The trends in Austin’s office market have remained consistent through the first quarter. We’re seeing rapidly increasing rates, decreasing availability of space, and numerous buildings changing hands.

In the Southwest market, we’re seeing the lowest office vacancy rate city-wide at 5 percent. In the Northwest and Far Northwest, vacancy rates are higher at 12 percent and 8 percent respectively. Large blocks of office space over 30,000 square feet remain scarce, but approximately 500,000 square feet is under construction, with another 500,000 square feet of office space in the works.

Austin’s Northwest market is getting a boost. The first phase of The Domain, a massive 57-acre, mixed-use development near the intersection of MoPac Expressway and Braker Lane, opens March 8. It brings a new breed of upscale retail to Austin with the arrival of stores like Neiman Marcus and Tiffany & Co. The completion of the first phase includes 93,000 square feet of office space - 75,000 square feet of which is available for lease.

New building owners, increasing rental rates and more competition for space means tenants looking to renew or expand will face an increasingly complex negotiation. New ownership will likely mean a more traditional tenant-landlord environment in Austin. There’s a 90-day window of opportunity as new building management begins to take hold and shake things up.

Winter does not officially end until March 21, but it’s long gone here in Austin. 

Why is Austin growing? It's the quality of life, right?

At least once a day you'll hear someone say, “I moved here because of the quality of life” as they explain the reason they left some other city and moved to Austin.

So what is this “quality of life” that attracts so many people, and why does Austin seem to have an abundance of it? Being from Austin, and having heard the explanation of why our city is growing countless times, I see a pattern.

The environment plays an important role in relocation choices. A plethora of public parks, lakes, and other free recreational areas is a big boost to the quality of life in Austin. And many of our citizens are concerned with protecting those assets, even though we sometimes take these public areas for granted because we see them everyday. It's easy to think, “Doesn’t every city have parks, lakes, and municipal golf courses 15 minutes away?”

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TREND WATCH: MORE AUSTIN OFFICE SPACE ON THE WAY IN '07

2007 Marks First Year More Than 1M Sq. Ft. of New Office Space Expected To Deliver Since 2003

Continuing a trend seen over the past two years, developers are expected to deliver more office space in the Austin region in 2007 than the year before.

According to CoStar Group's 2006 Year-End Office Report, approximately 1.38 million square feet of new office space is expected to reach completion this year, the first time more than one million square feet of new office space has been added to the market since 2003.

Since peaking in 2001 when 3.9 million square feet of office space was added to the market, the current cycle bottomed out in 2004 when only about 500,000 square feet of new office space came online. Since then, the amount of new space deliveries has crept up slowly, approximately 600,000 square feet in 2005 and 833,248 square feet last year.

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