South MoPac Corridor Defies Austin’s Office Slump

Austin’s South MoPac corridor is defying the city’s otherwise sagging office market with vacancy rates less than half of those downtown.

The area — stretching along MoPac Expressway from Lady Bird Lake to Hwy 290 — posted a 13.8 percent vacancy rate in the second quarter, down from 18.1 percent three months earlier, according to Aquila Commercial. The Austin Business Journal reported that the rate is far below the metro’s average vacancy of roughly 17 percent and a sharp contrast to submarkets like East Austin, where nearly half of office space is available.

The pull is a mix of location, pricing and convenience, Aquila said. Rents and operating expenses are cheaper than downtown, parking is free and plentiful, and tenants can still reach the city’s core in minutes. The corridor feels like a tight micromarket, with no new construction in the pipeline, Aquila Principal Taylor McHargue told the outlet.

That swing is helped by displaced tenants. Last year the city bought One and Two Barton Skyway, removing nearly 400,000 square feet of office space from the market to consolidate Austin city departments. Companies like JE Dunn Construction, which will relocate to a 25,000-square-foot office at Terrace 6 next year, have pushed into the corridor’s already limited 3.3 million-square-foot inventory.

HPI Real Estate, which owns and occupies space at Barton Oaks Plaza II and III, has seen demand rise. Managing director Casey Casper told the outlet that companies weighing downtown often opt for South MoPac instead, citing easier commutes for employees living south and west of the city. Executives who reside along the corridor also tilt decisions in its favor.

The relative affordability is another edge. Discounted rents, lower expenses and no parking charges have made the corridor more competitive at a time when cost-conscious tenants are balking at downtown’s 28 percent vacancy, McHargue said.

That demand is colliding with limited supply, creating one of the few Austin submarkets trending toward high occupancy. Available space totaled about 450,000 square feet at the end of the second quarter, including sublease offerings, Aquila reported.

— Eric Weilbacher