Q2 2023 Austin Industrial Market Report

A growing manufacturing sector has been a key demand driver for industrial use in the Austin market. With manufactures such as Samsung and Tesla moving to the Austin market, this has started a wave of many other corporate expansions and relocations, which has put Austin on a path of long-term growth. But as Austin remains an attractivecity for companies to move to, it has grown to risk of oversupply in the near term at a timewhen demand is slowing considering broader economic winds.


A rush of new construction has moved forward without tenants, leading to a market-widerate of 31 percent. With the increase of development, the under-construction squarefootage has gone up to 18 million from 10.1 million in the previous year, totaling a 75 percent increase. This has resulted in vacancies being on the rise.


Following a double digit rent growth in the first quarter, supply-side disruptions to the market could expand the landlords pricing power. With the rush of completions underway, this may flatten average rents and decelerate the rent growth by the end of the year.


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