Market fundamentals register new benchmarks during late cycle stage
As 2018 closes out, the Austin industrial market registered absorption activity levels that have not been seen since the post-financial crisis rebound period in 2012. Annual market absorption crested 1.7 million sq. ft. of positive demand, while market vacancy fell to 9.4%, despite the delivery of more than 1.7 million sq. ft. of new product to the market throughout 2018. This activity clearly represents the growing importance of Austin as a logistical hub along the I-35 corridor, and the
burgeoning industrial sector in the Hill Country.
Development activity in Q4 2018 was rather muted compared to past quarters, with only one building delivering in the market: a 222,800-sq.-ft. warehouse center in Hays County. However, total development activity in 2018 proved to be expansive, with more than 1.75 million sq. ft. of new product coming online throughout the year.
Leading into 2019, the construction pipeline came close to evening out, with approximately 1.06 million sq. ft. dedicated to Flex/R&D product, and 1.1 million sq. ft. dedicated to Warehouse/Distribution product.
2018 proved to be a burly year for the Austin market. In addition to high absorption levels, vacancy remained below the 10.0% "sweet spot" preferred by developers and average annual asking rates hit $10.53 per sq. ft. As reported by CBRE Research, development activity continues to dominate towards the southeast portion of Austin. Leading into 2019, Hays County has registered approximately 1.1 million sq. ft. of new construction activity. CBRE Research anticipates continued growth in this region as San Antonio and Austin become more connected along the I-35 Corridor.
More Info: https://www.cbre.us/research-and-reports/Austin-Industrial-MarketView-Q4-2018
