Downtown views might not cut it anymore for getting workers back into the office.
According to real estate agency CBRE, the U.S. downtown office vacancy rate topped office vacancies in the suburbs in the second quarter.
It’s the first time it’s happened in more than 20 years and reveals that companies might be making a shift out of city centers whether it’s to get a better deal on office space or to save workers on commute time and make a return to the office more attractive.
But even with this flip nationwide, it hasn’t appeared to reach Austin just yet. In the first quarter of this year, office vacancy rates in downtown and the suburbs were even at nearly 20%. Then in the next quarter, CBRE reported the suburban vacancy rate just above 20% while downtown’s was 15.5%.
It could just signal that the trend is slower to catch on in Austin as nationwide momentum for suburban office space carries on.
This week, commercial real estate agency Workspace Property Trust announced it had acquired approximately eight million square feet across 53 suburban office buildings in a deal valued at $1.1 billion. It includes Texas metros like Houston and Dallas, as well as Austin’s tech competitors like Silicon Valley and Seattle.
Workspace described the deal as creating convenient and attractive locations for the workforce.
“Driven by the redefinition of work as a result of the pandemic and the continued and unabated demographic shift to the suburbs, more and more Fortune 1000 corporations are rethinking their presence in downtown markets and relocating many of their office needs to suburban locations across the U.S.” Roger W. Thomas, a Workspace founder said. “Workspace is poised to lead this transformation.”
Thomas went on to note a few major corporations who have announced moves to suburban markets like Intel, Oracle, Tesla, Honeywell and more.
Vacancy rates in U.S. offices (CBRE)
Austin’s suburbs have become an ideal spot for some, including Leander which has reigned as one of the fastest growing cities in the U.S. for two years in a row as people are drawn to its more affordable cost of living.
More and more companies are looking at the suburbs too, even if it’s not strictly for office space. This spring, Meta announced an $800 million data center in Temple. And recently, Skybox Datacenters and Prologis partnered to purchase 200 acres in Hutto for a data center and are planning for another $548 million data center in Pflugerville.
Downtown and city limits can still flex its growth, however. CBRE notes that Austin joins Nashville, Charlotte and Boston as having the most space under construction as a share of their existing inventory. At least part of that excitement is set in downtown with several projects expected to break ground by the end of the year. Among those, CBRE reports, is the skyscraper poised to be the tallest tower in the state that would add another 700,000 square feet of office space to the construction pipeline.
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With major entertainment events slated for October, the Austin-Bergstrom International Airport is gearing up for a busy month.
Artists and music lovers are set to pack into Zilker Park for The Austin City Limits Music Festival in the coming two weekends. Following that, Formula One will bring racing fans to the Circuit of the Americas.
For those two events, the airport is anticipating high passenger days with 30,000 or more people departing flights.
ABIA recommends arriving at least two and a half hours in advance for domestic flights on those days. For ACL, it's expected on both Sundays of the festival along with the Monday and Tuesday after. The F1-driven high passenger days are expected on Oct. 20-21 and Oct. 23-26.
\u201c#AustinCityLimits visitors, you\u2019re in for a weird and wild ride \ud83e\udd18\u262e\ufe0f \n\nFlying in or out of our airport? We got firm and fun tips for you: https://t.co/RawVRalOXN\u201d— Austin-Bergstrom International Airport (AUS) (@Austin-Bergstrom International Airport (AUS)) 1664894083
F1, especially, could draw in loads of travelers as the three-day event saw 400,000 attendees last year. ABIA warns that highways leading to the airport may see even higher traffic than usual around the event and that travelers should plan their route accordingly.
Bailey Grimmett, a spokesperson for ABIA, said travel numbers come in 24 hours in advance. So, it's hard to predict if the airport will see travel volumes at the same levels that have happened around previous F1 races or if it'll top ACL's flight traffic.
Still, she says historical knowledge points to a chance for it.
“We've had that Monday after F1 break the record for single busiest in airport history," Grimmett said. "So context clues I would say yes, but I can't confirm that. But the historical background points to that."
In anticipation of the high volume of flyers, the airport received additional TSA officers for security screening through the end of October. To prepare even further, the Department of Aviation and partners hosted a job showcase and hiring fair to address the continued labor shortage the airport has experienced.
Relief from hectic travel days is on the horizon with November likely to see a slowdown.
"I don't anticipate it will be as busy as October just because we don't have as many events going on," Grimmett said. "Thanksgiving is kind of our primary holiday that we see a lot of passengers coming in and out of the airport."
Elon Musk has proposed once again to buy Twitter for $54.20 a share.
The news that Musk is offering to carry on with the $44 billion buyout was first reported by Bloomberg. Now, a filing with the Securities and Exchange Commission shows Musk made the proposal in a letter to the tech giant on Monday.
The New York Stock Exchange temporarily halted trading in Twitter stock twice Tuesday, first because of a big price move and the second time for a news event, presumably the announcement of Musk's renewed offer.
While the per share offer price on this latest proposal remains the same as the original offer, it’s unclear if Musk has made other term changes or if Twitter would reject it. According to other reports, a deal could be reached this week.
The stock closed at $52.00/share Tuesday, indicating market uncertainty around the $54.20 offer.
After Musk informed Twitter of plans to terminate the original agreement in July, Twitter sued. A trial has been expected in Delaware Chancery Court on Oct. 17.
With the proposition of a buyout on the table again, it revives the question of whether Musk might move Twitter from San Francisco to Central Texas.
He’s done so with some of his other companies. Tesla’s headquarters in southeast Travis County had its grand opening earlier this year and tunneling business The Boring Company moved to Pflugerville. At least two other Musk companies, SpaceX and Neuralink, have a Central Texas presence without being headquartered here.
Technology journalist Nilay Patel this afternoon voiced concerns that owning Twitter and Tesla together could be problematic for Musk, as his Tesla manufacturing facilities in Germany and China are both in countries that have disputes with Twitter over content moderation and censorship.
Telsa shares fell after the Twitter news became public, before rallying to close up, at $249.44.
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