AUSTIN, Texas — It seems at every corner of Downtown Austin, you can find a new building or construction. But just inside the new developments, many office spaces sit vacant.
"The general trends we're seeing is this is not unique to Austin or Texas; it's across the country, this surge of sublease space," said Steve Triolet, senior vice president at Partners Real Estate.
Triolet said in the Downtown Austin area, there is 1.8 million square feet of sublease space. Of that, TikTok just put its six floors at 300 Colorado up for sublease. Last month, Workrise Technologies put its two floors at One Eleven Congress up for sublease.
But Triolet said Austin’s vacancy rate is nothing to worry about.
"The vacancy rate is still lower than most other major metropolitan areas," Triolet said.
In other major cities like Dallas and Houston, the vacancy rate is above 20%, whereas Austin is only in the mid-teens. Economic analyst Ray Perryman said he isn't worried either.
"That's kind of been the history of Austin and most major cities that are in a growth mode for quite some time," Perryman said.
And he said the vacancies could be due to many different factors.
"It’s a combination of things. Higher interest rates is part of it," Perryman said. “Although most people are coming back to the office now, you still have more working from home than you did before the pandemic started. And then you're seeing the tech industry go through some readjustments right now.”
But despite the adjustments, analysts agree we won't see these vacancies forever.
"Everything points to the vacancy rate is going to rise in Austin," Triolet said.
And what we once saw as unused spaces could be filled again.
"Austin has been through these types of cycles before, and underneath all of that is a is a vibrant, long-term growth economy, one of the strongest economies in the country," Perryman said.
Boomtown is KVUE's series covering the explosive growth in Central Texas. For more Boomtown stories, head to KVUE.com/Boomtown.