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Spring :: 1Q 2013 Austin Publication Date: April 2013 Office Market Overview The Austin Office Market Overview is a quarterly publication prepared by Transwestern Austin for our clients. If you would like receive copies of this publication on a quarterly basis, please contact any of our senior team members below, or send an email request to [email protected]. Transwestern Austin 901 South MoPac Expressway Building 4, Suite 250 Austin, Texas 78746 512.328.5600 www.transwestern.net/austin Transwestern Austin Kevin Roberts, President | Southwest (713) 270.3347 [email protected] Robert Gaston, Executive Vice President | Central Texas (512) 314.3554 [email protected] Becky Doolin, CPA, Senior Vice President | Financial Services (512) 314.3575 [email protected] Agency Leasing and Tenant Advisory Mike Brown, Senior Vice President (512) 314.3552 [email protected] Britt Reed, Senior Vice President (512) 314.3577 [email protected] Greg Johnson, Vice President (512) 314.3570 [email protected] Luke Wheeler, Vice President (512) 314.3553 [email protected] Brandon Lester, Associate Vice President (512) 314.3576 [email protected] Will Stewart, Senior Associate (512) 314.3574 [email protected] Central Texas Multifamily Services Jeff Rogers, Managing Director (512) 314.5207 [email protected] Chris Stutzman, Managing Director (512) 314.5203 [email protected] Development Services Ty Puckett, Executive Vice President (512) 314.3572 [email protected] John Langton, LEED©-AP, Vice President (512) 328.5600 [email protected] Josh Delk, Associate Vice President (512) 314.3557 [email protected] Investment Services Hale Umstattd, Senior Vice President | Managing Director (512) 314.3551 [email protected] Leah Gallagher, Managing Director (512) 314.3571 [email protected] Structured Finance Craig Hutchens, Senior Vice President (512) 314.3555 [email protected] Marketing & Research Karen Judson, Vice President (512) 314.3560 [email protected] Property and Facilities Management Karisa Johnson, Vice President, RPA, CPM© (512) 314.3558 [email protected] Heidi Kelley, General Manager (512) 314.3559 [email protected] Kathryn Swift, RPA, General Manager (512) 314.3999 [email protected] Stephanie Vasquez, Property Manager (512) 314.5202 [email protected] Jenny Wheeler, Property Manager (512) 314.3960 [email protected] Sari Baker, Property Manager (512) 452.1636 [email protected] Barry Peterson, SMA, LEED©-AP, Senior Chief Engineer (512) 771.4355 [email protected] 901 South MoPac Expressway, Building 4, Suite 250, Austin, Texas 78746 | 512.328.5600 | www.transwestern.net/austin Table of Contents Section I :: Austin Office Overview Austin 1Q13 Office Market Summary Economic Indicators Notable Office Lease and Sales Transactions Large Contiguous Office Vacancy Survey - 20,000 sf or Greater Historical Office Rental Rates Green Building Statistics :: LEED© & ENERGY STAR© Historical Absorption, Vacancy and Population Growth Section II :: Office Development & Recent Deliveries Austin Office Deliveries & Development Summary Map & Survey - Select Austin Office Deliveries & Development Map & Survey - Potential Office Development Tracking: CBD / NW / SW Section III :: Central Business District Overview Austin Central Business District Summary Austin Central Business District Aerial Austin Central Business District Competitive Building Survey CoStar Survey: CBD-C-WC Submarkets Buildings 30K SF or Larger Section IV :: Northwest & Far Northwest Submarket Overview Northwest & Far Northwest Austin Summary Northwest & Far Northwest Austin Aerial Northwest & Far Northwest Austin Competitive Building Survey CoStar Survey: CP-E-FNW-N-NE-NW-RR Submarkets Buildings 30K SF or Larger Section V :: Southwest Submarket Overview Southwest Austin Summary Southwest Austin Aerial Southwest Austin Competitive Building Survey CoStar Survey: S-SE-SW Submarkets Buildings 30K SF or Larger Section VI :: Office Market Reports 1Q13 Office Market Report Comparison Summary What Is Up With These Market Reports? CB Richard Ellis 1Q13 MarketView Office Report Cushman & Wakefield 1Q13 MarketBeat Office Report Jones Lang LaSalle 1Q13 /Pulse/ Office Report NAI REOC 1Q13 Office Report Newmark Grubb Knight Frank 1Q13 Office Report Transwestern 1Q13 MarketWatch Office Report Xceligent 1Q13 Market Trends Office Report CoStar 1Q13 Office Report Please note that office lease and sales comparables will no longer be included as part of the quarterly Austin Office Market Overview. If you would like to discuss current lease or sales comps, please contact a Transwestern Austin team member at (512) 328.5600. Thank