Citywide positive net absorption reaches all time high in the nation’s fastest growing city

1. Citywide positive net absorption reaches all
time high in the nation’s fastest growing city
Research &
Forecast Report
AUSTIN | OFFICE
Q3 2015
Hannah Tysor Senior Marketing & Research Coordinator | Houston & Austin
Among the 50 largest U.S. cities, Austin is the #1 fastest growing
city based on population growth between July 2013 and July 2014
according to Forbes. Austin grew at 2.9% over the year, beating out
other major cities by a long shot. Tenants moving into new office
space during Q3 2015 amount to a positive net absorption of 871,272
square feet, the highest positive net absorption ever recorded.
Class A rental rates in Austin’s CBD increased by 7.5% over the
quarter - a sign that despite the seemingly endless new construction,
the demand for office space in the CBD is not slowing down.
Four buildings totaling 463,502 square feet delivered in the third
quarter, and just under two million square feet of office space is
currently under construction. Of that two million, 1,002,050 square
feet is scheduled to deliver in Q4 2015. Projects delivered in Q3
include Rollingwood Center Buildings 1 & 2 in southwest Austin.
The citywide average rental rate increased slightly by 0.46% from
$30.16 per SF to $30.30 per SF over the quarter. The average CBD
Class A rental rate increased dramatically by 7.5% over the quarter
from $41.50 to $44.60. Suburban submarkets also saw an increase
in rental rates as the average Class A suburban rental rate increased
from $33.43 per square foot to $33.85 per square foot over the
quarter.
According to the Texas Workforce Commission, Texas’ unemployment
rate of 4.4% is among the lowest that the state has ever seen. In the
state’s capital city, unemployment was at a mere 2.8% at the end of
the third quarter 2015, 100 basis points lower than it was last year.
Vacancy & Availability
Austin’s citywide vacancy rate decreased 70 basis points from
13.2% to 12.5% between quarters, continuing its gradual decrease
since Q2 of 2009. Vacancy in the CBD remains lower than the
average, at 8.3%, a decrease of 80 basis points since the end of the
second quarter. Overall suburban vacancy also decreased over the
quarter from 14.2% to 13.6%.
The suburban Class A vacancy rate increased 70 basis points over
Summary Statistics
Austin Office Market Q3 2014 Q2 2015 Q3 2015
Vacancy Rate 13.0% 13.2% 12.5%
Net Absorption
(Million Square Feet)
.512 .435 .871
New Construction
(Million Square Feet)
.0 .581 .463
Under Construction
(Million Square Feet)
2.862 2.223 1.996
Class A Vacancy Rate
CBD
Suburban
12.2%
12.5%
11.2%
13.5%
9.8%
14.2%
Asking Rents
Per Square Foot Per Year
Average $28.75 $30.16 $30.30
CBD Class A $42.26 $41.50 $44.60
Suburban Class A $32.11 $32.97 $33.43
Market Indicators
Relative to prior period
Annual
Change
Quarterly
Change
Quarterly
Forecast*
VACANCY
NET ABSORPTION
NEW CONSTRUCTION
UNDER CONSTRUCTION
*Projected

2. 2 Austin Research & Forecast Report | Q3 2015 | Office | Colliers International
the quarter from 13.5% to 14.2%, continuing its gradual increase since Q4
2013. The average suburban Class B vacancy decreased 200 basis points over
the quarter from 16.1% to 14.1%
Absorption, New Supply and Vacancy
Absorption & Demand
Austin’s office market posted 871,282 SF of positive net absorption in Q3
2015, most of which occurred in CBD’s Class A office buildings, and in the far
northwest, northwest and southwest submarkets. The northwest submarket
posted the largest positive absorption of 306,849 SF, where Indeed.com, the
#1 job searching website, moved into 220,000 SF at Champions Office Park.
The southwest submarket posted the second largest gain with 155,534 SF of
positive net absorption due primarily to ARM, Inc who moved into 101,867 SF at
Encino Trace I. The CBD posted the third largest gain of 129,187 SF of positive
net absorption almost completely in Class A office space. Cirrus Logic has pre-
leased 85,000 SF at Shoal Creek Walk, set to begin construction next month.
