733 37,863 58,024 0.4% 10.0% 12.6% $34.17 291,000 554,818Round Rock Totals 989,620 -6,581 -2,951 -0.3% 8.1% 8.6% $29.35 0 0South Totals 1,166,797 20,109 -47,511 -4.1% 9.6% 9.9% $28.89 0 115,100Southeast Totals 2,080,441 4,245 115,184 5.5% 15.5% 16.0% $26.19 29,205 0Southwest Totals 10,794,094 104,455 278,466 2.6% 10.3% 12.0% $38.43 324,064 135,790Suburbs Totals 41,397,170 184,844 707,142 1.7% 10.0% 11.7% $33.22 704,227 1,226,863Austin Totals 51,290,468 321,146 743,118 1.4% 10.0% 11.6% $37.34 1,204,739 1,892,932

Downtown A 7,737,097 107,925 24,391 0.3% 10.6% 11.9% $56.29 500,512 666,069CBD A 7,737,097 107,925 24,391 0.3% 10.6% 11.9% $56.29 500,512 666,069Central A 825,174 1,150 -1,463 -0.2% 4.9% 5.4% $51.77 0 0East A 182,712 0 -2,305 -1.3% 36.7% 36.7% $42.00 37,198 174,444Far Northwest A 3,240,588 42,487 118,736 3.7% 8.5% 10.0% $33.15 0 0Northeast A 558,373 -732 167,171 29.9% 4.5% 4.8% $24.88 0 0Northwest A 9,086,517 106,761 119,153 1.3% 8.5% 11.2% $38.07 291,000 554,818South A 284,951 0 0 0.0% 1.4% 1.4% $44.95 0 115,100Southeast A 265,260 2,231 4,839 1.8% 32.3% 35.2% $31.01 29,205 0Southwest A 7,860,145 95,753 262,490 3.3% 10.7% 12.7% $40.29 324,064 135,790Suburbs A 22,303,720 247,650 668,621 3.0% 9.5% 11.5% $38.27 681,467 980,152Austin A 30,040,817 355,575 693,012 2.3% 9.7% 11.6% $43.31 1,181,979 1,646,221

Downtown B 2,156,201 28,377 11,585 0.5% 7.8% 9.4% $46.60 0 0CBD B 2,156,201 28,377 11,585 0.5% 7.8% 9.4% $46.60 0 0Central B 1,708,855 6,670 47,065 2.8% 5.1% 5.8% $27.07 0 0East B 709,696 -5,898 -3,699 -0.5% 30.6% 30.6% $23.56 22,760 246,711Far Northwest B 1,203,028 -4,549 -3,503 -0.3% 3.9% 4.3% $27.71 0 0North B 1,273,917 -11,836 -21,471 -1.7% 9.0% 9.9% $24.57 0 0Northeast B 1,420,142 -2,539 5,399 0.4% 8.8% 8.9% $22.03 0 0Northwest B 6,157,216 -68,898 -61,129 -1.0% 12.1% 14.8% $30.14 0 0Round Rock B 989,620 -6,581 -2,951 -0.3% 8.1% 8.6% $29.35 0 0South B 881,846 20,109 -47,511 -5.4% 12.2% 12.7% $28.31 0 0Southeast B 1,815,181 2,014 110,345 6.1% 13.0% 13.2% $24.45 0 0Southwest B 2,933,949 8,702 15,976 0.5% 9.1% 10.0% $32.62 0 0Suburbs B 19,093,450 -62,806 38,521 0.2% 10.6% 11.8% $27.97 22,760 246,711Austin B 21,249,651 -34,429 50,106 0.2% 10.3% 11.6% $29.39 22,760 246,711





Q1 2017

Austin

Office Insight

As we kick off the new year, it seems there is no stopping Austin’s recent momentum. Over 900,000 square feet delivered during the first quarter as five buildings completed construction and two new projects broke ground, bringing the total number of square feet under construction to nearly 2.1 million. Average asking rents continue to creep up, reaching $37.61 at the start of 2017, an 11.5 percent year-over-year increase. Class A rents saw a 12.8 percent increase since last year from $38.36 to $43.25, while Class B went from $27.04 to $29.63, a 9.6 percent increase year-over-year. Overall vacancy ticked up to 11 percent due to this quarter’s large construction delivery but should level out over the next few months since 80 percent of those construction deliveries have already been preleased. The submarkets with the lowest vacancy rates are Northeast (5.3 percent), Central (5.3 percent) and North (7.3 percent). Several large tenants moved into office space this quarter, such as Home Depot , which moving into their call center space Northeast (185,400 square feet), Centene filling in the remainder of their 220,000-square-foot space Southeast (109,712 square feet) and Samsung expanding their current space Southwest (101,596 square feet), which helped with this quarter’s positive net absorption of over 500,000 square feet. Investment sales were a little slower to take off this year but there has still been three notable buildings that have changed hands totaling almost $280 million in office sales so far.

OutlookThis quarter finally broke Austin’s dropping vacancy streak, largely due to the 900,000 square feet of new construction that delivered vacant. As tenants begin move in to the new construction space, vacancy could dip back down again but the remaining 1.3 million square feet of new construction projected to deliver throughout the remainder of the year is only 37 percent preleased at this time.


YTD net absorption 514,005 s.f. ▲Under construction 2,046,321 s.f. ▲Total vacancy 11.0% ▶Average asking rent (gross) $37.61 p.s.f. ▲Concessions Stable ▶

0

1,000,000

2,000,000

2013 2014 2015 2016 YTD

2017


More cranes on the horizon for Austin

Forecast

14.2%12.7% 12.0%

10.3% 11.0%

2013 2014 2015 2016 2017

Total vacancy

$0.00

$20.00

$40.00

2013 2014 2015 2016 2017



• Austin’s population growth exceeded expectations in 2016, adding an estimated 58,000 residents to bring the total population to over 2 million.

• Annual job growth continues upward at a rate of 3.5% as Austin added 34,000 new jobs last year, making it the 5th fastest growing metro.

• The unemployment rate has increased from 3.2% at the beginning of 2016 up to 3.4% as of January.

Austin

Q1 2017

Office Statistics

ClassInventory

(s.f.)

Total net absorption

(s.f.)


(s.f.)


(% of stock)

Direct vacancy (%)

Total vacancy (%)

Average direct asking rent ($ p.s.f.)

YTD completions

(s.f.)

Under construction

(s.f.)Downtown Totals 9,893,298 23,704 23,704 0.2% 10.2% 11.0% $54.29 489,404 663,432CBD Totals 9,893,298 23,704 23,704 0.2% 10.2% 11.0% $54.29 489,404 663,432Central Totals 2,534,029 40,026 40,026 1.6% 4.5% 5.3% $35.05 0 0East Totals 892,408 -106 -106 0.0% 31.2% 31.2% $27.82 59,958 294,444Far Northwest Totals 4,443,616 147,680 147,680 3.3% 7.3% 7.6% $32.41 0 0North Totals 1,273,917 208 208 0.0% 7.3% 7.3% $24.71 0 0Northeast Totals 1,978,515 16,092 16,092 0.8% 5.1% 5.3% $21.90 0 0Northwest Totals 15,243,733 -8,840 -8,840 -0.1% 10.5% 12.3% $34.85 291,000 558,818Round Rock Totals 989,620 30,174 30,174 3.0% 6.7% 7.9% $29.95 0 0South Totals 1,166,797 -68,007 -68,007 -5.8% 11.6% 11.7% $29.50 0 115,100Southeast Totals 2,051,236 114,004 114,004 5.6% 13.9% 14.4% $25.08 0 29,205Southwest Totals 10,544,562 219,070 219,070 2.1% 9.2% 11.2% $37.82 74,532 385,322Suburbs Totals 41,118,433 490,301 490,301 1.2% 9.7% 11.0% $33.36 425,490 1,382,889Austin Totals 51,011,731 514,005 514,005 1.0% 9.8% 11.0% $37.61 914,894 2,046,321

Downtown A 7,737,097 16,707 16,707 0.2% 10.8% 11.5% $56.25 489,404 663,432CBD A 7,737,097 16,707 16,707 0.2% 10.8% 11.5% $56.25 489,404 663,432Central A 825,174 -369 -369 0.0% 4.8% 5.3% $47.10 0 0East A 182,712 -2,305 -2,305 -1.3% 36.7% 36.7% $38.82 37,198 129,444Far Northwest A 3,240,588 146,406 146,406 4.5% 8.8% 9.1% $33.04 0 0Northeast A 558,373 2,638 2,638 0.5% 0.9% 1.2% $24.43 0 0Northwest A 9,086,517 -68,604 -68,604 -0.8% 10.3% 12.0% $38.21 291,000 558,818South A 284,951 0 0 0.0% 1.4% 1.4% $36.90 0 115,100Southeast A 236,055 7,705 7,705 3.3% 18.9% 22.2% $30.00 0 29,205Southwest A 7,610,613 199,147 199,147 2.6% 9.2% 11.8% $39.86 74,532 385,322Suburbs A 22,024,983 284,618 284,618 1.3% 9.5% 11.2% $38.03 402,730 1,217,889Austin A 29,762,080 301,325 301,325 1.0% 9.8% 11.3% $43.25 892,134 1,881,321

Downtown B 2,156,201 6,997 6,997 0.3% 8.1% 9.4% $44.89 0 0CBD B 2,156,201 6,997 6,997 0.3% 8.1% 9.4% $44.89 0 0Central B 1,708,855 40,395 40,395 2.4% 4.4% 5.3% $28.69 0 0East B 709,696 2,199 2,199 0.3% 29.8% 29.8% $24.32 22,760 165,000Far Northwest B 1,203,028 1,274 1,274 0.1% 3.1% 3.5% $27.54 0 0North B 1,273,917 208 208 0.0% 7.3% 7.3% $24.71 0 0Northeast B 1,420,142 13,454 13,454 0.9% 6.8% 6.9% $21.76 0 0Northwest B 6,157,216 59,764 59,764 1.0% 10.9% 12.6% $30.18 0 0Round Rock B 989,620 30,174 30,174 3.0% 6.7% 7.9% $29.95 0 0South B 881,846 -68,007 -68,007 -7.7% 15.0% 15.0% $29.28 0 0Southeast B 1,815,181 106,299 106,299 5.9% 13.2% 13.4% $24.16 0 0Southwest B 2,933,949 19,923 19,923 0.7% 9.2% 9.6% $32.55 0 0Suburbs B 19,093,450 205,683 205,683 1.1% 9.9% 10.7% $28.22 22,760 165,000Austin B 21,249,651 212,680 212,680 1.0% 9.7% 10.6% $29.63 22,760 165,000




Average Asking Rate & Total Vacancy

Citywide projected construction deliveries and preleasing

Total Available Class A & Class B Sublease Space

It continues to be the same old story, but at least it’s a good one

Austin reports yet another year of increasing rental rates paired with decreasing

vacancy. Lease rates citywide continue to climb to record highs, seeing a 5.6

percent increase year-over-year. The top three submarkets to see the largest

rate increases year-over-year were the Northeast (up 12.0 percent), East (up

11.3 percent) and Southeast (up 8.9 percent) submarkets—typically not the

submarkets leading the pace in rent growth. Supply remains tight as vacancy

continues to shrink, down to 10.3 percent citywide compared to 12.4 percent at

the end of last year. Once again, it was the Northeast and Southeast

submarkets that saw the most significant drop in vacancy, due to several large

tenants like Trusource Labs and Cenpatico moving into spaces 50,000 square

feet and greater.