you. 901 South MoPac Expressway, Building 4, Suite 250, Austin, Texas 78746 | 512.328.5600 | www.transwestern.net/austin Section I :: Austin Office Overview Austin 1Q13 Office Market Summary Economic Indicators Notable Office Lease and Sales Transactions Large Contiguous Office Vacancy Survey - 20,000 sf or Greater Historical Office Rental Rates Green Building Statistics :: LEED© & ENERGY STAR© Historical Absorption, Vacancy and Population Growth 901 South MoPac Expressway, Building 4, Suite 250, Austin, Texas 78746 | 512.328.5600 | www.transwestern.net/austin Austin Office Market Snapshot Spring :: 1Q 2013 Vacancy Austin Office Market Rental Rates Vacancy & Class A Rental Rates 30% $40 $35 25% $30 20% $25 15% $20 % Vacant % $15 10% $10 Gross Rental Rate 5% $5 0% $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD 2013 Sources:. Transwestern MarketWatch, CoStar, CBRE MarketView, Cushman & Wakefield MarketBeat Sources: Transwestern MarketWatch, CoStar, CBRE MarketView, Cushman & Wakefield MarketBeat, Buls Sublease Report . Sources:Sources: Transwestern Transwestern MarketWatch, MarketWatch, CoStar, CoStar, CBRE CBRE MarketView, MarketView, Cushman Cushman & Wakefield & Wakefield MarketBeat MarketBeat, Buls Sublease Report Absorption Austin Office Market Vacancy Absorption and Vacancy 2000 30% 1500 25% 1000 20% Absorption Absorption (In Thousands)(In 500 15% % Vacant % 0 10% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD (500) 2013 5% (1000) 0% . Sources:Sources: Transwestern Transwestern MarketWatch, MarketWatch, CoStar, CoStar, CBRE CBRE MarketView, MarketView, Cushman Cushman & Wakefield & Wakefield MarketBeat MarketBeat, Buls Sublease Report Economic Indicators Spring:: 1Q 2013 Unemployment. Austin’s job market continues to outpace the state and national averages. Austin’s unadjusted unemployment rate was 5.4% as of February 2013, which is out-performing Texas’s unadjusted unemployment rate of 6.5% and the U.S. unadjusted unemployment rate of 8.1% for the same period. Health care hiring helps nudge Austin jobless rate lower [partial excerpt, Austin American-Statesman, March 29, 2013] Austin - Round Rock - San Marcos MSA February 2013 The rapid, ongoing (Bastrop, Caldwell,expansion Hays, of Travis, health Williamson) care jobs in Central Texas surged in February, supplementingIndustry modest Composition job growth in other industries and helpingMining, Logging, nudge and Construction the area’s joblessWages rate by Industry (in millions) 5% 3rd Quarter 2012 lower, according to data released Friday 6%by the Texas WorkforceManufacturing Commission. Unemployment $561.9 20% $1,097.7 in the Austin metro area dropped to 5.4 percent in February, downTrade, Transportation, from 5.8 and Utilitiespercent the prior $1,920.2 month, the commission said. The number of employed workers increased slightly faster than the Information average January-to-February increase over the18% past dozen years, and the number of unemployed $273.8 Financial Activities $1,667.5 workers dropped at4% a significantly faster-than-average rate, the commission data showed. Austin employers added 10,000 jobs during February, an increase of 1.2Professional percent and Business from Services the prior month, $444.4 the commission said. Education and Health Services 11% 3% Leisure and Hospitality $1,050.3 6% $394.1 Texas employers added a seasonally adjusted 80,600 jobs in February,Other Services more than any other state, according to the U.S.12% Bureau of Labor Statistics. (Unadjusted, the state added 118,000 $795.8 jobs, according to the Texas Workforce15% Commission.) “When lookingGovernment at Austin, I think that it is $1,875.8 impressive thatEmployment about 10 by percent Industry of the state’s employment gains came from a metro areaIndustry that Size Class September 2012 holds just 5 percent of its population,” said Michael Hennig,Monthly economic Change developmentAnnual Change programSize Employees Number Employment % Total Class per firm of Firms in Size Class Employment manager at the Capital Area Council ofFeb-13 Governments. Jan-13 Feb-12 “This isActual even more% impressiveActual considering% Total Nonfarm 840,100 830,100 807,900 10,000 1.2% 32,200 4.0% 9 1000+ 79 246,290 30.2% all the hiringMining, taking Logging, place and Construction in West Texas43,600 and the 42,900 Eagle 40,000 Ford shale 700 right1.6% now.” 3,600In fact, 9.0%few of the8 500-999 107 72,294 8.9% metro areasManufacturing around the country can match50,700 Austin’s 50,700 recovery 50,200 since0 the0.0% recession,500 according1.0% to7 250-499 236 79,727 9.8% an analysisTrade, released Transportation, Thursday