Skip Ribbon Commands
Skip to main content

News release


Austin's Skyline inventory is in short supply while rents are soaring

JLL’s 2017 Skyline report reveals creative tenants returning to downtown offices

AUSTIN, July 18, 2017 – When it comes to premium office space across the United States and Canada, creative firms are doing what they do best: driving change. JLL's 2017 Skyline shows that creative's boomerang to this coveted space and the eighth straight year of occupancy growth are contributing to record rents and a landlord-friendly market. In Austin, the market's unique blend of innovation, job growth and low cost of living has won it national attention and creates a unique culture attracting new clients and investors.

Skyline is JLL's annual look at office space within some of the tallest buildings in 57 markets across North America. Some Austin highlights from this year's edition include:

  • Skyline vacancy within Austin remains below the national average at 6.5 percent, with vacancy of Trophy buildings – those ultra-premium office towers within a Skyline – at just 8.8 percent
  • Rents within Austin Skyline buildings reached $58.81 per square foot
  • Buyers, on the hunt for higher investment returns, are attracted to Austin's economic growth and skyrocketing demand for space in Skyline assets
  • The construction pipeline remains healthy, but shows signs of a temporary slowing due to development restrictions and boundaries

"Net absorption has far outpaced office deliveries between 2013 and 2016, and appears on track to do so again in 2017," said Kevin Kimbrough, Senior Vice President, JLL Agency Leasing Co-Lead. "The market's blend of innovation, job growth and quality of life creates a unique culture that appeals to everyone - investors, companies and top talent alike."

Landlords on top, for now

The net change in occupied space within Austin's Skyline buildings, also called net absorption, moved down; indications point to a substantial rebound in net absorption in calendar year 2017. Navigating challenges to future development - environmental, financial and legislative – remains key to the future of office growth within the CBD.

"Owners are focused on providing first class amenities to their current and future tenants," said Rachel Coulter, Senior Vice President, JLL Agency Leasing Co-Lead. "Retaining tenants is critical in a market where new buildings are being constructed and have every amenity you can think of including roof top decks, bike storage, showers, lockers and cafes."

Nationally, Skyline vacancy sits at 12.9 percent. Austin's Skyline vacancy is half of that, at 6.5 percent. The overall national vacancy average is 14.5 percent.

A rising tide lifts all boats

Tenants still want that Skyline cache and immediate access to amenities, which is why rents jumped to $58.81 per square foot on average. For those coveted few Trophy spaces, that premium goes to $61.87 per square foot. By comparison, New York stands above all others with an average Skyline rent of $87.90.

Nashville hit a high note with the biggest year-over-year rent growth (+27.4 percent). Austin's year-over-year rent growth followed close behind (+24.2 percent).

Buyers selectively target the skyline

"Investors see Austin as one of the US cities with the brightest economic futures," said Jeff Coddington, Senior Vice President, JLL Capital Markets. "We have thought-leading companies relocating to and expanding in the market in an extremely meaningful way. Austin provides a uniquely good quality of life which attracts talented people to the region and overall cost of doing business that provides a significant cost advantage on a coastal basis. Rising rents due to lack of supply and increased demand give rise to increases in value, plain and simple. Add to this increased investor demand, particularly from overseas capital, and value increases."

So, just how much do investors love the Skyline?

  • Skyline acquisitions were up by more than $1.2 billion in 2016, while sales in the broader office market fell by nearly 10 percent – the sector's first decline since 2009.
  • Investors are increasingly looking to secondary markets for Skyline acquisitions. Ten secondary markets surpassed $300 million of total volume (not just Skylines) in 2016. Atlanta, Dallas and Miami led the way.
  • Offshore investment increased to 40.3 percent of total Skyline volume in the first quarter of 2017.
  • Forty-two Trophy assets were traded in 2016, increasing volume by $7.2 billion year-over-year.

Getting quieter on the construction front

About 345,000 square feet of Skyline space remains in the construction pipeline in Austin, but the delivery of a handful of large projects and tightening in construction lending could be leading to a slowdown in new deliveries.

"Developers have not been able to do as much spec development due to difficulty with construction financing, barriers to entry due to environmental factors and difficulty obtaining permitting from the city," said Coulter. "Tenants are trying to be efficient with their space planning to pack more employees into the space to justify the growing rent. There are many challenges with this because older buildings are not necessarily designed to accommodate this type of density."

About the Skyline

Investors and tenants can access JLL's Skyline via a digital platform. The interactive website features JLL's exclusive market insights regarding office supply, demand, rents, leverage and investment into 57 markets across the United States and Canada. It gives users the ability to compare and contrast individual markets or multiples of markets, as well as individual properties or portfolios. In addition, the site offers videos and infographics, all of which are available via mobile access.

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At the end of the first quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 78,000. As of March 31, 2017, LaSalle Investment Management had $58.0 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit