The story of industrial real estate today, at least in terms of national media coverage, centers around compressing cap rates and the steady stream of capital flowing into the sector. But in Austin — the kid brother of two major industrial markets, Dallas and Houston — the story over the past 12 months has been the large increase in the volume of industrial construction. Austin delivered 3.1 million square feet of industrial product in 2017, a 55 percent increase over the total space delivered during the previous year. Throughout the past year, the metro also trailed the national average in industrial vacancy, net absorption and percent change in rental rates from 2016 to 2017. Many developers that broke ground during one of the healthiest periods in Austin’s industrial history are now delivering space at a time when the Austin economy is starting to cool. Employers have found themselves in a more competitive environment, with annual job growth slowing to sub-3 percent levels and the unemployment rate reaching numbers not seen since the dot-com boom. Market Evolution Austin’s recent industrial performance should not be seen as cause for alarm, but rather as an opportunity to understand the changing mindset of the …