Additional transactions in the CBD in late Q2 and early Q3 include AllClear ID
leasing up 21,610 SF at 816 Congress and shortly thereafter expanding into
33,720 SF at their existing location across the street at 823 Congress for a
total transaction size of 55,330 SF.
The demand for office space in Austin has caused a push to expand operations
into secondary locations, such as in the above transaction, due to a lack of
supply. Alternatively, corporations find office space outside of the CBD. Overall
positive net absorption for suburban office space reached 742,095 SF at the
end of Q3, nearly double what it was last quarter, and far higher than any time
in history.
Rental Rates
The citywide average rental rate increased slightly by 0.46% from $30.16 per SF
to $30.30 per SF over the quarter. Behind the CBD, where rental rates are now
averaging at $42.37 per SF, the west central submarket has the second highest
average rates at $37.99 per SF.
For Class A office space, rates in the CBD increased by 7.5% over the quarter
to $44.60 per SF. The second highest average Class A rental rates are in west
central submarket at $41.96 per SF.
Citywide average Class B rental rates are much lower than Class A space,
averaging at $24.63 while Class A citywide average rental rates are $35.67 per
SF.
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
-200,000
0
200,000
400,000
600,000
800,000
1,000,000
Net Absorption New Supply Vacancy
Job Growth & Unemployment
(not seasonally adjusted)
UNEMPLOYMENT 08/14 08/15
AUSTIN 3.9% 2.8%
TEXAS 5.3% 4.4%
U.S. 6.3% 5.2%
JOB GROWTH
Annual
Change
# of Jobs
Added
AUSTIN 3.4% 31.1K
TEXAS 1.8% 212K
U.S. 2.1% 2.9M
CBD vs. Suburban
CLASS A OFFICE VACANCY
$27.00
$29.00
$31.00
$33.00
$35.00
$37.00
$39.00
$41.00
$43.00
Class A Office Rents
CBD Rents Suburban Rents
CLASS A OFFICE RENTS
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
CBD VS. Suburban
Class A Office Vacancy
CBD Vacancy Suburban Vacancy
$27.00
$29.00
$31.00
$33.00
$35.00
$37.00
$39.00
$41.00
$43.00
$45.00
Class A Office Rents
CBD Rents Suburban Rents

3. 33 Austin Research & Forecast Report | Q3 2015 | Office | Colliers International
Q3 2015 Top Office Lease Transactions
BUILDING NAME/ADDRESS SUBMARKET SF TENANT LEASE DATE
7700 W Parmer Ln. Bldg C Far Northwest 125,007 Electronic Arts, Inc Aug-15
7700 W Parmer Ln, Bldg B Far Northwest 121,275 Oracle Corporation Aug-15
1601 S MoPac Expy Southwest 99,047 Logitech1
Jul-15
301 Congress Ave CBD 95,537 RetailMeNot1
Aug-15
835 W 6th St CBD 84,872 Cirrus Logic Aug-15
7700 W Parmer Ln, Bldg A Far Northwest 61,471 Dun & Bradstreet Corp. Aug-15
301 Congress Ave CBD 41,803 Gerson Lehrman Group Jul-15
823 Congress Ave CBD 33,800 AllClear ID Sep-15
Park Centre Building II Northwest 32,319 Motion Computing, Inc Jul-15
98 San Jacinto Blvd CBD 28,000 TechSpace Jul-15
12301 Research Blvd Northwest 23,379 Site Stuff, Inc Aug-15
One American Center CBD 22,314 WeWork2
Jul-15
816 Congress Ave CBD 21,000 AllClear ID Jul-15
501 Congress CBD 20,391 Spanning Cloud Apps Jul-15
11501 Alterra Pky - Domain 7 North 17,811 Unknown Jul-15
One American Center CBD 14,000 Unknown Aug-15
98 San Jacinto Blvd CBD 13,492 Insurance Zebra, Inc Aug-15
1806 Rio Grande St CBD 11,452 uStudio, Inc Aug-15
12600 Hill Country Blvd Southwest 10,343 ZEEP3
Aug-15
Leasing Activity
Austin’s office leasing activity recorded 887,637 SF in Q3 2015. Major transactions this quarter included new leases for Electronic Arts,
Inc. who will take 125,007 SF at 7700 Parmer - Bldg B, and Oracle who will occupy 121,275 SF in 7700 Parmer - Bldg C.
