Marcus and Millichap, a commercial real estate company headquartered in Calabasas, California, has published its midyear 2024 Austin Industrial Market Report, and it finds both vacancy and rent rates slightly on the rise in that sector.
The company’s researchers found that Austin’s industrial vacancy rate reached 6.7 percent by mid-2024, a rise driven by the addition of 7.4 million square feet of new supply during the first half of the year. The high rate of construction over the past decade — by the end of 2024, roughly 39 million of the city's 115 million square feet of industrial inventory will have been built since 2017 — has been a major factor in increase in vacancies, which it predicts will hit the double-digit mark this year:
The volume of metrowide vacant stock rose by more than 7.3 million square feet across 2022-2023, and this year’s substantial delivery slate is expected to elevate that figure by an additional 3.3 million square feet. Upward vacancy pressure is more evident among 100,000-square-foot-plus spaces, however, as larger facilities have accounted for a significant share of new construction in recent periods.
Smaller facilities — those measuring less than 10,000 square feet — face less competition in the area and had lower vacancy rates, it adds.
Despite rising overall vacancy rates, the report predicts that the average asking rent in the metro is expected to rise to $14.64 per square foot in 2024, continuing a trend of strong rental increases for the fifth consecutive year.
Researchers attribute the ability to increase rents while vacancies grow to rising employment levels in the Austin metro, where 29,000 jobs were added in the first half of 2024 and overall job growth is predicted to increase by 2.2 percent by the end of the year.
“Austin’s tech-driven industrial growth continues to drive demand, making it one of the strongest markets in the region despite some near-term vacancy challenges," said Marcus and Millichap’s Tyler Ranft.
