Austin and San Antonio Q4 2011 Office Highlights

Austin Q4 2011 Office Highlights
With almost 950,000 square feet of positive net absorption over the past 12 months, leasing velocity throughout the year certainly supports the positive outlook for the Austin office market. While leasing activity over the year totaled over 3.5 million square feet, a good portion of the net absorption was caused by the 2.2 million square feet of leases signed over the second half of 2010. As leasing activity maintained momentum from the end of 2010 into the beginning of 2011, quoted rental rates rose across the market, increasing $1.48 per square foot over the year downtown and $0.66 per square foot over the year in the suburbs during 2011.

In contrast to last quarter when buyers were reluctant to transact, a number of office properties traded hands this quarter. The sales completed over the past 90 days reflect what institutional investors from across the country are finding attractive about the Austin office market – they are drawn to quality, well-located properties in close proximity to diverse housing choices. As it relates to new construction, developers are in the early stages of site selection and feasibility studies for office developments in the downtown and southwest submarkets. Additionally, large blocks of space have been leased in the northwest submarket and a few select developers are analyzing new construction there as well.

Leasing Activity
• Electronic Arts leased 49,493 square feet in 7700 Parmer Building C at 7700 West Parmer Lane. They will take occupancy of their third floor space in March.
• Retro Studios leased 38,274 square feet in Park Central I at 12345 North Lamar Boulevard. They will take occupancy of their third floor space in March.
• Informatica leased 35,824 square feet in Aspen Lake at 13785 Research Boulevard. They will take occupancy of their third floor space in March.
• WhiteGlove Health leased 25,001 square feet in Two Barton Skyway at 1601 South MoPac Expressway. They took occupancy of their fourth floor space in October.
• Convio leased 23,238 square feet in Domain 5 at 11501 Domain Drive. They will take occupancy of their first floor space in January.
• Sage Software leased 20,292 square feet in Pecan Park Building I at 10700 Pecan Park Boulevard. They will take occupancy of their fourth floor space in February.

San Antonio Q4 2011 Office Highlights
The San Antonio office market ended the year on a relatively high note, with positive absorption experienced in the CBD and suburban markets. The market posted nearly 114,000 square feet of positive absorption in the fourth quarter, with more than 100,000 square feet of absorption directly attributed to the CBD market. Overall, direct market vacancy dropped to 14.0 percent from 14.5 percent in the third quarter. Average market rental rates remained nearly the same from the previous quarter, increasing by a penny to $19.64 per square foot.

The San Antonio MSA added approximately 3,100 jobs during the month of November, primarily in the trade, transportation and construction sectors. As such, the unemployment rate dropped from 7.5 percent in October to 7.0 percent in November 2011. Year-over-year, the metropolitan area gained approximately 10,400 jobs. The education, health service and trade industries have seen the largest numerical gains in jobs over the last 12 months. The mining industry continues to experience rapid growth due to the Eagle Ford Shale exploration, and jobs in this sector have now increased by nearly 18.0 percent since 2010.

Leasing Activity
• Although reported last quarter, Eyemasters’ 110,000 square foot lease at 175 East Houston Street closed fourth quarter. (CBD)
• Argo Group’s lease for 80,000 square feet at 175 East Houston Street also closed this quarter. (CBD)
• Forge Energy leased 12,000 square feet at 10999 Huebner Road. (Northwest)
• Frost Bank leased 2,300 square feet at Culebra Crossing. (Northwest)

©2012 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document. Arrows in charts above represent change from prior quarter.