1
Renewal
2
Expansion
3
Sublease
4
Pre-lease/proposed or under construction
Q3 2015 Significant Sales Transactions – (100,000 SF or greater)
BUILDING NAME SUBMARKET RBA (SF) YEAR BUILT BUYER SELLER SALE PRICE $/SF CLOSED
Bank of American Center CBD 258,176 1975 KBS REIT III Stream Realty Partners Undisclosed Undisclosed Aug-15
Domain 7* North 221,973 2015 TIER REIT, Inc
Deutsche Asset & Wealth
Management
$66,800,000 $301 Jul-15
501 Congress Ave CBD 191,517 1961
AFIAA U.S.
Investment, Inc
Stream Realty Partners $79,100,000 $645 Aug-15
Domain 3* North 179,006 2001 TIER REIT, Inc
Deutsche Asset & Wealth
Management
$53,800,000 $301 Jul-15
Domain 4* North 152,992 2001 TIER REIT, Inc
Deutsche Asset & Wealth
Management
$46,000,000 $301 Jul-15
Domain 1* North 114,665 2014 TEIR REIT, Inc
Deutsche Asset & Wealth
Management
$34,500,000 $301 Jul-15
Sales Activity
Austin’s office investment sales activity included three sales transactions (including one portfolio sale) with an average sale price of $369
per SF.
Sources: CoStar and Real Capital Analytics
*Part of a portfolio

4. 4 Austin Research & Forecast Report | Q3 2015 | Office | Colliers International
Austin Office Market Summary (CBD, Suburban, & Overall)
INVENTORY DIRECT VACANCY
SUBLEASE
VACANCY
VACANCY VACANCY RATE (%)
NET ABSORPTION
(SF)
RENTAL
RATE
CLASS
# OF
BLDGS.
TOTAL (SF) (SF)
RATE
(%)
(SF)
RATE
(%)
TOTAL
(SF)
Q3-2015 Q2-2015 Q3-2015 Q2-2015
AVG
($/SF)
CBD
A 26 6,741,601 630,637 9.4% 28,470 0.4% 659,107 9.8% 11.2% 141,732 -29,385 $44.60
B 32 2,382,745 84,989 3.6% 4,715 0.2% 89,704 3.8% 2.9% -20,590 43,619 $36.57
C 9 470,243 46,500 9.9% 0 0.0% 46,500 9.9% 11.6% 8,045 -10,605 $23.46
Total 67 9,594,589 762,126 7.9% 33,185 0.3% 795,311 8.3% 9.1% 129,187 3,629 $42.37
SUBURBAN
A 162 18,704,336 2,288,938 12.2% 367,227 2.0% 2,656,165 14.2% 13.5% 366,740 434,272 $33.43
B 324 17,862,584 2,366,691 13.2% 154,166 0.9% 2,520,857 14.1% 16.1% 354,930 -42,372 $23.96
C 59 3,025,628 189,236 6.3% 3,138 0.1% 192,374 6.4% 7.0% 20,415 38,150 $16.71
Total 545 39,592,548 4,844,865 12.2% 524,531 1.3% 5,369,396 13.6% 14.2% 742,085 430,050 $28.39
OVERALL
A 188 25,445,937 2,919,575 11.5% 395,697 1.6% 3,315,272 13.0% 11.4% 508,472 379,970 $35.67
B 356 20,245,329 2,451,680 12.1% 158,881 0.8% 2,610,561 12.9% 10.6% 334,340 13,532 $24.63
C 68 3,495,871 235,736 6.7% 3,138 0.1% 238,874 6.8% 6.1% 28,460 41,685 $17.65
Total 612 49,187,137 5,606,991 11.4% 557,716 1.1% 6,164,707 12.5% 13.2% 871,272 435,187 $30.30
INVENTORY
DIRECT
VACANCY
SUBLEASE
VACANCY
VACANCY VACANCY RATE (%) NET ABSORPTION (SF)
RENTAL
RATE
CLASS
# OF
BLDGS.
TOTAL (SF) (SF)
RATE
(%)
(SF)
RATE
(%)
TOTAL
(SF)
Q3-2015 Q2-2015 Q3-2015 Q2-2015
AVG
($/SF)
CEDAR PARK
A 2 232,274 14,723 6.3% 0 0.0% 14,723 6.3% 6.3% 0 22,135 $32.07
B 3 142,622 0 0.0% 0 0.0% 0 0.0% 1.3% 1,800 1,300 $27.20
Total 5 374,896 14,723 3.9% 0 0.0% 14,723 3.9% 4.4% 1,800 23,435 $32.07
CENTRAL
A 3 474,288 81,735 17.2% 0 0.0% 81,735 17.2% 17.2% 0 3,769 $34.30
B 35 1,932,024 207,257 10.7% 3,979 0.2% 211,236 10.9% 12.4% 27,922 -4,392 $22.99
C 16 939,288 23,862 2.5% 3,138 0.3% 27,000 2.9% 3.5% 5,679 21,381 $16.42
Total 54 3,345,600 312,854 9.4% 7,117 0.2% 319,971 9.6% 10.6% 33,601 20,758 $24.72
EAST
A 2 104,821 0 0.0% 0 0.0% 0 0.0% 0.0% 0 0 -
B 14 2,273,894 781,951 34.4% 0 0.0% 781,951 34.4% 34.5% 2,802 1,612 $19.43
C 4 141,447 29,050 20.5% 0 0.0% 29,050 20.5% 20.5% 0 0 $19.98
Total 20 2,520,162 811,001 32.2% 0 0.0% 811,001 32.2% 32.3% 2,802 1,612 $19.44
FAR NORTHEAST
Total 1 23,408 0 0.0% 0 0.0% 0 0.0% 0.0% 0 0
FAR NORTHWEST
A 11 1,781,263 229,183 12.9% 51,094 2.9% 280,277 15.7% 20.8% 89,839 68,681 $30.56
B 8 327,418 28,354 8.7% 0 0.0% 28,354 8.7% 7.8% -2,854 0 $21.21
C 1 21,964 0 0.0% 0 0.0% 0 0.0% 0.0% 0 0
Total 20 2,130,645 257,537 12.1% 51,094 2.4% 308,631 14.5% 18.6% 86,985 68,681 $28.71
Austin Suburban Office Market Summary

5. 5 Austin Research & Forecast Report | Q3 2015 | Office | Colliers International
Austin Suburban Office Market Summary - Continued
INVENTORY DIRECT VACANCY
SUBLEASE
VACANCY
VACANCY VACANCY RATE (%)
NET ABSORPTION
(SF)
RENTAL
RATE
CLASS
# OF
BLDGS.
TOTAL (SF) (SF)
RATE
(%)
(SF)
RATE
(%)
TOTAL
(SF)
Q3-2015 Q2-2015 Q3-2015 Q2-2015
AVG
($/SF)
NORTH
A 11 1,526,977 168,054 11.0% 22,226 1.5% 190,280 12.5% 17.0% 69,343 60,714 $32.76
B 31 1,974,436 101,971 5.2% 67,466 3.4% 169,437 8.6% 8.8% 3,920 2,960 $22.39
C 2 102,925 0 0.0% 0 0.0% 0 0.0% 24.1% 24,759 0 $18.98
Total 44 3,604,338 270,025 7.5% 89,692 2.5% 359,717 10.0% 12.7% 98,032 63,674 $29.48
NORTHEAST
B 17 1,253,254 139,063 11.1% 1,470 0.1% 140,533 11.2% 13.2% 25,017 4,934 $19.08
C 9 332,614 109,461 32.9% 0 0.0% 109,461 32.9% 29.1% -12,807 3,206 $12.32
Total 30 1,961,014 451,418 23.0% 1,470 0.1% 452,888 23.1% 15.5% 13,569 8,140 $19.79
NORTHWEST
A 71 6,654,942 549,808 8.3% 84,410 1.3% 634,218 9.5% 9.8% 17,559 111,806 $33.43
B 96 4,233,849 328,471 7.8% 66,153 1.6% 394,624 9.3% 16.2% 289,499 -33,828 $29.03
C 4 361,355 1,699 0.5% 0 0.0% 1,699 0.5% 0.4% -209 -1,313 $25.18
Total 171 11,250,146 879,978 7.8% 150,563 1.3% 1,030,541 9.2% 11.9% 306,849 76,665 $31.19
ROUND ROCK
A 1 87,000 0 0.0% 0 0.0% 0 0.0% 0.0% 0 3,879 $18.00
B 12 460,074 37,725 8.2% 0 0.0% 37,725 8.2% 9.7% 6,867 -1,605 $20.00
C 4 167,998 1,836 1.1% 0 0.0% 1,836 1.1% 1.1% 0 0
Total 17 715,072 39,561 5.5% 0 0.0% 39,561 5.5% 6.5% 6,867 2,274 $19.84
SOUTH
A 4 372,497 9,761 2.6% 2,798 0.8% 12,559 3.4% 2.9% -1,635 28,052 $34.97
