AQUILA Austin Market Report Q14 2016

1Q 2016

AUSTINMARKET

OVERVIEW

CITYWIDE SUBMARKET MAP

Read the full 1Q Austin Market Report at aquilacommercial.com/reports

85%

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2014Q2

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Net Absorption* Direct & Sublease Occupancy Rate

Quarter Net Rentable Area

Direct Available SF Net Absorption*

Direct & Sublease

Vacancy Rate

Average Class A Full Service Rental Rate

2014 Q2 42,475,999 4,647,525 6,277 11.79% $33.44

2014 Q3 42,720,370 4,373,103 377,613 11.41% $33.67

2014 Q4 42,784,115 4,068,526 420,985 10.56% $34.78

2015 Q1 43,665,210 4,612,974 383,535 11.49% $36.27

2015 Q2 44,534,490 4,795,149 585,639 11.90% $35.60

2015 Q3 44,874,380 4,650,151 766,602 10.86% $36.36

2015 Q4 45,456,083 3,747,189 1,070,732 9.64% $35.81

2016 Q1 45,960,250 4,291,361 225,653 10.14% $37.08

* Absorption includes sublease space Numbers based on CBRE statistics

CITYWIDE PERFORMANCE

VACANCY VS. RENTAL RATESNET ABSORPTIONAVAILABLE SF VS. VACANCY RATE


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Average Class A Full Service Rental Rate Direct & Sublease Vacancy Rate

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Direct Available SF Sublease Available SF Direct & Sublease Vacancy Rate


CBD SUBMARKET OVERVIEW

1Q 2016

CBD OVERALL SUBMARKET PERFORMANCE





Direct & Sublease

Vacancy Rate


2014 Q2 9,084,414 1,021,461 (13,728) 11.96% $40.88

2014 Q3 9,252,285 1,041,014 153,098 11.90% $41.39

2014 Q4 9,252,285 802,517 227,661 9.44% $43.13

2015 Q1 9,768,770 1,135,835 139,236 12.81% $43.83

2015 Q2 9,809,755 870,240 291,638 10.20% $41.90

2015 Q3 9,809,755 672,222 232,375 7.83% $44.17

2015 Q4 9,732,884 631,228 3,066 7.07% $43.64

2016 Q1 9,732,884 565,112 109,480 5.94% $47.52


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CBD COMPETITIVE SET PERFORMANCE

NET ABSORPTIONAVAILABLE SF VS. VACANCY RATE VACANCY VS. RENTAL RATES


Quarter Net Rentable Area Direct Available SF

Sublease Available SF Net Absorption* Direct & Sublease

Vacancy Rate

Average Class A Full Service Rental

Rate

2014 Q2 5,637,136 576,465 25,189 21,517 10.67% $44.81

2014 Q3 5,827,916 483,868 81,356 227,210 9.70% $45.13

2014 Q4 5,827,916 503,540 69,160 (7,476) 9.83% $46.49

2015 Q1 6,344,401 421,858 55,200 612,127 7.52% $47.28

2015 Q2 6,466,952 479,092 40,409 80,108 8.03% $47.74

2015 Q3 6,466,952 370,193 38,822 110,486 6.32% $48.70

2015 Q4 6,471,834 237,718 55,748 120,431 4.53% $52.03

2016 Q1 6,349,283 220,479 80,687 (130,251) 4.74% $52.74

* Absorption includes sublease space

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CBD OFFICE RENTAL RATE PROJECTIONS


$15

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Full

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Historic Rental Rate AQUILA Model 3% Job Growth 1% Job Growth

1% Job Growth

3% Job Growth

CBD OFFICE VACANCY RATE PROJECTIONS


7.5

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Mar

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Market Size Historic Vacancy Rate AQUILA Model 3% Job Growth 1% Job Growth

1% Job Growth

3% Job Growth

5th + ColoradoNorthshore

500 W 2nd

Shoal Creek Walk

CBD COMPETITIVE SET BUILDING LIST

Building Name Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate Estimated OpEx

