Posted tagged ‘Austin Texas’

What a Trip to La Grange Tells Me About Real Estate

March 2, 2009

This is a Repost from my (Patrick Foley) Activerain Blog today that appeared at 3:24 PM CST.

Today I was fortunate enough to take a trip to La Grange, Texas which is about 70 miles from where I live in Austin.  I say forunate because the weather is phenomenal, and I rode most of the way with my windows down and because I had some time to do some thinking which is always nice.  Along the way I realized how many For Lease signs I saw.

To be fair, today isn’t the first day that I saw a lot of For Lease signs, but it really began to hit home for me.  There is a LOT of supply of commercial real estate in the Austin market.  A TON!  More than I’ve seen, though I have only been around this market for 3 years.  What is even more amazing to me is that people are still BUILDING!

Drive along MoPac, I-35, 183, or any other major throughfare and count the For Lease signs, it truly is amazing.  Now what doesnt’ jive, is that market rates haven’t come down all that much, at least not on the surface.  In reality, deals are being done at way below asking rates, but of course nobody aggregates this data, so it is difficult to get a bead on where the market truly is, especially if you don’t happen to be a commercial real estate agent actively working in the Austin market.  I can tell you for a FACT that rates are way below anything you read in a research report, or see offered by a landlord.  If you want proof, call me on my cell at 832.659.5076 and I will prove it to you.

Bottom line – Supply is up, rates are down (remember that microeconmics class you took many years ago that taught you about supply and demand?), supply is only going to grow, and rates are only going to continue to go down (at least in the short-term).

Sublease Market Review 2-15-09

February 18, 2009

Sublease up from 1.227 M to 1.282M sf an increase of 55K sf.
From the initial report approx 100,884 sf have been leased or removed from the report.

The SW subsector continues to lead the market with 454K sf which is 36% of the market.

The Average Class A rates citywide break out as follows:

Avg. NNN = $18.60
Avg. Gross = $22.14
Avg. FS = $21.00

For a breakdown by subsector please review the ‘Rate Analysis’ tab in the spreadsheet

The next report for 3/1/2009 will be out Monday, March 2nd. Thank you again for your support.

What we have seen over the last 6 months is the slowdown in the economy brought on by the financial collapse of mortgage backed securities. As to be expected serioius layoffs and downsizing of local corporations has brought on 500K sf increase in sublease space in the Austin Market. This does not even include the Freescale campus of 282K sf which has been added to the already swollen office market with a vacancy of 18% and rising.

We should all batten down the hatches because its only going to get rougher from here. My experience with previous markets is that even the smart operators get burned because of the domino effect of failed clients, slow paid or unpaid bills, and bankruptcy.

History will tell whether we can spend our way out of this financial crisis.