Significant construction starts occurred in Q4 2016

Construction commenced on nearly one million square feet in four projects

including Third + Shoal (345,000 square feet - CBD), Westview renovation

(100,000 square feet - CBD), Domain Tower (310,000 square feet - Northwest)

and Reserve at Oak Hill (38,448 square feet - Southwest). Over the course of

the next year there is more than two million square feet scheduled to deliver in

the Austin market, 46 percent of which has already been preleased.

All eyes on sublease space

Austin currently sees nearly as much sublease space on the market than in

2009. Reasons? Companies outgrowing their current space and moving into a

larger location, such as Planview, or growing companies who leased more

space than they need now in anticipation of growing into that space eventually.

More exception than the rule, certain companies have downsized their Austin

operations (like SolarWinds) or are vacating their Austin operations altogether,

such as BMC Software. JLL Research will continue to keep a close eye on the

depth of sublease availability

Austin still in high demand with even higher rents

Office Insight

Austin | Q4 2016

50,178,897Total inventory (s.f.)

492,923Q4 2016 net absorption (s.f.)

$34.08Direct average asking rent

2,705,514Total under construction (s.f.)

10.3%Total vacancy

1,619,185YTD net absorption (s.f.)

5.6%12-month rent growth

35.0% Total preleased

207,85350,539 18,220

287,423243,737

208,591364,420 310,000345,000

139,592 435,933

74,209 198,000

672,471

200,000 73,872

0

250,000

500,000

750,000

1,000,000

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 2Q18 3Q18

Available Space (s.f.)

Leased Space (s.f.)

Preleasing Future deliveries

40% 90% 80% 100% 70% 45% 0% 17% 0% 0%

https://goo.gl/dWHTYD

1,408,036

849,752

711,646

425,533

749,327

1,199,844 1,144,669

1,359,800

-

500,000

1,000,000

1,500,000

2009 2010 2011 2012 2013 2014 2015 2016

Class A

Class B

$26.10

$34.0821.8%

10.3%

8%

13%

18%

23%

$20.00

$25.00

$30.00

$35.00

2010 2011 2012 2013 2014 2015 2016

Average Asking Rate Total Vacancy

Current conditions – submarket Historical leasing activity (s.f.)

Source: JLL Research Source: JLL Research

Citywide total net absorption (s.f.)

Source: JLL Research

Citywide total vacancy rate (%)


Citywide direct full service average asking rent ($ p.s.f.)


382,631 368,709

-41,634

240,934 172,301

896,877

1,232,692 1,164,121

2,253,197

1,619,185

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$24.75 $24.68 $24.52 $24.66 $26.42 $26.99

$28.77

$31.47$32.59

$34.08

$15.00

$20.00

$25.00

$30.00

$35.00

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

14.8%

16.7%

19.7% 19.6%

17.8%

15.2%14.2%

12.7%12.0%

10.3%8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

6,831,502

8,441,977

6,636,375

5,292,6274,923,930

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

2012 2013 2014 2015 2016

©2016 Jones Lang LaSalle IP, Inc. All rights reserved. For more information, contact: Emily Hunt | [email protected]

Land

lord

leve

rage

Tenant leverage

Peaking

market

Falling

market

Bottoming

marketRising

market

CBDSouthwest

Northwest

Office Statistics

Austin | Q4 2016

Class Inventory (s.f.)

Total net

absorption

(s.f.)

YTD total net

absorption

(s.f.)

YTD total net

absorption (%

of stock)

Direct vacancy

(%)

Total vacancy

(%)

Average direct

asking rent ($

p.s.f.)

YTD

completions

(s.f.)

Under

construction

(s.f.)

Downtown Totals 9,392,786 9,524 127,365 1.4% 6.2% 6.5% $50.18 203,438 1,152,836

CBD Totals 9,392,786 9,524 127,365 1.4% 6.2% 6.5% $50.18 203,438 1,152,836

Central Totals 2,534,029 28,756 225,651 8.9% 6.4% 6.9% $30.81 46,000 0

East Totals 824,993 37,748 115,237 14.0% 25.5% 25.5% $25.17 94,500 269,958

Far Northwest Totals 4,443,616 -4,705 324,596 7.3% 9.3% 10.9% $32.36 25,347 0

North Totals 1,273,917 24,700 0 0.0% 7.1% 7.3% $23.47 0 0

Northeast Totals 2,079,198 159,584 290,857 14.0% 14.5% 5.8% $25.01 237,400 0

Northwest Totals 14,952,675 75,528 248,477 1.7% 9.4% 10.5% $32.83 372,640 701,000

Round Rock Totals 989,620 17,758 133,286 13.5% 10.7% 11.0% $28.30 123,941 0

South Totals 1,166,797 -26,992 -3,725 -0.3% 5.8% 5.8% $28.42 0 81,412

Southeast Totals 2,051,236 133,340 128,157 6.2% 19.4% 19.9% $24.82 0 29,205


Suburbs Totals 40,786,111 483,399 1,491,820 3.7% 10.5% 11.2% $31.89 920,900 1,552,678

Austin Totals 50,178,897 492,923 1,619,185 3.2% 9.7% 10.3% $34.08 1,124,338 2,705,514

Downtown A 7,236,585 56,491 206,555 2.9% 5.3% 5.6% $53.50 203,438 1,152,836

CBD A 7,236,585 56,491 206,555 2.9% 5.3% 5.6% $53.50 203,438 1,152,836

Central A 825,174 35,920 220,104 26.7% 4.7% 5.2% $42.64 46,000 0East A 124,951 16,090 92,794 74.3% 5.5% 5.5% $40.34 94,500 82,198

Far Northwest A 3,240,588 14,556 342,104 10.6% 11.4% 13.6% $32.91 25,347 0

Northeast A 599,056 106,395 230,650 38.5% 32.4% 1.6% $26.57 237,400 0

Northwest A 8,795,459 115,866 475,509 5.4% 7.5% 8.3% $36.53 372,640 701,000

South A 284,951 -3,889 3,669 1.3% 1.4% 1.4% $45.50 0 81,412

Southeast A 236,055 -9,999 -16,962 -7.2% 21.1% 25.4% $30.00 0 29,205

Southwest A 7,536,081 39,343 104,769 1.4% 11.1% 13.6% $39.69 0 432,655

Suburbs A 21,642,315 314,282 1,452,637 6.7% 10.0% 10.7% $36.23 729,887 1,326,470

Austin A 28,878,900 370,773 1,659,192 5.7% 8.8% 9.4% $38.83 933,325 2,479,306

Downtown B 2,156,201 -46,967 -79,190 -3.7% 9.1% 9.7% $43.74 0 0

CBD B 2,156,201 -46,967 -79,190 -3.7% 9.1% 9.7% $43.74 0 0

Central B 1,708,855 -7,164 5,547 0.3% 7.2% 7.7% $27.08 0 0East B 700,042 21,658 22,443 3.2% 29.1% 29.1% $24.65 0 187,760Far Northwest B 1,203,028 -19,261 -17,508 -1.5% 3.6% 3.6% $27.58 0 0North B 1,273,917 24,700 0 0.0% 7.1% 7.3% $23.47 0 0Northeast B 1,480,142 53,189 60,207 4.1% 7.3% 7.5% $22.23 0 0Northwest B 6,157,216 -40,338 -227,032 -3.7% 12.2% 13.6% $29.57 0 0Round Rock B 989,620 17,758 133,286 13.5% 10.7% 11.0% $28.30 123,941 0South B 881,846 -23,103 -7,394 -0.8% 7.3% 7.3% $27.39 0 0Southeast B 1,815,181 143,339 145,119 8.0% 19.2% 19.2% $24.08 0 0Southwest B 2,933,949 -1,661 -75,485 -2.6% 9.3% 10.3% $31.37 21,072 38,448

Suburbs B 19,143,796 169,117 39,183 0.2% 11.0% 11.7% $27.47 145,013 226,208

Austin B 21,299,997 122,150 -40,007 -0.2% 10.8% 11.5% $28.85 145,013 226,208

1703 West Sixth, Suite 850, Austin, TX 78746 tel +1 512 225 2716 [email protected]



SF occupied by 7 select tech bellwether giants (2011-Present)


Select submarket full service rent growth (2010 to present)

Technology sector experiences massive 5-year growth as Austin is revealed

as 3rd most resilient tech market in United States

According to JLL’s new High Technology Outlook, the technology sector remains

the leading industry for real estate expansion in the US, accounting for almost 25

percent of leasing activity across the country in past two years. When stacked

against 45 other technology markets, Austin is highlighted as the third most

resilient technology market, meaning that in times of national economic contraction,

Austin’s tech sector is expected to remain stable. In 2011, seven of Austin's largest

technology bellwether giants (think Google, Oracle), occupied approximately

860,000 square feet of space. Fast forward the clock to today and these same

seven have now more than tripled in size, occupying nearly 3.2 million square feet,

an impressive 268 percent increase.

Over one million square feet on the horizon but little remains unencumbered

Five speculative projects broke ground during the third quarter across five

submarkets representing 430,000 square feet. These projects include Springdale

General (165,000 s.f. – East), MoPac Centre (100,000 s.f. – NW), 801 Barton

Springs (95,000 s.f. – South), Walsh Tarlton (55,500 s.f. SW) and 2301 E Riverside

(30,000 s.f. – SE). Six projects citywide totaling over one million square feet are

slated to deliver during the first quarter of 2017. These six projects are currently 66

percent preleased. If we include the 100,000 square feet in leases, it brings

preleasing to 75 percent, leaving only 270,000 square feet to meet strong demand.

CBD year-over-year rent growth shows no sign of slowing

The CBD, Northwest and Southwest submarkets are the largest and most popular

submarkets in Austin, representing 70 percent of inventory. Over the last twelve

months, there has been an ease in rental rate growth. From third quarter 2014 to

third quarter 2015, rental rate growth within each of the three submarkets totaled

approximately 8 to 10 percent year-over-year. From third quarter 2015 to third

quarter 2016, CBD rent growth has continued unabated while the Northwest and

Southwest submarkets have shown signs of stabilization (with some exceptions

such as the Domain). The CBD maintained a notable year-over-year rent growth of

8.2 percent while the Northwest and Southwest experienced a growth of 2.3 to 2.5

percent. While rental rate growth is easing Northwest and Southwest, consistent

demand and limited supply will drive increases in rates into the foreseeable future.

Five years pass, Austin’s tech giants more than triple in size

Office Insight

Austin | Q3 2016





11.3%Total vacancy




139,592

435,933

33,072239,137

718,385

25,000 85,000

207,853

50,539

13,34749,873

371,509

173,737532,811

0

500,000

1,000,000

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17

Leased Space (s.f.)



13%40% 90% 71% 83% 66%

860,000

3,200,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2011 2016

268%

increase in

SF occupied

14%

Check out the 2016 High Technology Outlook here: https://goo.gl/dWHTYD

$33.74

$36.53

$46.86 $50.72

$25.19$32.35

$33.15$26.09

$36.35 $37.20

$25.00

$35.00

$45.00

$55.00

2010 2011 2012 2013 2014 2015 Q3'16

CBD Northwest Southwest

8.2%

2.3%

2.5%

T12

Rent

Growth

https://goo.gl/dWHTYD









382,631 368,709

-41,634

240,934 172,301

896,877

1,232,692 1,164,121

2,253,197

1,178,343

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 2016

$24.75 $24.68 $24.52 $24.66 $26.42 $26.99

$28.77

$31.47$32.59

$34.05

$15.00

$20.00

$25.00

$30.00

$35.00

2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 2016

14.8%

16.7%

19.7% 19.6%

17.8%

15.2%14.2%

12.7%12.0%

11.3%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 2016

6,831,502

8,441,977

6,636,375

5,292,6274,454,796

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

2012 2013 2014 2015 YTD 2016

©2016 Jones Lang LaSalle IP, Inc. All rights reserved. For more information, contact: Travis Rogers | [email protected]

Land

lord

leve

rage

Tenant leverage

Peaking

market

Falling

market

Bottoming

marketRising

market

CBDSouthwest

Northwest

Office Statistics

Austin | Q3 2016


absorption (s.f.)

YTD total net

absorption (s.f.)

YTD total net

absorption (%

of stock)

Direct vacancy

(%)

Total vacancy

(%)

Average direct

asking rent ($

p.s.f.)

YTD

completions

(s.f.)

Under

construction


CBD Totals 9,392,786 154,970 117,841 1.3% 7.1% 7.5% $50.72 203,438 707,836Central Totals 2,488,029 7,353 196,895 7.9% 5.8% 6.3% $30.41 0 46,000East Totals 802,233 4,273 77,489 9.7% 28.1% 28.1% $25.31 94,500 232,760Far Northwest Totals 4,443,616 5,740 329,301 7.4% 9.7% 10.5% $32.55 25,347 0North Totals 1,273,917 -21,023 27,381 2.1% 9.1% 9.3% $23.38 0 0Northeast Totals 1,890,058 84,535 131,273 6.9% 12.9% 13.1% $22.93 39,400 235,198Northwest Totals 14,952,675 16,000 172,949 1.2% 10.1% 11.0% $33.15 372,640 391,000Round Rock Totals 989,620 91,331 115,528 11.7% 12.5% 12.8% $28.61 123,941 95,000South Totals 1,166,797 -5,835 23,267 2.0% 3.5% 3.5% $27.78 0 81,412Southeast Totals 2,051,236 457 -5,183 -0.3% 26.4% 26.4% $24.64 0 0Southwest Totals 10,470,030 59,341 -8,398 -0.1% 10.4% 13.0% $37.20 0 432,655Suburbs Totals 40,528,211 242,172 1,060,502 2.6% 11.0% 12.2% $31.58 655,828 1,514,025

Austin Totals 49,920,997 397,142 1,178,343 2.4% 10.3% 11.3% $34.05 859,266 2,221,861

Downtown A 7,236,585 142,281 150,064 2.1% 7.2% 7.5% $53.03 203,438 707,836CBD A 7,236,585 142,281 150,064 2.1% 7.2% 7.5% $53.03 203,438 707,836

Central A 779,174 23,701 184,184 23.6% 4.3% 4.3% $42.45 0 46,000East A 124,951 4,537 76,704 61.4% 18.4% 18.4% $40.34 94,500 45,000Far Northwest A 3,240,588 6,918 327,548 10.1% 12.5% 13.7% $32.85 25,347 0Northeast A 414,556 90,004 124,255 30.0% 27.9% 27.9% $25.17 39,400 235,198Northwest A 8,795,459 80,140 359,643 4.1% 9.0% 9.7% $36.40 372,640 391,000South A 284,951 0 7,558 2.7% 0.0% 0.0% $42.50 0 81,412Southeast A 236,055 0 -6,963 -2.9% 21.2% 21.2% $30.00 0 0Southwest A 7,536,081 137,201 65,426 0.9% 10.8% 14.1% $39.49 0 432,655Suburbs A 21,411,815 342,501 1,138,355 5.3% 10.4% 12.1% $36.29 531,887 1,231,265

Austin A 28,648,400 484,782 1,288,419 4.5% 9.6% 10.9% $39.46 735,325 1,939,101

Downtown B 2,156,201 12,689 -32,223 -1.5% 6.6% 7.5% $42.18 0 0CBD B 2,156,201 12,689 -32,223 -1.5% 6.6% 7.5% $42.18 0 0

Central B 1,708,855 -16,348 12,711 0.7% 6.4% 7.2% $26.79 0 0East B 677,282 -264 785 0.1% 29.9% 29.9% $23.60 0 187,760Far Northwest B 1,203,028 -1,178 1,753 0.1% 2.0% 2.0% $27.51 0 0North B 1,273,917 -21,023 27,381 2.1% 9.1% 9.3% $23.38 0 0Northeast B 1,475,502 -5,469 7,018 0.5% 8.7% 8.9% $20.91 0 0Northwest B 6,157,216 -64,140 -186,694 -3.0% 11.6% 12.7% $29.53 0 0Round Rock B 989,620 91,331 115,528 11.7% 12.5% 12.8% $28.61 123,941 95,000South B 881,846 -5,835 15,709 1.8% 4.7% 4.7% $27.78 0 0Southeast B 1,815,181 457 1,780 0.1% 27.1% 27.1% $24.10 0 0Southwest B 2,933,949 -77,860 -73,824 -2.5% 9.4% 10.2% $30.41 0 0Suburbs B 19,116,396 -100,329 -77,853 -0.4% 11.6% 12.2% $26.84 123,941 282,760Austin B 21,272,597 -87,640 -110,076 -0.5% 11.1% 11.8% $27.75 123,941 282,760




Hot prospects and relocation/expansion announcements


Sublet vacant available space vs deliveries (s.f.)

Announced relocations and expansions suggests continued demand on par

with 2014 and 2015

Opportunity Austin is a well-organized & very effective local private-public

partnership that specializes principally in recruiting companies from across the

United States to relocate to Austin. Opportunity Austin publishes annually a “hot

prospect” list that denotes companies considering either relocating to or expanding

in Austin. Based on prior years data, Opportunity Austin has a +/- 40 percent rate

of converting those “hot prospects” to relocation or expansion announcements. As

of May 31, 2016 there have been 45 announced relocations or expansions out of

the +/- 60 JLL research originally estimated for 2016. This pipeline of new

companies is as robust as 2014 and 2015 with the creation of 3,300 jobs year-to-

date, attributable strictly due to the efforts of the program. The number that have

received incentives is few to none.

We can’t build fast enough—new construction delivers 90 percent leased

Five office buildings, representing over 480,000 square feet, delivered in Q2 2016

across five submarkets. These deliveries include 5th & Colorado (180,000 square

feet - CBD), La Frontera Plaza (98,000 square feet – Round Rock), The Arnold

(95,000 square feet – East), Domain 5 (75,000 square feet - NW) and the Lakes at

Techridge (39,000 square feet – NE). Combined, these five properties delivered 90

percent leased. Only four office buildings are under construction & expected to

deliver before the close of 2016 (totaling 358,000 square feet) and collectively are

75 percent leased to date. With over 1,000,000 square feet set to deliver in Q1

2017, 44 percent is preleased and 28 percent is at leases, leaving only 28 percent

or 297,000 square feet available to the meet strong demand.

Sublet vacant space—vacant today, gobbled up tomorrow

As of Q2 2016, +/- 400,000 square feet is available on the sublease market, a

40,000 square foot increase from Q1 2016. While this may sound alarming,

sublease availability is at its lowest since Q1 2014. This is impressive when taking

into consideration the delivery of over 4.5 million square feet from Q1 2014 to Q2

2016, representing a 10 percent increase in citywide inventory. While vacant sublet

space is the highest it has been in two quarters, 161,000 square feet of that space

has been leased and is awaiting occupancy. This shows that while new deliveries,

shifting tenants and other factors may cause increases in sublet space, this is not

an indication of a softening market.

So, you’re trying to talk yourself into a recession?

0

200,000

400,000

600,000

800,000

2013 Q2 2014 Q2 2015 Q2 2016 Q2

s.f.

Sublet Vacant Sublet Vacant Available Construction Deliveries

Office Insight

Austin | Q2 2016


-434Q2 2016 net absorption (s.f.)



12.0%Total vacancy

774,253YTD net absorption (s.f.)



384,315139,592

435,933

68,824198,000

468,277

85,000

171,858

207,853

50,539

46,33545,000

619,659

302,840

0

500,000

1,000,000

Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17

Leased Space (s.f.)



22%40%69% 90% 60% 82% 44%

6453 45

15

0

20

40

60

CY 2014 CY 2015 YTD 2016# Of Relocation/Expansion Annoucements # Of Hot Prospects

75%









382,631 368,709

-41,634

240,934 172,301

896,877

1,232,692 1,164,121

2,253,197

774,253

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 2016

$24.75 $24.68 $24.52 $24.66 $26.42 $26.99

$28.77

$31.47$32.59

$34.30

$15.00

$20.00

$25.00

$30.00

$35.00

2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2 2016

14.8%

16.7%

19.7% 19.6%

17.8%

15.2%14.2%

12.7%12.0% 12.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2 2016

6,831,502

8,441,977

6,636,375

5,292,627

2,019,033

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

2012 2013 2014 2015 YTD 2016


Land

lord

leve

rage

Tenant leverage

Peaking

market

Falling

market

Bottoming

marketRising

market

CBDSouthwest

Northwest

Office Statistics

Austin | Q2 2016


absorption (s.f.)

YTD total net

absorption (s.f.)

YTD total net

absorption (%

of stock)

Direct vacancy

(%)

Total vacancy

(%)

Average direct

asking rent ($

p.s.f.)

YTD

completions

(s.f.)

Under

construction

(s.f.)Downtown Totals 9,392,786 -62,290 -37,129 -0.4% 8.4% 9.1% $50.31 203,438 707,836

CBD Totals 9,392,786 -62,290 -37,129 -0.4% 8.4% 9.1% $50.31 203,438 707,836Central Totals 2,488,029 82,826 189,542 7.6% 6.5% 7.0% $32.81 0 46,000East Totals 802,233 71,937 73,216 9.1% 28.0% 28.0% $25.27 94,500 67,760Far Northwest Totals 4,418,207 35,945 324,161 7.3% 8.9% 10.7% $33.18 0 25,347North Totals 1,273,917 -9,281 48,404 3.8% 7.4% 7.6% $23.35 0 0Northeast Totals 1,890,058 30,043 46,738 2.5% 17.5% 17.5% $23.07 39,400 235,198Northwest Totals 14,952,675 -116,763 156,949 1.0% 10.1% 10.9% $33.33 372,640 291,000Round Rock Totals 989,620 16,164 24,197 2.4% 18.3% 22.0% $27.87 123,941 95,000South Totals 1,166,797 9,992 21,554 1.8% 3.0% 3.0% $26.83 0 0Southeast Totals 2,051,236 -13,363 -5,640 -0.3% 26.4% 26.4% $22.76 0 0Southwest Totals 10,470,030 -45,644 -67,739 -0.6% 11.3% 13.4% $37.66 0 345,136Suburbs Totals 40,502,802 61,856 811,382 2.0% 11.5% 12.7% $31.58 630,481 1,105,441

Austin Totals 49,895,588 -434 774,253 1.6% 10.9% 12.0% $34.30 833,919 1,813,277

Downtown A 7,236,585 -32,650 7,783 0.1% 9.0% 9.4% $52.30 203,438 707,836CBD A 7,236,585 -32,650 7,783 0.1% 9.0% 9.4% $52.30 203,438 707,836