100 Congress 411,536 20,182 5,855 ↑ $37.00 $20.84

300 West 6th 454,225 1,421 942 ↑ $36.00 $21.75

301 Congress 418,338 17,930 ↓ 9,373 ↑ $35.00 $19.55 ↑

400 West 15th 281,196 8,627 21,442 ↑ $26.00 ↑ $15.92

501 Congress 122,551 18,927 ↑ 20,396 ↑ $35.00 ↑ $20.93 ↓

515 Congress 263,058 3,432 ↓ 7,174 ↑ $33.00 ↑ $18.05

600 Congress Ave. 503,951 13,187 0 $34.00 ↑ $18.75 ↑

816 Congress 434,081 10,821 ↓ 0 $27.00 ↓ $17.59

Austin Centre 326,335 23,455 ↑ 7,346 ↓ $28.00 $17.65

Capitol Center 164,044 7,852 ↓ 8,205 ↑ $30.00 ↑ $19.70 ↑

Capitol Tower 172,837 10,208 ↑ 0 $31.00 ↑ $16.52

Chase Tower 389,503 18,704 ↑ 5,418 ↑ $32.00 ↑ $19.84

Colorado Tower 373,334 0 0 $34.00 $16.83

Frost Bank Tower 535,078 0 0 $40.00 ↑ $21.75

IBC Bank Plaza 194,749 0 0 ↓ $33.00 ↑ $21.00

Lavaca Plaza 118,635 1,070 ↑ 11,199 ↑ $32.50 $21.74

Littlefield Building 109,779 15,614 ↓ 0 ↓ $35.00 ↑ $18.08 ↑

One Congress Plaza 518,385 56,675 ↑ 3,733 ↑ $40.00 $17.77

San Jacinto Center 406,279 0 0 $36.00 ↓ $18.75

Scarbrough Building 130,789 11,301 ↓ 0 $32.00 $19.04 ↑

Seaholm 143,151 0 0 $28.00 $12.00


CBD DEVELOPMENTS & AVAILABILITY

Building % Preleased Total SF Est. Delivery500 W 2nd 42% 489,404 SF 1Q 20175th + Colorado 28% 179,000 SF 2Q 2016NorthShore 100% 23,592 SF 2Q 2016801 Barton Springs 0% 90,500 SF 2Q 2017Shoal Creek Walk 42% 218,432 SF 3Q 2017

Building Units/Rooms Est. Delivery5th & West 154 Units 4Q 2017Aloft & Element 422 Rooms 3Q 2017Fairmont 1,066 Rooms 3Q 2017Hotel Indigo/Holiday Inn Express 300 Rooms 2Q 2016Hyatt House Hotel 190 Rooms 4Q 2016NorthShore 436 Units 1Q 2017The Austin Proper 250 Rooms, 120 Units 2Q 2017The Independent 370 Units 3Q 2018

Building Size/Units Use405 Colorado TBD Office604 W 6th Street 31,035 SF OfficeAustin American Statesman TBD OfficeNovare/Post Office TBD OfficeRainey Gateway 355,000 SF OfficeThird + Shoal 338,279 SF OfficeWaller Creek Center 325,000 SF Office70 Rainey 164 Units MultifamilyGreen Water Residential Tower TBD MultifamilyHotel Zaza/Gables 226 Units, 160 Rooms Hotel/Multifamily

Building Available SF Max. Contiguous

One Congress Plaza 44,055 SF 31,037 SF

Perry Brooks Tower 1,409 (direct) + 28,000 SF (sublease) 22,400 SF (sublease)

CBD AVAILABILITY SKYLINE


NORTHWESTSUBMARKET OVERVIEW

1Q 2016


NORTHWEST OVERALL SUBMARKET PERFORMANCE




Direct & Sublease

Vacancy Rate


2014 Q2 16,697,337 1,493,813 (12,658) 10.02% $29.89

2014 Q3 16,697,337 1,566,544 (103,939) 10.64% $30.65

2014 Q4 16,817,337 1,540,054 137,486 10.46% $30.83

2015 Q1 17,154,310 1,879,975 98,887 11.65% $32.06

2015 Q2 17,269,310 1,819,734 116,457 11.56% $32.74

2015 Q3 17,269,310 1,665,124 276,295 9.96% $33.26

2015 Q4 17,535,625 1,283,335 410,012 8.99% $34.14

2016 Q1 18,039,828 1,868,483 64,911 11.17% $33.77


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Vacancy Rate


Rate

2014 Q2 12,242,690 1,030,332 246,257 (141,246) 10.43% $31.61

2014 Q3 12,389,252 911,833 321,739 189,579 9.96% $32.12

2014 Q4 12,845,611 1,197,426 320,587 171,918 11.82% $32.93

2015 Q1 12,931,909 992,203 292,334 319,774 9.93% $33.39

2015 Q2 13,120,924 897,208 284,035 292,309 9.00% $33.83

2015 Q3 13,310,232 1,129,335 287,248 (46,032) 10.64% $33.55

2015 Q4 13,831,583 1,135,749 235,206 566,979 9.91% $34.30

2016 Q1 15,142,863 1,422,335 395,496 864,404 12.00% $35.14


NORTHWEST COMPETITIVE SET PERFORMANCE



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ARBORETUM MICROMARKET PERFORMANCE





