Austin office space inventory shrinks

Austin (KXAN) - The uptick in the Austin economy has help the city fill more than 1 million square foot of office in the past two years.

That puts the city's office occupancy rate at 85%. And the space is filling up with both buyers and renters.

"Last year we had a total of 17 sales with consideration  of $291 million," said Helen Jobes, head of marketing and sales for the commercial investment firm of Kennedy Wilson. "So far this year, we've had 14 sales with consideration of $403 million."

Chris Oddo of Don Cox Commercial Real Estate said the burgeoning demand is driving up prices. In 2011, office space were selling for $126 a square foot. This year, the same space is going for $180.

"From my perspective, when the news reports that the market is really healthy, that's not good for the tenant, because that means rent is going up and there is less available space." Oddo said.

And people are gobbling it up. "Two years ago we had about 1.4 million square feet of available office space, sub lease space," Oddo said. "Now, we're under 400,000 square feet."

Which led to this observation from Oddo: "The rental rates are starting to creep up and and they're looking and asking, "why should I keep renting at higher rates when I can just buy something?"