B 23 1,216,351 57,309 4.7% 8,144 0.7% 65,453 5.4% 5.9% 6,607 -11,381 $28.44
C 11 651,834 14,069 2.2% 0 0.0% 14,069 2.2% 2.5% 2,281 514 $22.20
Total 38 2,240,682 81,139 3.6% 10,942 0.5% 92,081 4.1% 4.4% 7,253 17,185 $28.83
SOUTHEAST
B 11 1,263,240 500,447 39.6% 0 0.0% 500,447 39.6% 39.5% -1,860 18,360 $20.01
C 4 161,933 3,502 2.2% 0 0.0% 3,502 2.2% 2.5% 561 0 $15.50
Total 14 1,425,173 503,949 35.4% 0 0.0% 503,949 35.4% 35.3% -1,299 18,360 $19.81
SOUTHWEST
A 50 6,626,125 1,013,113 15.3% 136,185 2.1% 1,149,298 17.3% 15.0% 164,637 114,808 $35.32
B 69 2,579,314 168,823 6.5% 6,954 0.3% 175,777 6.8% 6.5% -8,207 -9,198 $27.28
C 3 94,138 5,757 6.1% 0 0.0% 5,757 6.1% 5.2% -896 22,138 $27.31
Total 122 9,299,577 1,187,693 12.8% 143,139 1.5% 1,330,832 14.3% 12.4% 155,534 127,748 $34.06
WEST CENTRAL
A 3 469,003 19,667 4.2% 70,514 15.0% 90,181 19.2% 24.7% 25,638 -4,489 $41.96
B 4 182,700 15,320 8.4% 0 0.0% 15,320 8.4% 10.3% 3,417 1,151 $32.30
C 1 50,132 0 0.0% 0 0.0% 0 0.0% 2.1% 1,047 6,364 $28.25
Total 8 701,835 34,987 5.0% 70,514 10.0% 105,501 15.0% 19.3% 30,102 3,026 $37.99

6. 6 Austin Research & Forecast Report | Q3 2015 | Office | Colliers International
Office Development Pipeline
Almost two million square feet of office space was under construction during Q3 2015. Only four buildings delivered this quarter including
Rollingwood Center Buildings I & II. Almost half of the buildings currently under construction plan to deliver in Q4 2015.
BUILDING NAME ADDRESS SUBMARKET SF
PRE-
LEASED
DEVELOPER
EST.
DELIVERY
Green Water Treament Plant 500 W 2nd St CBD 500,512 41.2% Trammel Crow Co Jan-17
5th & Colorado 201 W 5th St CBD 179,846 9.5% Lincoln Property Company Mar-16
Research Park Plaza Bldg V 12301 Research Blvd Northwest 172,854 0.0% Cousins Properties
Incorporated
Nov-15
Lamar Central 3800 N Lamar Blvd West Central 168,752 28.1% Highland Resources, Inc. Nov-15
Encino Trace 2 5707 Southwest Pky Southwest 158,137 14.6% Koontz McCombs Nov-15
Quarry Oaks III 10901 Stonelake Blvd Northwest 137,615 100.0% Riverside Resources Dec-15
Aspen Lake Two 13785 US-183 Far Northwest 128,700 100.0% Patrinely Group Nov-15
Domain 1 11801 Domain Blvd North 124,578 0.0% Endeavor Real Estate Group Mar-16
Paloma Ridge Bldg A 13650 N FM 620 Cedar Park 106,200 0.0% Stream Realty Oct-15
Paloma Ridge Bldg B 13620 N FM 620 Cedar Park 106,200 0.0% Stream Realty Nov-15
317 Grace Ln 317 Grace Ln Southwest 87,748 2.5% Equitable Commercial Realty Dec-16
Domain 5 2901 Esperanza Crossing North 74,804 0.0% Endeavor Real Estate Group Feb-16
411 W Main St 411 W Main St Round Rock 26,563 0.0% 411 Partners, LLC Jan-16
NorthShore 110 San Antonio St CBD 23,592 100.0% Trammel Crow Co Oct-15
QUOTED GROSS RENTAL RATES FOR EXISTING TOP PERFORMING OFFICE BUILDINGS
BUILDING NAME ADDRESS SUBMARKET RBA (SF)
YEAR
BUILT
%
LEASED
AVAIL.