Vacancy Rate


Rate

2014 Q2 6,106,452 476,360 109,332 (97,407) 9.59% $33.04

2014 Q3 6,253,014 401,651 157,535 173,068 8.94% $33.66

2014 Q4 6,474,987 445,544 121,157 214,458 8.75% $34.38

2015 Q1 6,553,774 447,850 71,595 126,043 7.93% $34.46

2015 Q2 6,742,789 389,248 63,891 255,321 6.72% $34.77

2015 Q3 6,719,697 407,169 76,078 (53,200) 7.19% $34.38

2015 Q4 6,938,611 322,314 93,200 286,647 5.99% $34.82

2016 Q1 8,253,506 617,666 88,016 1,024,727 8.55% $35.76


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100200300400500600700800900

1,0001,100

2014Q2

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SHEPHERD MOUNTAIN MICROMARKET PERFORMANCE





Vacancy Rate


Rate

2014 Q2 2,453,857 241,923 46,956 17,127 11.77% $31.95

2014 Q3 2,453,857 211,437 92,007 (14,565) 12.37% $32.28

2014 Q4 2,688,442 389,788 127,233 21,008 19.23% $33.10

2015 Q1 2,690,750 207,238 179,538 132,553 14.37% $34.17

2015 Q2 2,690,750 181,807 152,245 52,724 12.41% $34.45

2015 Q3 2,690,750 193,874 135,899 4,279 12.26% $34.55

2015 Q4 2,690,835 173,907 79,703 76,248 9.42% $35.16

2016 Q1 2,690,835 266,741 97,821 (110,952) 13.55% $36.11


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FAR NORTHWEST MICROMARKET PERFORMANCE





Vacancy Rate


Rate

2014 Q2 3,682,381 312,049 89,969 (60,966) 10.92% $29.02

2014 Q3 3,682,381 298,745 72,197 31,076 10.07% $29.40

2014 Q4 3,682,182 362,094 72,197 (63,548) 11.79% $30.26

2015 Q1 3,687,385 337,115 41,201 61,178 10.26% $30.93

2015 Q2 3,687,385 326,153 67,899 (15,736) 10.69% $31.66

2015 Q3 3,899,785 528,292 75,271 2,889 15.48% $31.42

2015 Q4 4,202,137 639,528 62,303 204,084 16.70% $32.77

2016 Q1 4,198,522 537,928 209,659 (49,371) 17.81% $33.30


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NORTHWEST OFFICE RENTAL RATE PROJECTIONS


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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