Central A 779,174 82,299 160,483 20.6% 7.3% 8.5% $43.60 0 46,000East A 124,951 72,167 72,167 57.8% 17.9% 17.9% $40.40 94,500 45,000Far Northwest A 3,215,179 35,082 320,630 10.0% 11.5% 14.1% $33.49 0 25,347Northeast A 414,556 36,518 34,251 8.3% 49.6% 49.6% $25.09 39,400 235,198Northwest A 8,795,459 -28,593 279,503 3.2% 9.9% 10.7% $36.44 372,640 291,000South A 284,951 7,558 0 0.0% 0.0% 0.0% $0.00 0 0Southeast A 236,055 -6,963 -6,963 -2.9% 21.2% 21.2% $30.00 0 0Southwest A 7,536,081 -38,005 -71,775 -1.0% 12.9% 15.7% $39.31 0 324,064Suburbs A 21,386,406 160,063 788,296 3.7% 11.9% 13.6% $36.26 506,540 966,609

Austin A 28,622,991 127,413 796,079 2.8% 11.2% 12.6% $39.53 709,978 1,674,445

Downtown B 2,156,201 -29,640 -44,912 -2.1% 6.4% 8.1% $40.91 0 0CBD B 2,156,201 -29,640 -44,912 -2.1% 6.4% 8.1% $40.91 0 0

Central B 1,708,855 527 29,059 1.7% 6.1% 6.3% $26.97 0 0East B 677,282 -230 1,049 0.2% 29.9% 29.9% $23.60 0 22,760Far Northwest B 1,203,028 863 3,531 0.3% 1.9% 1.9% $28.16 0 0North B 1,273,917 -9,281 48,404 3.8% 7.4% 7.6% $23.35 0 0Northeast B 1,475,502 -6,475 12,487 0.8% 8.4% 8.5% $19.71 0 0Northwest B 6,157,216 -88,170 -122,554 -2.0% 10.5% 11.3% $29.15 0 0Round Rock B 989,620 16,164 24,197 2.4% 18.3% 22.0% $27.87 123,941 95,000South B 881,846 2,434 21,554 2.4% 4.0% 4.0% $26.83 0 0Southeast B 1,815,181 -6,400 1,323 0.1% 27.1% 27.1% $22.02 0 0Southwest B 2,933,949 -7,639 4,036 0.1% 7.0% 7.5% $29.86 0 21,072Suburbs B 19,116,396 -98,207 23,086 0.1% 11.0% 11.6% $25.94 123,941 138,832Austin B 21,272,597 -127,847 -21,826 -0.1% 10.6% 11.2% $26.86 123,941 138,832



Travis Rogers Research Analyst

Investment opportunities by submarket


Class A rental rate increase Y-O-Y (Base Rent vs OpEx)

Large portfolios coming to market allow for investors to be choosyTraditionally, investors looking to acquire office product in Austin have had relatively few investment opportunities and faced fierce bidding competition. A few large portfolio owners are now bringing their properties to market, creating an array of investment options. While buyers still face intense competition, this increase in overall investment opportunities allows buyers to be more discerning in their next acquisition. There are currently over 3.2 million square feet, representing 6.5 percent of inventory, up for grabs in the Austin market.

New construction preleasing gaining momentum at deliveryFour properties, representing over 340,000 square feet, delivered in Q1 2016 across three submarkets. The largest deliveries include Research Park Plaza V (173,000 square feet) and Domain 1 (125,000 square feet). Collectively, these two properties delivered 38.9 percent leased with a rumored 100,000 square feet at leases. The majority of leasing activity occurred within a few months of each delivery, representing a recent trend with speculative developments across all submarkets. The most anticipated deliveries during Q2 2016 are 5th & Colorado (180,000 square feet - CBD), The Arnold (95,000 square feet - East), Domain 5 (75,000 square feet - NW) and The Lakes at Techridge (40,000 square feet - NE). Collectively, these properties are over 60 percent preleased.

Think base rent is driving rent growth? Think againCitywide Class A rents experienced a surge of growth during the first quarter. Contributions to this growth stem from both base rent and operating expenses. Year-over-year, Class A operating expenses downtown increased an average of $2.13 per square foot (12.9 percent) while the suburban market experienced a more subtle increase of $0.69 per square foot (5.5 percent). The real estate tax portion of operating expenses is the main contributor to the increase. As properties trade, their value is reassessed by the local taxing authority to reflect the trade value. When properties trade higher than their assessed value, real estate taxes increase to reflect a higher property valuation.

Supply allows investors the freedom to be choosy

2,257$30.18 $32.97

$21.75 $22.75

$16.48$18.61

$12.56 $13.25

$0

$20

$40

$60

Q1 2015 Q1 2016 Q1 2015 Q1 2016

Base

OpEx

Office Insight

Austin | Q1 2016





11.1%Total vacancy




12.9%

9.2%

5.5%

4.6%

CBD Suburbs

0

250,000

500,000

750,000

1,000,000

Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q3 17


Leased Space (s.f.)

Preleasing Future deliveries39%57% 40%69% 59% 70% 77% 36%

2,25753%

30%

9%4%4%

NW CBD FNW C SW

3,200,000 s.f.On the market









193,598

1,188,889

453,581 422,188

1,369,744

896,877683,724

1,164,121

1,528,730

774,140

0

500,000

1,000,000

1,500,000

2,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 2016

$19.09

$21.97

$24.75 $24.68 $24.52 $24.66 $26.42 $26.99

$28.77

$31.47$32.59

$33.72

$15.00

$20.00

$25.00

$30.00

$35.00

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016

15.7%14.8%

16.7%

19.7% 19.6%

17.8%

15.2%14.2%

12.7%12.0%

11.1%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016

Land

lord

leve

rage

Tenant leverage

Peaking market

Falling market

Bottoming market

Rising market

7,631,9818,333,294

6,831,502

8,441,977

6,636,375

5,292,627

1,250,000

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

2010 2011 2012 2013 2014 2015 YTD2016

CBD


Southwest

Northwest

Office Statistics

Austin | Q1 2016


absorption (s.f.)

YTD total net

absorption (s.f.)

YTD total net

absorption (%

of stock)

Direct vacancy

(%)

Total vacancy

(%)

Average direct

asking rent ($

p.s.f.)

YTD

completions

(s.f.)

Under

construction


CBD Totals 9,212,940 25,161 25,161 0.3% 6.5% 6.7% $48.77 23,592 898,714Central Totals 2,488,029 106,716 106,716 4.3% 10.2% 10.3% $35.25 0 0East Totals 707,733 1,279 1,279 0.2% 28.6% 28.6% $27.20 0 162,260Far Northwest Totals 4,421,021 288,216 288,216 6.5% 9.7% 11.6% $33.01 0 24,000North Totals 1,416,327 57,685 57,685 4.1% 6.2% 6.2% $24.87 0 0Northeast Totals 1,880,658 16,695 16,695 0.9% 17.0% 17.1% $22.82 0 295,400Northwest Totals 14,733,053 273,712 273,712 1.9% 9.3% 9.8% $33.17 297,853 365,787Round Rock Totals 891,679 8,033 8,033 0.9% 14.6% 15.2% $27.30 26,000 195,000South Totals 1,166,797 11,522 11,522 1.0% 3.9% 3.9% $21.98 0 0Southeast Totals 2,051,236 7,723 7,723 0.4% 25.8% 25.8% $22.80 0 0Southwest Totals 10,470,030 -22,602 -22,095 -0.2% 10.9% 13.0% $37.59 0 196,072Suburbs Totals 40,226,563 748,979 749,486 1.9% 11.2% 12.2% $31.73 323,853 1,238,519

Austin Totals 49,439,503 774,140 774,647 1.6% 10.3% 11.1% $33.72 347,445 2,137,233

Downtown A 7,056,739 40,433 40,433 0.6% 6.5% 6.7% $51.58 23,592 898,714CBD A 7,056,739 40,433 40,433 0.6% 6.5% 6.7% $51.58 23,592 898,714

Central A 779,174 78,184 78,184 10.0% 19.1% 19.1% $41.57 0 0East A 30,451 0 0 0.0% 0.0% 0.0% $0.00 0 139,500Far Northwest A 3,217,993 285,548 285,548 8.9% 12.6% 15.2% $33.22 0 24,000Northeast A 375,156 -2,267 -2,267 -0.6% 54.1% 54.1% $24.63 0 295,400Northwest A 8,720,655 308,096 308,096 3.5% 9.2% 9.6% $36.23 297,853 365,787Round Rock A 0 0 0 0.0% 0.0% 0.0% $0.00 0 95,000South A 284,951 -7,588 -7,588 -2.7% 2.7% 2.7% $0.00 0 0Southeast A 236,055 0 0 0.0% 18.2% 18.2% $30.00 0 0Southwest A 7,536,081 -33,770 -33,770 -0.4% 12.6% 15.2% $39.12 0 175,000Suburbs A 21,180,516 628,203 628,203 3.0% 12.1% 13.6% $36.00 297,853 1,094,687

Austin A 28,237,255 668,636 668,636 2.4% 10.7% 11.8% $38.36 321,445 1,993,401

Downtown B 2,156,201 -15,272 -15,272 -0.7% 6.6% 6.7% $39.80 0 0CBD B 2,156,201 -15,272 -15,272 -0.7% 6.6% 6.7% $39.80 0 0

Central B 1,708,855 28,532 28,532 1.7% 6.2% 6.3% $26.34 0 0East B 677,282 1,279 1,279 0.2% 29.8% 29.8% $27.20 0 22,760Far Northwest B 1,203,028 2,668 2,668 0.2% 2.0% 2.0% $29.42 0 0North B 1,416,327 57,685 57,685 4.1% 6.2% 6.2% $24.87 0 0Northeast B 1,505,502 18,962 18,962 1.3% 7.8% 7.9% $19.71 0 0Northwest B 6,012,398 -34,384 -34,384 -0.6% 9.4% 10.1% $28.80 0 0Round Rock B 891,679 8,033 8,033 0.9% 14.6% 15.2% $27.30 26,000 100,000South B 881,846 19,110 19,110 2.2% 4.3% 4.3% $26.39 0 0Southeast B 1,815,181 7,723 7,723 0.4% 26.8% 26.8% $22.16 0 0Southwest B 2,933,949 11,168 11,675 0.4% 6.6% 7.3% $30.10 0 21,072Suburbs B 19,046,047 120,776 121,283 0.6% 10.2% 10.6% $26.11 26,000 143,832Austin B 21,202,248 105,504 106,011 0.5% 9.9% 10.2% $27.04 26,000 143,832

2705 Bee Cave Rd Suite 325 Austin, TX 78746 tel +1 512 225 2700 [email protected]



Office Outlook

Austin | Q3 2015

Q3Stats, Insights & Activity

Austin Submarket MapSan Antonio Submarket Map

Austin | Q3 2015

Submarket Map

Far Northwest

Northwest

Round Rock

NorthNortheast

East

Central

Southwest

South

Southeast

CBD

Lake Travis

Citywide absorption as a percent of inventory (%)


Citywide projected construction deliveries by quarter (s.f.)


Citywide tenants in the market by size (s.f.)


Austin takes on Silicon ValleyAustin is going head-to-head with Silicon Valley in the battle of absorption. Austin has absorbed a whopping 1.5 million square feet of office space year-to-date, or 3.2 percent of inventory. This is the highest amount of absorption Austin has experienced in the last nine (9) years. Silicon Valley is putting up a fight and has absorbed over 2.1 million square feet or 3.2 percent of inventory, tieing-up the two tech-friendly heavyweights at the close of Q3. Absorption in Austin is projected to increase again during the fourth quarter, but will it be enough to beat Silicon Valley?

