- Since COVID began, we have been concerned about the future of the Texas office market.
- Meta announced last week that it has leased the entire office portion of what will be the tallest tower in Austin.
- This hopefully signals a good sign that companies will still continue to lease office space.
Since COVID began, in this blog I’ve talked a lot about the fate of the office market. It really concerns me because I have a lot of clients who own and/or are developing a lot of office space. And so much uncertainty in that market is not a good thing.
I am feeling a little better and more confident this week because there was a huge office space announcement. And, as a result, I think the Central Texas office market is a little brighter – at least in my eyes.
So that’s what we are talking about this week – the state of the Texas office market and how the huge Austin announcement affects it.
How much Uncertainty has COVID Brought to the Texas Office Market
As I wrote above, we have talked about this before, but I just want to quickly rehash my thoughts on the post-COVID Texas office market. Here’s my opinion – I have no idea what is going to happen.
I do want to start by saying all of this is anecdotal based on discussions with people in the industry and just my own thoughts. But it seems like companies have learned a lot during COVID. Having people work at home may not be the disaster we once thought. Just speaking from my own experience, I was pleasantly surprised at how effectively we have worked from home when it was necessary. And, as a result, we have a much more flexible work schedule now.
Its easy to see, therefore, that companies could work a) entirely remotely or b) partially remotely with office sharing/hoteling. And this could potentially put the office market in danger. Indeed, a very large law firm – Quinn Emmanuel – recently announced that it will not be hiring new associates for any particular office. People will work where they are.
And on top of this, there is a lot of office space in the pipeline in Texas. I’m sure you can see how this would make me nervous about the future of office.
Meta Leases Entire Office Space of Largest High Rise in Austin
That’s why this week’s news about Meta (Facebook’s parent) was so welcomed. According to the ABJ, on December 31 Meta signed a lease for the all the office space in what will become the tallest tower in Austin.
At the corner of Sixth and Guadalupe, a 66 story tower is being built. Half of those floors will be office space. Meta has agreed to lease all of them – 589,000 square feet. The tower is scheduled to be complete some time in 2023.
Meta currently has about 2000 employees in Austin. And with this lease, it expects to add another 400 or so.
Meta’s Large Lease Brings Renewed Life to Texas Office Market
Obviously one lease – regardless of how big it is – does not solve all of the future concerns for Texas office space. But to me, what it does is signal where the employers’ mindset is at. Lets face it, Meta is a cutting edge, Silicon Valley tech company. And if it is showing that having office space is important to it, then I would think other companies will not be far behind.
Obviously that is no guarantee that the Texas office market is going to continue/return to a boom. But it certainly is a lot more optimistic than it was two weeks ago.