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1% Job Growth

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NORTHWEST OFFICE VACANCY RATE PROJECTIONS


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3% Job Growth

Braker Pointe III

Domain 8

*Already existing—coming to market 3Q 2016

Building Total SF % Preleased Estimated Delivery Status

1 Braker Point III* 195,230 0% 3Q 2016 Coming to Market

2 Domain 8 290,983 0% 3Q 2017 Under Construction

3 La Frontera Plaza 97,941 89% 2Q 2016 Under Construction

Building Total SF % Preleased Estimated Delivery Status

4 10721 Domain Dr. 308,000 0% Planned Planned

5 Amber Oaks Phase I 90,300 0% Planned Planned

6 Amber Oaks Phase II 90,300 0% Planned Planned

7 Amber Oaks Phase III 45,000 0% Planned Planned

8 Aspen Lake Three 128,700 0% Planned Planned

9 Frontera Ridge 400,000 0% Planned Planned

10 Four Points Centre Bldg 3 250,000 0% Planned Planned

11 Four Points Centre Bldg 4 80,000 0% Planned Planned

12 Paloma Ridge C 112,500 0% Planned Planned

13 Research Park Bldg 6 117,314 0% Planned Planned

14 Riata Corporate Park Bldg 1 65,000 0% Planned Planned

15 Riata Crossing Bldg 6 49,716 0% Planned Planned

NORTHWEST OFFICE DEVELOPMENTS


Building Direct Available SF

Sublease Available SF

Total Available SF

1 7700 Parmer - Bldg B 31,500 - 31,500

2 7700 Parmer - Bldg C 23,693 - 23,693

3 Amber Oaks F 79,732 - 79,732

4 Amber Oaks J 6,245 33,147 39,392

5 Atrium Office Centre 23,732 - 23,732

6 Austin Oaks 43,080 2,659 45,739

7 Domain 1 86,271 86,271

8 Domain 3 - 20,041 20,041

9 IBM Broadmoor Campus 144,818 144,818

10 Lakewood Center I - 45,020 45,020

11 Paloma Ridge A 106,200 - 106,200

12 Paloma Ridge B 83,915 - 83,915

13 Park Central I 15,375 23,326 38,701

14 Park Centre Bldg. 3 49,828 5,397 55,225

15 Prominent Pointe I 37,597 - 37,597

16 Research Park Number Five 43,172 - 43,172

17 Research Park Place 8 33,518 - 33,518

18 Research Park Plaza IV 3,355 96,334 99,689

19 Research Park Plaza V 95,292 95,292

20 Research Tech Center Bldg 2 22,295 22,295

21 Reserve at Bull Creek B 43,713 43,713

22 Reserve at Bull Creek C 43,695 43,695

23 Riata Corporate Park Bldg 4 57,118 - 57,118

24 Riata Corporate Park Bldg 5 22,867 - 22,867

25 Riata Corporate Park Bldg 7 21,477 21,477

26 Riata Corporate Park Bldg 8 45,457 45,457

27 River Place Corp Park Bldg VII - 21,477 21,477

28 The Park at 8300 N. MoPac 6,911 31,958 38,869

29 Travesia Corporate Park 1-3 34,226 33,945 68,171

30 UFCU Plaza 32,797 - 32,797

Availabilities of 20,000 sf ±

NORTHWEST LARGE OFFICE AVAILABILITY

SOUTHWESTSUBMARKET OVERVIEW

1Q 2016


SOUTHWEST OVERALL SUBMARKET PERFORMANCE




Direct & Sublease

Vacancy Rate


2014 Q2 9,382,293 853,812 (150,296) 10.26% $30.72

2014 Q3 9,458,793 653,880 164,619 9.24% $31.38

2014 Q4 9,418,793 640,998 42,081 8.41% $34.87

2015 Q1 9,446,430 589,875 66,172 7.98% $34.35

2015 Q2 10,109,725 1,070,609 182,561 12.21% $33.76

2015 Q3 10,257,625 1,192,565 121,673 12.29% $35.03

2015 Q4 10,484,922 769,552 460,460 9.80% $35.85

2016 Q1 10,484,886 777,581 57,396 9.25% $36.65


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SOUTHWEST COMPETITIVE SET PERFORMANCE





Vacancy Rate


Rate

2014 Q2 7,102,874 387,913 208,978 85,381 8.40% $35.06

2014 Q3 7,102,874 294,587 169,604 132,700 6.54% $35.47

2014 Q4 7,102,547 386,333 182,477 (104,946) 8.01% $36.07

2015 Q1 7,100,750 399,919 188,613 (21,519) 8.29% $36.98

2015 Q2 7,782,464 428,605 213,812 627,829 8.25% $37.55

2015 Q3 7,949,325 353,625 264,345 191,308 7.77% $37.61

2015 Q4 8,158,872 634,326 246,492 (53,301) 10.80% $38.15

2016 Q1 8,161,143 680,309 195,638 7,142 10.73% $38.67


0%

3%

6%

9%

12%

15%

0

200

400

600

800

1,000

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

Vaca

ncy

Rate

Ava

ilabi

lity

(Tho

usan

ds o

f SF)


85%

87%

89%

91%

93%

95%

(200)

0

200

400

600

800

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

Occ

upan

cy R

ate

Abs

orpt

ion

(Tho

usan

ds o

f SF)