Construction deliveries will dip in 2016In 2016, construction deliveries will slow significantly, with only 640,000 (s.f.) projected to deliver between eight (8) projects. To put that number into perspective, seven (7) projects totaling 695,000 (s.f.) delivered during Q3 2015 alone. These projects include Paloma Ridge A & B (212,000 s.f.), Encino Trace I (162,000 s.f.), Rollingwood I & II (215,000 s.f.), Hill Country Galleria B (54,000 s.f.) and 1303 San Antonio (52,000 s.f.). Of this newly delivered inventory, 65% has been preleased. The next wave in construction deliveries will occur Q1 2017 with 500 West 2nd (500,000 s.f.), Shoal Creek Walk (218,000 s.f.) and Domain 8 (291,000 s.f.). Subsequent deliveries have not yet broken ground and are subject to many variables.

10,000-20,000 square foot requirements are kingIn such a competitive market, it helps to know the size distribution of tenants actively searching for space. Of approximately 180 surveying tenants, 73% are looking for between 5,000 and 30,000 (s.f). The most popular tenant size requirement falls in the 10,000 to 20,000 (s.f.) range, composing 28.7% of the market. Tenants searching for contiguous blocks greater than 50,000 (s.f.) or 13.2% of the market, will face the largest challenges. There are currently only 17 options citywide for that can accommodate a tenant of that size.

Silicon Hills goes head-to-head with Silicon Valley

2,257

2.0%2.0%

2.1%2.5%2.5%

2.6%3.0%

3.2%3.2%

MinneapolisSan Francisco

SeattleDallas

JacksonvilleColumbus

Raleigh-DurhamSilicon Valley

Austin

694,953

1,246,618

375,133

66,072 95,000 100,000

1,009,616

0

500,000

1,000,000

1,500,000

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017

Require 5,000-20,000 s.f.

26.9%28.7%

17.4%5.4%

8.4%1.8%

0.6%2.4%

0.6%2.4%

5.4%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

5,000-10,000> 10,000-20,000> 20,000-30,000> 30,000-40,000> 40,000-50,000> 50,000-60,000> 60,000-70,000> 70,000-80,000> 80,000-90,000

> 90,000-100,000>100,000

Citywide Office Insight

Austin | Q3 2015





12.0%Total vacancy



30% Total preleased

56%

Next wave









193,598

1,188,889

453,581 422,188

1,369,744

896,877683,724

1,164,121

1,528,730

0

500,000

1,000,000

1,500,000

2,000,000

2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

$19.09

$21.97

$24.75 $24.68 $24.52 $24.66 $26.42 $26.99

$28.77

$31.47$32.59

$15.00

$20.00

$25.00

$30.00

$35.00

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

15.7%14.8%

16.7%

19.7% 19.6%

17.8%

15.2%14.2%

12.7%12.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

Land

lord

leve

rage

Tenant leverage

Peaking market

Falling market

Bottoming market

Rising market

7,631,9818,333,294

6,831,502

8,441,977

6,636,375

5,292,627

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

2010 2011 2012 2013 2014 YTD2015

CBD


Southwest

Northwest

Office Statistics

Austin | Q3 2015


absorption (s.f.)YTD total net

absorption (s.f.)

YTD total net absorption (%

of stock)

Direct vacancy (%)

Total vacancy (%)

Average direct asking rent ($

p.s.f.)

YTD completions

(s.f.)

Under construction

(s.f.)Downtown Totals 9,189,348 134,579 544,218 5.9% 8.5% 8.8% $46.86 680,979 922,054CBD Totals 9,189,348 134,579 544,218 5.9% 8.5% 8.8% $46.86 680,979 922,054Central Totals 2,319,277 59,851 20,631 0.9% 9.4% 11.4% $31.02 0 131,721East Totals 707,733 2,802 -11 0.0% 28.8% 28.8% $22.55 0 139,500Far Northwest Totals 4,292,321 25,559 131,118 3.1% 9.9% 12.4% $30.43 212,400 128,700North Totals 1,416,327 -5,851 -16,108 -1.1% 6.3% 9.6% $22.19 0 0Northeast Totals 1,880,658 -6,781 -50,024 -2.7% 20.1% 21.8% $22.00 192,000 137,000Northwest Totals 14,298,006 203,029 453,524 3.2% 8.9% 9.9% $32.35 0 801,255Round Rock Totals 858,045 -36,697 -27,981 -3.3% 17.4% 17.7% $26.13 0 221,000South Totals 1,166,797 5,567 6,591 0.6% 3.9% 4.4% $31.86 0 0Southeast Totals 2,051,236 42,607 69,544 3.4% 26.5% 26.5% $22.18 81,116 232,000Southwest Totals 10,256,677 218,690 397,228 3.9% 10.6% 12.6% $36.35 951,211 179,209Suburbs Totals 39,247,077 508,776 984,512 2.5% 11.2% 12.7% $30.07 1,436,727 1,970,385Austin Totals 48,436,425 643,355 1,528,730 3.2% 10.7% 12.0% $32.59 2,117,706 2,892,439

Downtown A 7,033,147 136,461 478,577 6.8% 9.6% 10.1% $48.28 680,129 922,054CBD A 7,033,147 136,461 478,577 6.8% 9.6% 10.1% $48.28 680,129 922,054Central A 610,422 -1,697 -57,501 -9.4% 12.5% 19.6% $40.55 0 131,721East A 30,451 0 0 0.0% 0.0% 0.0% $0.00 0 139,500Far Northwest A 3,089,293 37,613 137,361 4.4% 12.5% 15.9% $30.76 212,400 128,700Northeast A 375,156 1,369 5,112 1.4% 54.1% 54.1% $24.18 192,000 137,000Northwest A 8,285,608 162,917 354,517 4.3% 9.9% 10.5% $34.74 0 801,255Round Rock A 0 0 0 0.0% 0.0% 0.0% $0.00 0 95,000South A 284,951 0 3,634 1.3% 0.0% 0.0% $39.26 0 0Southeast A 236,055 43,935 49,603 21.0% 16.4% 16.4% $29.00 81,116 232,000Southwest A 7,377,944 212,817 368,298 5.0% 12.0% 14.7% $37.85 923,574 179,209Suburbs A 20,289,880 456,954 861,024 4.2% 11.9% 13.9% $34.45 1,409,090 1,844,385Austin A 27,323,027 593,415 1,339,601 4.9% 11.3% 12.9% $37.48 2,089,219 2,766,439

Downtown B 2,156,201 -1,882 65,641 3.0% 4.6% 4.8% $37.13 45,700 0CBD B 2,156,201 -1,882 65,641 3.0% 4.6% 4.8% $37.13 45,700 0Central B 1,708,855 61,548 78,132 4.6% 8.2% 8.5% $25.85 0 0East B 677,282 2,802 -11 0.0% 30.1% 30.1% $22.55 0 0Far Northwest B 1,203,028 -12,054 -6,243 -0.5% 3.3% 3.3% $27.17 0 0North B 1,416,327 -5,851 -16,108 -1.1% 6.3% 9.6% $22.19 0 0Northeast B 1,505,502 -8,150 -55,136 -3.7% 11.6% 13.7% $19.48 0 0Northwest B 6,012,398 40,112 99,007 1.6% 7.5% 8.9% $27.96 0 0Round Rock B 858,045 -36,697 -27,981 -3.3% 17.4% 17.7% $26.13 0 126,000South B 881,846 5,567 2,957 0.3% 5.1% 5.8% $31.86 0 0Southeast B 1,815,181 -1,328 19,941 1.1% 27.8% 27.8% $21.66 0 0Southwest B 2,878,733 5,873 28,930 1.0% 7.0% 7.3% $29.71 27,637 0Suburbs B 18,957,197 51,822 123,488 0.7% 10.5% 11.5% $24.78 27,637 126,000Austin B 21,113,398 49,940 189,129 0.9% 9.9% 10.8% $25.36 73,337 126,000

2705 Bee Cave Rd Suite 325 Austin, TX 78746 tel +1 512 225 2700 [email protected] Rogers Research Analyst

CBD projected construction deliveries and current available space


Tenants in the market by industry


Downtown Austin skyline review (select image below)

Source: JLL Research jllcampaigns.com/skyline/city/austin

New construction deliveries are few and far between There are four (4) projects under construction downtown. These projects are NorthShore (24,000 s.f.), 5th & Colorado (180,000 s.f.), 500 W. 2nd (500,000 s.f.) and as of this quarter, Shoal Creek Walk (218,000 s.f.). In total, these four (4) developments are approximately 36% preleased. The only delivery this quarter downtown was 1303 San Antonio (52,000 s.f.) with approximately 50% preleased to St. David’s. During 2016, we should see three (3) straight quarters of no deliveries. The next wave of deliveries downtown will occur Q1 2017 with 500 W. 2nd (41% preleased to Google) and Shoal Creek Walk (39% preleased to Cirrus Logic).

The largest industry looking for space downtown is not techAustin is known nationwide as a tech-hub because of large companies like Google, Oracle, Ebay and AMD that lease some of Austin’s largest blocks of space. Contrary to common belief, the largest industry of tenants surveying for space during the third quarter are companies related to accounting, consulting, research and strategy at approximately 30%. Of the 47 tenants currently surveying for space downtown, tech companies compose approximately 27.7%. Of these 47 tenants, 50.0 percent have a requirement below 15,000 (s.f.).

Introducing the new JLL digital SkylineJLL has an exciting new tool that allows clients and prospects that typically lease in Skyline buildings to review availability in competing properties — then drill down into building-level data such as floor plate sizes and average asking rents. The Skyline can also show how the highest-quality buildings are performing across the market — including vacancy rates and average asking rents — to other high-quality properties. To access the Skyline, select the image on the right or search jllcampaigns.com/skyline/city/austin.

Construction deliveries will dip in 2016

89,21426,180

162,000425,677233,734

632,621

26,180 23,592

17,000

292,939

0

200,000

400,000

600,000

800,000

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Available Space (s.f.) Leased Space (s.f.)

CBD Office Insight

Austin | Q3 2015



$46.86 Direct average asking rent

922,054 Total under construction (s.f.)

8.8%Total vacancy

544,218 YTD net absorption (s.f.)



Accounting, Consulting, Research, Strategy,

29.8%

Technology, 27.7%

Other Professional and Business

Services, 14.9%

Energy & Utilities, 8.5%

Preleasing Future deliveries41%99% 50% 100%88% 9.3%

Current conditions – submarket CBD historical leasing activity (s.f.)


CBD total net absorption (s.f.)


CBD total vacancy rate (%)


CBD direct full service average asking rent ($ p.s.f.)

Source: JLL Research *rates do not include parking costs

-61,138

438,900

-50,166

177,992123,746 88,464

-110,090

593,756544,218

-200,000

0

200,000

400,000

600,000

800,000

2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

$35.78 $35.71 $36.35 $37.83 $39.03 $42.14

$43.95$48.28

$25.75 $25.48 $25.82 $27.75 $29.12

$32.99 $34.51$37.13

$20

$30

$40

$50

2008 2009 2010 2011 2012 2013 2014 YTD 2015

Class A Class B

20.13%17.62%

15.26% 14.21% 13.59% 13.41% 12.38% 12.81%10.91%

8.80%

0%

5%

10%

15%

20%

25%

2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

Land

lord

leve

rage

Tenant leverage

Peaking market

Falling market

Bottoming market

Rising market

974,892 991,9711,095,426

1,364,127

1,706,553

990,656

0

500,000

1,000,000

1,500,000

2,000,000

2010 2011 2012 2013 2014 YTD2015

CBD


Southwest

Northwest

Northwest projected construction deliveries and current available space


Northwest tenants in the market by size (s.f.)