SF
RENT
($/SF)
OWNER
Frost Bank Tower 401 Congress Ave. CBD 535,078 2003 96.90% 38,000 $54.00 Parkway Properties, Inc.
One Congress Plaza 111 Congress Ave. CBD 518,385 1985 83.20% 119,441 $46.69 Parkway Properties, Inc
300 West Sixth 300 W. 6th Street CBD 454,225 2001 99.70% 39,814 $54.52 Parkway Properties, Inc.
301 Congress 301 Congress Ave. CBD 418,338 1986 90.90% 66,820 $49.95 National Office Partners, LP
100 Congress 100 Congress Ave. CBD 411,536 1987 94.10% 45,161 $33.65 Metlife, Inc.
San Jacinto Center 98 San Jacinto Blvd. CBD 410,248 1987 90.10% 68,207 $52.15 Parkway Properties, Inc.
7700 W Parmer Ln -
Bldg. B
7700 W Parmer Ln - Bldg. B Far Northwest 350,000 1999 90.60% 31,500 $35.20 Unknown
7700 W. Parmer Ln -
Bldg. C
7700 W. Parmer Ln. - Bldg.
C
Far Northwest 282,000 1999 91.80% 23,693 $35.33 Unknown
UFCU Plaza 8303 N. Mopac Expy Central 246,869 1987 92.80% 33,793 $32.15 University Federal Credit
Union
Note: Avail. SF includes direct and sublet space as well as any future available space listed.
Source: CoStar Property

7. 7 <<region>> Research & Forecast Report | Quarter Year or Date | <<Location / Sector>> | Colliers International7 North American Research & Forecast Report | Q4 2014 | Office Market Outlook | Colliers International
Copyright © 2015 Colliers International.
The information contained herein has been obtained from sources deemed reliable. While
every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No
responsibility is assumed for any inaccuracies. Readers are encouraged to consult their
professional advisors prior to acting on any of the material contained in this report.
Colliers International | Market
000 Address, Suite #
000 Address, Suite #
+1 000 000 0000
colliers.com/<<market>>
7 North American Research & Forecast Report | Q4 2014 | Office Market Outlook | Colliers International
Copyright © 2015 Colliers International.
The information contained herein has been obtained from sources deemed reliable. While
every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No
responsibility is assumed for any inaccuracies. Readers are encouraged to consult their
professional advisors prior to acting on any of the material contained in this report.
Colliers International | Austin
515 Congress Avenue, Suite 1700
Austin, Texas 78701
+1 512 539 3000
colliers.com/texas/austin
FOR MORE INFORMATION
Hannah Tysor
Senior Marketing & Research Coordinator | Houston & Austin
+1 713 830 2192
hannah.tysor@colliers.com
Q3 2015 Highlights
Class A (52%) Class B (41%) Class C (7%)
25.4M SF 20.2M SF
3.5M SF
1.9M SF
12.5%
Current Vacancy
463,502 SF
Delivered Inventory
49.2
Million SF
LEADING THE NATION
Austin is ranked No. 1 for real estate development
across all 75 markets surveyed in Emerging
Trends in Real Estate, an annual report published
by the Urban Land Institute and PwC LLP. Austin
ranked second in the nation for overall real estate
prospects.
871K
380K
666K
435K
Square Feet
Q3
Q4
Q1
Q2
2015
512KQ3
2014
Highest
Positive Net
Absorption
Ever
Recorded
CITYWIDE POSITIVE NET ABSORPTION
TOTAL OFFICE
INVENTORY