4%

6%

8%

10%

12%

$32

$34

$36

$38

$40

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

Vaca

ncy

Rate

Rent

al R

ate


NEAR SOUTHWEST MICROMARKET PERFORMANCE





Vacancy Rate


Rate

2014 Q2 2,712,851 191,624 165,931 (4,311) 13.18% $37.40

2014 Q3 2,712,851 174,207 126,557 56,791 11.09% $37.59

2014 Q4 2,713,137 158,703 124,248 18,099 10.43% $38.03

2015 Q1 2,711,340 143,863 125,110 12,181 9.92% $39.26

2015 Q2 2,925,937 110,815 101,710 271,045 7.26% $39.49

2015 Q3 2,925,937 105,532 175,528 (68,535) 9.61% $39.84

2015 Q4 2,925,937 149,170 165,733 (33,843) 10.76% $40.59

2016 Q1 2,926,017 137,847 113,003 64,133 8.57% $41.09


0%

4%

8%

12%

16%

0

100

200

300

400

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

Vaca

ncy

Rate

Ava

ilabi

lity

(Tho

usan

ds o

f SF)


84%

88%

92%

96%

100%

(100)

0

100

200

300

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

Occ

upan

cy R

ate

Abs

orpt

ion

(Tho

usan

ds o

f SF)


6%

9%

12%

15%

18%

$35

$37

$39

$41

$43

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

Vaca

ncy

Rate

Rent

al R

ate


FAR SOUTHWEST MICROMARKET PERFORMANCE





Vacancy Rate


Rate

2014 Q2 4,390,023 196,289 43,047 89,692 5.45% $33.62

2014 Q3 4,390,023 120,380 43,047 75,909 3.72% $34.16

2014 Q4 4,389,410 227,630 58,229 (123,045) 6.51% $34.86

2015 Q1 4,389,410 256,056 63,503 (33,700) 7.28% $35.57

2015 Q2 4,856,527 317,790 112,102 356,784 8.85% $36.39

2015 Q3 5,023,388 248,093 88,817 259,843 6.71% $36.31

2015 Q4 5,232,935 485,156 80,759 (19,458) 10.81% $36.75

2016 Q1 5,235,126 542,462 82,635 (56,991) 11.94% $37.28


0%

3%

6%

9%

12%

15%

0

150

300

450

600

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

Vaca

ncy

Rate

Ava

ilabi

lity

(Tho

usan

ds o

f SF)


88%

91%

94%

97%

100%

(150)

0

150

300

450

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

Occ

upan

cy R

ate

Abs

orpt

ion

(Tho

usan

ds o

f SF)


0%

4%

8%

12%

16%

$30

$32

$34

$36

$38

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

Vaca

ncy

Rate

Rent

al R

ate


SOUTHWEST OFFICE RENTAL RATE PROJECTIONS


$15

$20

$25

$30

$35

$40

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Full

Serv

ice

Rent

al R

ates


1% Job Growth

3% Job Growth

SOUTHWEST OFFICE VACANCY RATE PROJECTIONS


5.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

0%

5%

10%

15%

20%

25%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Mar

ket S

ize

(Mill

ions

of S

F)

Tota

l Vac

ancy

Rat

e


1% Job Growth

3% Job Growth

Building Total SF % Preleased EstimatedDelivery Status

1 The Backyard - Buildings B, J, & H 171,450 0% Planned Planned

2 Galleria Oaks I & II 147,928 0% Planned Planned

3 Lantana Ridge I 87,500 0% Planned Planned

4 Lantana Ridge II 87,500 0% Planned Planned

5 Overwatch Campus Phase II 123,525 0% Planned Planned

6 Regency Park 90,000 0% Planned Planned

7 Rollingwood Center III 107,000 0% Planned Planned

8 The Terrace 3 203,130 0% Planned Planned



SOUTHWEST OFFICE DEVELOPMENTS


Building Direct Available SF Sublease Available SF

Total Available SF

1 3700 San Clemente 85,436 85,436

2 3900 San Clemente 135,366 135,366

3 Barton Skyway II 15,796 24,275 40,071

4 CityView Center - 24,478 24,478

5 Encino Trace II 135,036 - 135,036

6 Parkway at Oak Hill 1 & II 23,644 23,644

7 Rialto II - 36,421 36,421

8 Rollingwood Center I & II - 65,169 65,169

9 The Park on Barton Creek 1 23,465 2,203 25,668

10 The Park on Barton Creek 2 38,900 38,900

11 The Summit 1-5 52,934 - 52,934

12 The Terrace 6 22,771 8,258 31,029

Availabilities of 20,000 sf ±

SOUTHWEST LARGE OFFICE AVAILABILITY


SOUTHWEST AVAILABILITY SKYLINE



Questions? Contact Clayton Schleimer at

[email protected]

1717 W. 6th Street, Suite 400Austin, TX 78703

aquilacommercial.com

Real Estate

AQUILA Austin Market Report Q14 2016