Vacant available blocks greater than 25,000 s.f. market-wide


If you build it, will they come?There are five (5) projects under construction northwest. These projects are Research Park Plaza V (173,000 s.f.), Quarry Oaks III (138,000 s.f.), Domain 1 (125,000 s.f.), Domain 5 (75,000 s.f.), and most recently, Domain 8 (291,000 s.f.). In total, these developments are approximately 17% preleased. The only lease signed for the approximately 801,000 s.f. under construction is BazaarVoice, who signed a lease for the entirety of Quarry Oaks III. Research Park Plaza V, Quarry Oaks III and Domain 1 are expected to deliver during the fourth quarter. While these projects have no preleasing, they each are in advanced lease negotiations.

Almost half of tenant requirements are between 10,000 and 20,000 (s.f.)There are approximately 47 tenants surveying for space northwest. Of these 47 tenants, 70% have a requirement between 5,000 and 20,000 (s.f.). While the 10,000 to 20,000 (s.f.) requirement is the most common throughout the market, this requirement is especially pronounced northwest. When we compare tenants searching in all submarkets to the tenants searching solely northwest, we find a 56% increase within this range. Tenants searching for contiguous blocks greater than 25,000 (s.f.) will face the most challenges northwest, as there are only seven (7) vacant blocks currently available.

Northwest comes in second for largest blocks of vacant available spaceThere are only seven (7) contiguous blocks greater than 25,000 (s.f.) available now. These blocks are located at Riata Corporate Park 4 (65,000 s.f.), Park Centre III (42,000 s.f.), Echelon I (52,000 s.f.), Lakewood Center (48,000 s.f.), Domain 7 (38,000 s.f.), Research Park V (39,000 s.f.) and HighFLEX (27,000 s.f.).

Massive Domain project breaks ground

Northwest Office Insight

Austin | Q3 2015





9.9%Total vacancy



17% Total preleased

8 75 5 4 4

2 1 1 1 002468

10

280,600 297,85374,787

291,000

276,553 137,615

0

200,000

400,000

600,000

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017



0%50% 32% 0%

25.5%44.7%

8.5%2.1%

12.8%0.0%0.0%

2.1%2.1%

0.0%2.1%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

5,000-10,000> 10,000-20,000> 20,000-30,000> 30,000-40,000> 40,000-50,000> 50,000-60,000> 60,000-70,000> 70,000-80,000> 80,000-90,000

> 90,000-100,000>100,000



Northwest total net absorption (s.f.)


Northwest total vacancy rate (%)


Northwest direct full service average asking rent ($ p.s.f.)


788,059

38,355120,307

-138,519

158,457

331,623276,080

155,096 147,069

453,524

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

$28.02 $27.77 $26.51

$27.57 $28.13 $29.68

$31.93

$34.74

$23.77 $22.79 $22.58 $21.97

$22.74 $23.79

$26.55 $27.96

$20

$25

$30

$35

2008 2009 2010 2011 2012 2013 2014 YTD 2015

Class A Class B

14.74%12.84%

15.00%

18.00% 17.90%

15.40%13.45%

11.89% 11.70%9.90%

0%

5%

10%

15%

20%

2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

Land

lord

leve

rage

Tenant leverage

Peaking market

Falling market

Bottoming market

Rising market

3,332,000 3,322,608

2,263,648

2,838,754

2,285,885

1,348,249

0500,000

1,000,0001,500,0002,000,0002,500,0003,000,0003,500,000

2010 2011 2012 2013 2014 YTD2015

CBD


Southwest

Northwest

Southwest projected construction deliveries and current available space


Construction deliveries and current available space


Vacant available blocks greater than 25,000 s.f. market-wide


No deliveries beyond Q2 2016There are two (2) projects under construction southwest. These projects are Encino Trace II (158,000 s.f.) and Preserve at Bee Cave (21,000 s.f.). Preserve at Bee Cave is a build to suit for SecureLink that broke ground during the third quarter. These developments are approximately 25% preleased. This quarter, four (4) projects delivered approximately 98% preleased. These projects are Encino Trace I (162,000 s.f.), Rollingwood Center I-II (215,000 s.f.) and Hill Country Galleria B (54,000 s.f.). The next projects likely to break ground are 5301 Southwest Parkway Phase II (125,000 s.f.), Lantana Ridge I & II (175,000 s.f.) and The Backyard (335,000 s.f.)

New deliveries cause vacancy to riseCapital Ridge and 3700 San Clemente delivered during the second quarter. Both of these deliveries pushed class A inventory southwest up 7.2% quarter-over-quarter, resulting in vacancy rising from 8.2 to 11.4% for the first time since 2008 when vacancy rose from 8.0 to 13%. During the third quarter, Hill Country Galleria B (54,000 s.f.), Rollingwood Center I-II (215,000 s.f.) and Encino Trace I delivered. While these deliveries are 98% preleased, most tenants will not occupy for a couple quarters, causing vacancy to rise. EZ Corp has also put (3) of the four floors they leased at Rollingwood Center I on the sublease market.

Southwest sees rise in vacant available large contiguous blocksTraditionally, the northwest had the largest amount of vacant available blocks due to sheer size of inventory. Tides have turned during the third quarter with new construction deliveries partly responsible. There are eight (8) contiguous blocks greater than 25,000 (s.f.) available now. These blocks are located at 3700 San Clemente (51,000 s.f.), Rollingwood Center I (75,000 s.f.), The Park on Barton Creek I (43,000 s.f.), The Park on Barton Creek II (39,000 s.f.), Wild Basin II (29,000 s.f.), Summit at Lantana III (52,000 s.f.), Terrace 7 (45,000 s.f.) and Rialto II (38,000 s.f.).

Construction deliveries lead to increase in large contiguous blocks

8,000 27,000 154,169 8,000 135,13727,000

312,212422,193

23,00021,072

0100,000

200,000300,000400,000500,000600,000

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016


Future deliveries

Southwest Office Insight

Austin | Q3 2015





12.6%Total vacancy




0%

5%

10%

15%

20%

0

500,000

1,000,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD2015

New Deliveries Vacancy

8 75 5 4 4

2 1 1 1 002468

10

Preleasing100%77% 0% 67% 98% 15%



Southwest total net absorption (s.f.)


Southwest total vacancy rate (%)


Southwest direct full service average asking rent ($ p.s.f.)


250,616

531,380

211,110

86,011

243,378

50,737100,191

189,622

397,228

0

100,000

200,000

300,000

400,000

500,000

600,000

2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

$28.30 $26.31

$28.50 $28.33 $28.95

$32.71

$35.68 $37.85

$20.46 $20.62 $21.31 $22.47 $23.05

$24.42

$28.26 $29.71

$20

$25

$30

$35

$40

2008 2009 2010 2011 2012 2013 2014 YTD 2015

Class A Class B

8.47% 8.50%

13.49%15.56% 15.23%

12.79%

10.42% 9.63% 9.40%

12.60%

0%

5%

10%

15%

20%

2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

Land

lord

leve

rage

Tenant leverage

Peaking market

Falling market

Bottoming market

Rising market

1,975,568

1,529,802 1,521,568

2,533,884

1,282,8621,111,676

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2010 2011 2012 2013 2014 YTD2015

CBD


Southwest

Northwest

5-year labor force growth and current unemployment rate


Projected construction deliveries and current available space


Itemized CBD operating expenses by % increase (2007-2015)

Source: JLL Research *Percent increase reflects random CBD sample

Austin retains lowest unemployment even with highest labor force growthOf all metropolitan areas in the U.S. with a population of at least one million, Austin ranks #1 for the lowest unemployment rate at 3.0 percent. While maintaining the lowest unemployment rate, Austin’s labor force has grown more than any other metropolitan area with a comparable unemployment rate. Austin’s labor force has grown at a torrid rate of 13.4 percent from April 2010 to April 2015, followed by Dallas in second at 8.4 percent and San Antonio in third at 7.6 percent. The Urban Institute’s most conservative estimate projects that Austin’s population will increase by 30.5 percent by 2030 but with higher-than-average birth rates and lower-than-average death rates, Austin could see growth as high as 81.7 percent. Low unemployment and high labor force growth spells high office demand.

Construction pre-leasing holds steady with lack of available large blocksNew inventory will continue to deliver in Austin steadily through 2015 and into the second quarter of 2016. Projects that delivered this quarter were 3700 San Clemente, Capital Ridge, Parmer 3.2 and 3100 Alvin Devane. Of the 740,000 square feet delivered, 48.0 percent has been leased. The largest lease year-to-date occurred this quarter with Apple signing the full balance or 217,000 square feet at Capital Ridge. As large tenants like Apple plan for expansion and search for large blocks of space, they find their options are limited. There are currently only three blocks of available space larger than 25,000 square feet downtown and 13 blocks of space larger than 50,000 square feet market-wide. Demand will continue to grow into 2016 resulting in additional speculative developments breaking ground during the third and fourth quarter of 2015.

As valuations of CBD inventory rise, operating expenses follow suit Tenants leasing space downtown have noticed operating expenses increase rapidly in recent years. The main contributor to this increase is a result of the real estate tax portion of operating expenses. As properties trade, their value is reassessed by the local taxing authority to reflect the trade value. When properties trade higher than their assessed value, real estate taxes increase to reflect a higher property valuation. This quarter, Scarbrough, Littlefield and Perry Brooks traded while 501 and 515 Congress are under contract with Invesco. As a result, tenants leasing space in these buildings may see a higher than normal increase in operating expenses come 2016.

Austin continues to grow by leaps and bounds

2,257

44%

13%

44%

16%

86%

51%

Cleaning

Security

Parking Garage

Insurance

RE Taxes

Management Fees

0% 2% 4% 6% 8% 10% 12% 14%

BostonColumbus

DallasMinneapolis

Oklahoma CitySan Antonio

Salt Lake CityAustin

5-Year Labor Force Growth Unemployment Rate

354,594462,499

289,90764,376 207,939

384,903

548,312666,853

284,757

96,000

292,497

0

500,000

1,000,000

Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q1 2017

Leased Space (s.f.) Available Space (s.f.)

Office Insight

Austin | Q2 2015





12.3%Total vacancy






Total net absorption (s.f.)


Total vacancy rate (%)


Direct full service average asking rent ($ p.s.f.)


2,857,894

193,598

1,188,889

453,581 422,188

1,369,744

896,877683,724

1,164,121885,221

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

$19.09

$21.97

$24.75 $24.68 $24.52 $24.66 $26.42 $26.99

$28.77

$31.47$32.56

$15.00

$20.00

$25.00

$30.00

$35.00

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

15.7%14.8%

16.7%

19.7% 19.6%

17.8%

15.2%

14.2%

12.7% 12.3%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015

Land

lord

leve

rage

Tenant leverage

Peaking market

Falling market

Bottoming market

Rising market

7,631,9818,333,294

6,831,502

8,441,977

6,636,375

2,866,631

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

2010 2011 2012 2013 2014 YTD2015

CBD


Southwest

Northwest

Office Statistics

Austin | Q2 2015


absorption (s.f.)

YTD total net

absorption (s.f.)

YTD total net

absorption (%

of stock)

Direct vacancy

(%)

Total vacancy

(%)

Average direct

asking rent ($

p.s.f.)

YTD

completions

(s.f.)

Under

construction


CBD Totals 9,134,906 34,539 409,639 4.5% 9.4% 9.7% $45.49 680,979 756,234Central Totals 2,267,928 5,623 -39,220 -1.7% 7.6% 9.6% $30.67 0 131,721East Totals 707,733 1,612 -2,813 -0.4% 29.2% 29.2% $22.39 0 94,500Far Northwest Totals 4,079,921 101,369 105,559 2.6% 11.9% 13.6% $32.23 0 341,100North Totals 1,416,327 982 -10,257 -0.7% 6.0% 9.2% $22.13 0 0Northeast Totals 1,880,658 -25,446 -43,243 -2.3% 19.7% 21.4% $21.84 192,000 137,000Northwest Totals 14,298,006 36,068 250,495 1.8% 9.9% 11.3% $32.27 0 510,255Round Rock Totals 858,045 7,392 12,196 1.4% 13.1% 13.4% $25.89 0 122,000South Totals 1,166,797 -9,055 -2,610 -0.2% 4.7% 4.9% $29.89 0 0Southeast Totals 2,051,236 30,526 26,937 1.3% 28.6% 28.6% $22.74 81,116 232,000Southwest Totals 9,823,654 135,865 178,538 1.8% 10.3% 11.4% $35.92 494,018 588,330Suburbs Totals 38,550,305 284,936 475,582 1.2% 11.7% 13.0% $30.10 767,134 2,156,906

Austin Totals 47,685,211 319,475 885,221 1.9% 11.2% 12.3% $32.56 1,448,113 2,913,140

Downtown A 6,978,705 17,933 342,116 4.9% 10.9% 11.3% $46.66 635,279 756,234CBD A 6,978,705 17,933 342,116 4.9% 10.9% 11.3% $46.66 635,279 756,234

Central A 610,422 -280 -55,804 -9.1% 12.1% 15.2% $40.23 0 131,721East A 30,451 0 0 0.0% 0.0% 0.0% $0.00 0 94,500Far Northwest A 2,876,893 100,069 99,748 3.5% 15.9% 18.4% $32.55 0 341,100Northeast A 375,156 0 3,743 1.0% 54.4% 54.4% $24.18 192,000 137,000Northwest A 8,285,608 70,054 191,600 2.3% 11.4% 12.5% $34.59 0 510,255Round Rock A 0 0 0 0.0% 0.0% 0.0% $0.00 0 96,000South A 284,951 3,634 0 0.0% 0.0% 0.0% $39.26 0 0Southeast A 236,055 0 5,668 2.4% 35.0% 35.0% $29.00 81,116 232,000Southwest A 6,944,921 141,745 155,481 2.2% 11.6% 13.0% $37.55 466,381 588,330Suburbs A 19,644,457 315,222 400,436 2.0% 13.1% 14.5% $34.31 739,497 2,130,906

Austin A 26,623,162 333,155 742,552 2.8% 12.5% 13.7% $37.13 1,374,776 2,887,140

Downtown B 2,156,201 16,606 67,523 3.1% 4.6% 4.4% $36.61 45,700 0CBD B 2,156,201 16,606 67,523 3.1% 4.6% 4.4% $36.61 45,700 0

Central B 1,657,506 5,903 16,584 1.0% 6.0% 7.5% $23.58 0 0East B 677,282 1,612 -2,813 -0.4% 30.5% 30.5% $22.39 0 0Far Northwest B 1,203,028 1,300 5,811 0.5% 2.3% 2.3% $26.87 0 0North B 1,416,327 982 -10,257 -0.7% 6.0% 9.2% $22.13 0 0Northeast B 1,505,502 -25,446 -46,986 -3.1% 11.1% 13.2% $18.96 0 0Northwest B 6,012,398 -33,986 58,895 1.0% 7.9% 9.6% $27.66 0 0Round Rock B 858,045 7,392 12,196 1.4% 13.1% 13.4% $25.89 0 26,000South B 881,846 -12,689 -2,610 -0.3% 6.3% 6.4% $29.89 0 0Southeast B 1,815,181 30,526 21,269 1.2% 27.7% 27.7% $21.71 0 0Southwest B 2,878,733 -5,880 23,057 0.8% 7.3% 7.5% $29.69 27,637 0Suburbs B 18,905,848 -30,286 75,146 0.4% 10.3% 11.4% $24.53 27,637 26,000Austin B 21,062,049 -13,680 142,669 0.7% 9.7% 10.7% $25.12 73,337 26,000




Large wave of inventory delivers downtown with next wave southwest

More than 600,000 square feet of new construction delivered downtown in the first quarter, representing a 7.6 percent increase in downtown inventory. Still, tenants are surprised by the lack of vacant available space in the presence of prolific office development. Class A downtown deliveries during the first quarter were over 90.0 percent leased. Other downtown projects continue to take shape, the most noteworthy being the 500,000-square-foot development delivering in the first quarter of 2017 known as 500 W 2nd. Google signed a 200,000-square-foot lease at this Trammell Crow project, taking 42.0 percent of available space. The next wave of construction will deliver approximately 900,000 square feet to the southwest market in the second quarter, representing a 10.0 percent increase in inventory with 50.0 percent of available space already leased.

Citywide construction deliveries by quarter


Rental rates continue to climb citywide driving suburban development

Demand for larger blocks of space has increased, coupled with a limited supply of 50,000-square-foot blocks of contiguous space, has caused rental rates to rise. While operating expenses have risen substantially due to increased appraisal values, the largest contribution to rent growth over the last five years is attributed to increases in base rent. East Austin, having fewer development barriers, lower land values and close proximity to downtown is witnessing a large push in planned Class A construction. 1645 E. 6th At The Arnold, at 95,000 square feet and delivering in Q1 2016, is the first large Class A mixed-use office development to begin construction and is over 50.0 percent leased to C3 Presents. Other large Eastside planned developments include Cityline at MLK Station, 310 Comal and The Waterfront, representing over 800,000 square feet of Class A office space.

Class A downtown rent growth


Large portfolio sales and leases northwest

Approximately 68.0 percent of total sales transactions traded in the northwest submarket in the first quarter. The largest sale, Apple’s four-building purchase at Riata Crossing totaling 357,000 square feet, closed for an undisclosed price. Prominent Point I, II and Stratum Executive Center also sold for a total of $120 million. The second largest lease of the quarter took place northwest with Indeed leasing 198,000 square feet at Champion Office Park, bringing the recently delivered development to 100.0 percent leased. Other notable sales were Lavaca Plaza downtown and Rialto I & II southwest.

Sales Transactions > 50,000 s.f. by submarket


12.7%Total vacancy





Office Insight

Austin | Q1 2015

Rising rates and low vacancy in midst of new inventory

748,835

1,547,529

418,558 625,060

355,500 500,436

0

500,000

1,000,000

1,500,000

2,000,000

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q1 2017

New Construction Leased s.f.

$22.85 $24.28 $24.08 $26.36 $27.69

$30.85

$12.86 $13.18 $13.69$14.42

$14.98$15.75

$0

$10

$20

$30

$40

$50

2010 2011 2012 2013 2014 Q1 2015

Full Service Rate

Base Rent Operating Expenses

23%

35%

Rate growth

122,514

822,528

107,648

155,385

CBD Northwest

Southeast Southwest

1,208,075 s.f.in transactions

1,595,850 s.f. leased

Current conditions – market and submarket Historical leasing activity


Total net absorption (s.f.)


Total vacancy rate


Direct average asking rent ($ p.s.f.)


2,857,894

193,598

1,188,889

453,581 422,188

1,369,744

896,877683,724

1,164,121

567,318

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 2015

$21.97 $24.75 $24.68 $24.52 $24.66

$26.42 $26.99$28.77

$31.47 $32.19

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 2015

15.7%14.8%

16.7%

19.7% 19.6%

17.8%

15.2%14.2%

12.7% 12.7%

7.0%

9.0%

11.0%

13.0%

15.0%

17.0%

19.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 2015

Austin

Landlord leverage

Tenant leverage

Peaking market

Falling market

Bottoming market

Rising market

Non-CBD

CBD

8,333,294

6,831,502

8,441,977

6,636,375

1,192,131

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

2011 2012 2013 2014 Q1 2015

©2015 Jones Lang LaSalle IP, Inc. All rights reserved. For more information, contact: Travis Rogers | +1 512 225 2718 | [email protected]

Austin Q1 2015

Office StatisticsAustin | Q1 2015


absorption (s.f.)

YTD total net

absorption (s.f.)

YTD total net

absorption (%

of stock)

Direct vacancy

(%)

Total vacancy

(%)

Average direct

asking rent ($

p.s.f.)

YTD

completions

(s.f.)

Under

construction


CBD Totals 9,670,906 375,100 375,100 3.9% 10.7% 11.1% $45.51 680,979 755,388Central Totals 2,319,277 -44,843 -44,843 -1.9% 11.0% 15.3% $29.44 0 131,721East Totals 707,733 -4,425 -4,425 -0.6% 29.4% 29.4% $22.57 0 94,500Far Northwest Totals 4,267,921 4,190 4,190 0.1% 15.6% 17.8% $30.59 0 453,200North Totals 1,416,327 -11,239 -11,239 -0.8% 6.4% 9.3% $23.57 0 0Northeast Totals 1,657,132 -17,797 -17,797 -1.1% 12.9% 13.0% $19.31 0 329,000Northwest Totals 13,940,838 214,427 214,427 1.5% 9.9% 11.7% $31.44 0 464,468Round Rock Totals 858,045 4,804 4,804 0.6% 13.6% 14.3% $25.92 0 108,000South Totals 1,159,932 6,445 6,445 0.6% 4.9% 4.9% $31.76 0 0Southeast Totals 2,142,920 -2,017 -2,017 -0.1% 33.5% 33.5% $24.20 0 81,116Southwest Totals 9,356,294 42,673 42,673 0.5% 6.6% 8.2% $33.88 27,637 1,055,690Suburbs Totals 37,826,419 192,218 192,218 0.5% 11.4% 13.1% $29.00 27,637 2,717,695

Austin Totals 47,497,325 567,318 567,318 1.2% 11.3% 12.7% $32.19 708,616 3,473,083

Downtown A 7,514,705 324,183 324,183 4.3% 12.3% 12.7% $46.60 635,279 755,388CBD A 7,514,705 324,183 324,183 4.3% 12.3% 12.7% $46.60 635,279 755,388

Central A 610,422 -55,524 -55,524 -9.1% 12.2% 28.2% $37.96 0 131,721East A 30,451 0 0 0.0% 0.0% 0.0% $0.00 0 94,500Far Northwest A 3,064,893 -321 -321 0.0% 20.1% 23.2% $30.89 0 453,200Northeast A 183,156 3,743 3,743 2.0% 23.0% 23.0% $21.22 0 329,000Northwest A 7,928,440 121,546 121,546 1.5% 11.9% 13.8% $33.43 0 464,468Round Rock A 0 0 0 0.0% 0.0% 0.0% $0.00 0 82,000South A 284,951 -3,634 -3,634 -1.3% 1.3% 1.3% $39.26 0 0Southeast A 327,739 5,668 5,668 1.7% 53.2% 53.2% $25.10 0 0Southwest A 6,477,561 13,736 13,736 0.2% 6.3% 8.6% $36.25 0 1,055,690Suburbs A 18,907,613 85,214 85,214 0.5% 12.0% 14.6% $32.54 0 2,610,579

Austin A 26,422,318 409,397 409,397 1.5% 12.1% 14.1% $36.61 635,279 3,365,967

Downtown B 2,156,201 50,917 50,917 2.4% 5.2% 5.4% $36.57 45,700 0CBD B 2,156,201 50,917 50,917 2.4% 5.2% 5.4% $36.57 45,700 0

Central B 1,708,855 10,681 10,681 0.6% 10.5% 10.7% $25.91 0 0East B 677,282 -4,425 -4,425 -0.7% 30.7% 30.7% $22.57 0 0Far Northwest B 1,203,028 4,511 4,511 0.4% 4.0% 4.0% $26.77 0 0North B 1,416,327 -11,239 -11,239 -0.8% 6.4% 9.3% $23.57 0 0Northeast B 1,473,976 -21,540 -21,540 -1.5% 11.7% 11.8% $18.83 0 0Northwest B 6,012,398 92,881 92,881 1.5% 7.2% 9.0% $27.10 0 0Round Rock B 858,045 4,804 4,804 0.6% 13.6% 14.3% $25.92 0 26,000South B 874,981 10,079 10,079 1.2% 6.1% 6.1% $31.25 0 0Southeast B 1,815,181 -7,685 -7,685 -0.4% 29.9% 29.9% $23.91 0 81,116Southwest B 2,878,733 28,937 28,937 1.0% 7.2% 7.3% $29.20 27,637 0Suburbs B 18,918,806 107,004 107,004 0.6% 10.9% 11.7% $25.09 27,637 107,116Austin B 21,075,007 157,921 157,921 0.7% 10.3% 11.1% $25.69 73,337 107,116




YTD

completion (s.f.) Inventory (s.f.)

Direct net

absorption (s.f.)

YTD

direct net

absorption (s.f.)

Total net

absorption

(s.f.)

YTD total net

absorption

(s.f.)

YTD total net

absorption

(% of stock)

Direct

vacancy (s.f.)

Direct

vacancy (%)

Total vacancy

(s.f.)

Total vacancy

(%)

Average asking

rent ($ p.s.f.)

Under

construction /

renovation (s.f.)

Downtown

Class A 235,734 7,059,596 149,930 418,475 159,331 425,766 6.2% 438,231 6.2% 519,537 7.4% $43.95 1,537,148

Class B 0 2,268,681 -5,324 61,681 -5,324 65,517 2.9% 86,923 3.8% 94,761 4.2% $34.51 45,700

Total 235,734 9,328,277 144,606 480,156 154,007 491,283 5.4% 525,153 5.6% 614,299 6.6% $41.65 1,582,848

Suburban

Class A 557,153 19,771,539 106,465 514,199 73,700 267,042 1.4% 2,266,118 11.5% 2,713,452 13.7% $32.84 1,781,026

Class B 0 17,662,832 73,815 29,444 71,044 -106,595 -0.6% 2,386,037 13.5% 2,616,034 14.8% $24.56 81,116

Total 557,153 37,434,371 180,280 543,643 144,744 160,447 0.4% 4,652,155 12.4% 5,329,486 14.2% $28.93 1,862,142

Market Totals

Class A 792,887 26,831,135 256,395 932,674 233,031 692,808 2.7% 2,704,349 10.1% 3,232,989 12.0% $35.76 3,318,174

Class B 0 19,931,513 68,491 91,125 65,720 -41,078 -0.2% 2,472,959 12.4% 2,710,795 13.6% $25.70 126,816

Totals 792,887 46,762,648 324,886 1,023,799 298,751 651,730 1.4% 5,177,308 11.1% 5,943,785 12.7% $31.47 3,444,990

2705 Bee Cave Rd Suite 325 Austin, TX 78746 tel +1 512 225 2700 fax +1 512 225 2701

Office StatisticsAustin | Q4 2014

© 2015 Jones Lang LaSalle IP, Inc. All rights reserved.

Downtown

YTD


Direct net

absorption (s.f.)

YTD

direct net

absorption (s.f.)

Total net

absorption

(s.f.)

YTD total net

absorption

(s.f.)

YTD total net

absorption

(% of stock)

Direct

vacancy (s.f.)

Direct

vacancy (%)

Total vacancy

(s.f.)

Total vacancy

(%)

Average asking

rent ($ p.s.f.)

Under

construction /

renovation (s.f.)

Downtown

Class A 235,734 7,059,596 149,930 418,475 159,331 425,766 6.2% 438,231 6.2% 519,537 7.4% $43.95 1,537,148

Class B 0 2,268,681 -5,324 61,681 -5,324 65,517 2.9% 86,923 3.8% 94,761 4.2% $34.51 45,700

Totals 235,734 9,328,277 144,606 480,156 154,007 491,283 5.4% 525,153 5.6% 614,299 6.6% $41.65 1,582,848

Totals

Class A 235,734 7,059,596 149,930 418,475 159,331 425,766 6.2% 438,231 6.2% 519,537 7.4% $43.95 1,537,148

Class B 0 2,268,681 -5,324 61,681 -5,324 65,517 2.9% 86,923 3.8% 94,761 4.2% $34.51 45,700

Totals 235,734 9,328,277 144,606 480,156 154,007 491,283 5.4% 525,153 5.6% 614,299 6.6% $41.65 1,582,848


Austin Office Statistics - Q4 2014


Suburban

YTD


Direct net

absorption (s.f.)

YTD

direct net

absorption (s.f.)

Total net

absorption

(s.f.)

YTD total net

absorption

(s.f.)

YTD total net

absorption

(% of stock)

Direct

vacancy (s.f.)

Direct

vacancy (%)

Total vacancy

(s.f.)

Total vacancy

(%)

Average asking

rent ($ p.s.f.)

Under

construction /

renovation (s.f.)

Cedar Park

Class A 0 232,274 0 0 0 0 0.0% 19,627 8.4% 19,627 8.4% $29.00 0

Class B 0 166,822 0 0 0 0 0.0% 11,390 6.8% 11,390 6.8% $25.49 0

Totals 0 399,096 0 0 0 0 0.0% 31,017 7.8% 31,017 7.8% $27.53 0

Central

Class A 0 843,342 0 47,573 0 47,573 5.6% 142,617 16.9% 169,772 20.1% $35.89 131,721

Class B 0 2,067,458 37,839 89,643 36,169 69,400 3.4% 187,111 9.1% 219,037 10.6% $24.64 0

Totals 0 2,910,800 37,839 137,216 36,169 116,973 4.0% 329,728 11.3% 388,809 13.4% $27.90 131,721

East

Class A 0 30,451 0 0 0 0 0.0% 0 0.0% 0 0.0% $0.00 0

Class B 0 692,825 363 14,721 363 14,721 2.1% 213,208 30.8% 214,335 30.9% $19.50 0

Totals 0 723,276 363 14,721 363 14,721 2.0% 213,208 29.5% 214,335 29.6% $18.68 0

Far Northwest

Class A 0 2,710,432 -62,000 6,736 -62,000 -58,046 -2.1% 286,514 10.6% 353,317 13.0% $30.04 0

Class B 0 422,948 -7,009 1,450 -7,009 1,450 0.3% 50,626 12.0% 52,762 12.5% $24.04 0

Totals 0 3,133,380 -69,009 8,186 -69,009 -56,596 -1.8% 337,140 10.8% 406,079 13.0% $29.23 0

Hays County

Class B 0 164,760 0 -5,369 0 -5,369 -3.3% 55,054 33.4% 55,054 33.4% $25.06 0

Totals 0 164,760 0 -5,369 0 -5,369 -3.3% 55,054 33.4% 55,054 33.4% $25.06 0

North

Class A 336,553 1,441,092 121,756 127,558 121,756 127,402 11.5% 275,763 19.1% 349,756 24.3% $31.01 154,000

Class B 0 2,021,512 43,009 111,887 40,815 87,458 4.3% 128,568 6.4% 156,933 7.8% $26.37 0

Totals 336,553 3,462,604 164,765 239,445 162,571 214,860 6.9% 404,331 11.7% 506,689 14.6% $28.30 154,000

Northeast

Class A 0 189,381 -5,508 -14,609 -5,508 -14,609 -7.7% 64,900 34.3% 64,900 34.3% $20.37 329,000

Class B 0 1,772,250 -1,823 -10,025 -1,823 -2,952 -0.2% 312,764 17.6% 312,764 17.6% $15.29 81,116

Totals 0 1,961,631 -7,331 -24,634 -7,331 -17,561 -0.9% 377,664 19.3% 377,664 19.3% $15.78 410,116

Austin Office Statistics - Q4 2014 •



Suburban (continued)

YTD


Direct net

absorption (s.f.)

YTD

direct net

absorption (s.f.)

Total net

absorption

(s.f.)

YTD total net

absorption

(s.f.)

YTD total net

absorption

(% of stock)

Direct

vacancy (s.f.)

Direct

vacancy (%)

Total vacancy

(s.f.)

Total vacancy

(%)

Average asking

rent ($ p.s.f.)

Under

construction /

renovation (s.f.)

Northwest

Class A 220,600 7,208,993 -16,960 195,407 -72,815 141,262 2.0% 769,131 10.7% 864,724 12.0% $32.71 137,615

Class B 0 4,754,158 22,838 32,631 19,349 -54,711 -1.2% 510,277 10.7% 623,415 13.1% $26.77 0

Totals 220,600 11,963,151 5,878 228,038 -53,466 86,551 0.7% 1,279,408 10.7% 1,488,139 12.4% $30.35 137,615

Round Rock

Class A 0 87,000 2,121 2,337 2,121 2,337 2.7% -216 -0.2% 3,505 4.0% $28.51 0

Class B 0 337,587 12,475 3,997 12,475 5,809 1.7% 83,141 24.6% 90,057 26.7% $22.87 0

Totals 0 424,587 14,596 6,334 14,596 8,146 1.9% 82,925 19.5% 93,562 22.0% $24.03 0

South

Class A 0 2,740,386 27,277 134,951 26,022 52,330 1.9% 171,840 6.3% 284,227 10.4% $37.08 0

Class B 0 1,083,347 -21,460 -23,004 -21,460 -16,565 -1.5% 136,601 12.6% 142,542 13.2% $26.27 0

Totals 0 3,823,733 5,817 111,947 4,562 35,765 0.9% 308,441 8.1% 426,769 11.2% $34.02 0

Southeast

Class A 0 327,739 0 11,365 0 11,365 3.5% 190,675 58.2% 190,675 58.2% $22.25 0

Class B 0 1,537,337 -3,202 -237,064 -3,202 -238,636 -15.5% 492,982 32.1% 494,554 32.2% $20.65 0

Totals 0 1,865,076 -3,202 -225,699 -3,202 -227,271 -12.2% 683,657 36.7% 685,229 36.7% $20.93 0

Southwest

Class A 0 3,960,449 39,779 2,881 64,124 -42,572 -1.1% 345,267 8.7% 412,949 10.4% $34.11 1,028,690

Class B 0 2,641,828 -9,215 50,577 -4,633 32,800 1.2% 204,314 7.7% 243,190 9.2% $28.48 0

Totals 0 6,602,277 30,564 53,458 59,491 -9,772 -0.1% 549,581 8.3% 656,139 9.9% $31.86 1,028,690

Totals

Class A 557,153 19,771,539 106,465 514,199 73,700 267,042 1.4% 2,266,118 11.5% 2,713,452 13.7% $32.84 1,781,026

Class B 0 17,662,832 73,815 29,444 71,044 -106,595 -0.6% 2,386,037 13.5% 2,616,034 14.8% $24.56 81,116

Totals 557,153 37,434,371 180,280 543,643 144,744 160,447 0.4% 4,652,155 12.4% 5,329,486 14.2% $28.93 1,862,142


Austin Office Statistics - Q4 2014 • 4


Austin Office Insight & StatisticsOffice Insight Austin’s office environment has remained stable from Q4 2017 into Q1 2018. An additional 156,049 s.f.delivered between MopacCentre

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