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Q3 2022 Austin Industrial Report

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The 2nd quarter of 2022 brought with it uncertainty across asset classes, including the Austin Industrial market, driven largely by macroeconomic events including rising global inflation, rising interest rates, the war in Ukraine, and the rising prospect of a recession in 2023.


Key Takeaways

  • Absorption remains positive
  • Construction increased by 47% from Q2 to Q3
  • Rates continue to increase

Boots On The Ground & Market at a Glance

Our “Boots on the Ground” viewpoint is the voice of our experts, who have broken down the market data and compared it to what they are seeing for themselves. This is their take on what the numbers actually mean for the Austin industrial market.

The 2nd quarter of 2022 brought with it uncertainty across asset classes, including the Austin Industrial market, driven largely by macroeconomic events including rising global inflation, rising interest rates, the war in Ukraine, and the rising prospect of a recession in 2023.

Most notably, the commercial real estate capital markets have softened significantly, making it more difficult for developers to underwrite new projects, source equity, and secure debt, blunting the rapid pace of growth in Austin’s spec industrial pipeline. That said, Austin is still squarely in the midst of a historic run in industrial development, with nearly 11 million square feet of new spec product under construction at the end of Q3 or roughly 17% of our existing market size.

Despite the challenges facing developers, tenant demand remains robust in the Austin market across size ranges. As in the preceding quarters in 2022, the Austin market continues to benefit from larger tenant requirements than in years past, which is great given the volume of new supply in the pipeline, but still leaves mid- and small-tenant requirements stuck in an evertightening market of 2nd generation buildings. With so much demand from half- and full-building users seeking space in new buildings, the mid-and small-tenants in the market are often left on the sidelines given developer appetite for larger deals.

The geography of Austin’s industrial market also continues to expand at a rapid pace. Whereas the Georgetown market only had one investment-grade industrial development two years ago, the submarket now accounts for roughly one-quarter of the development pipeline. Similarly, the northeast and far northeast submarkets account for one-quarter of the development pipeline, as does the Hays County submarket, quickly stretching southwards into south Kyle and San Marcos. The remaining quarter of the development pipeline is mostly scattered throughout the legacy infill submarkets in Austin (namely the southeast and Round Rock).

While tenant demand remains high, there have been whispered concerns about the pace of industrial development in Austin, for which a slowdown in the capital markets proves to be a double-edged sword—the pace of new projects coming online may slow, including those that had intended to break ground in the first half of 2023, but it may bring the market into better balance with existing tenant demand.


Market Indicators

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Historic Comparison



Unemployment Rate



Future Forecast

Given the economic headwinds on the horizon, we anticipate somewhat softer tenant demand in 2023, though still strong from a historical standpoint compared to the Austin market of 4-5 years ago. Similarly, land pursuits in the Austin area have slowed to a trickle as the capital markets adapt to this new reality of higher interest rates and higher exit caps, and spec developers have largely shifted to focusing on projects they already have in the hopper. We anticipate slower growth of the spec development pipeline and delayed ground-breaking in mid-2023 as the market rebalances between the new supply coming online and recalibrated tenant demand. While the Austin market has seen rapid rent growth over the last eighteen months, with so much new supply looming, we anticipate a slowing of the pace of rent growth, but likely not a reversal of the trend (i.e., we don’t anticipate seeing falling rents).


Absorption, Supply & Demand

Net absorption in Q3 was a very healthy 1,176,168 square feet, bringing trailing 12-month absorption to 4,557,014 square feet. At this pace, we might expect to see the Austin market take ±2.6 years feet to work through the existing product under construction, but this belies the current pace of pre-lease activity and the robust tenant demand that we currently see in the Austin market. Rough estimates of current tenant demand are well north of 15 million square feet-users that are intent on leasing space and that will largely be forced to lease new buildings as the market continues to hover near 5% vacancy. Never blind to macroeconomic pressures, we recognize that rising interest rates and a looming recession —however severe— will likely dampen some of this tenant demand, but we also believe that the Austin market will, in many ways, be insulated from
some of these economic headwinds.

For example, with congress pouring $52.7 billion into domestic semiconductor manufacturing through the CHIPS act, in tandem with Samsung’s new $17 billion facility currently under construction in Taylor, we anticipate continued growth and robust demand from ancillary third-party suppliers and logistics companies supporting local semiconductor manufacturing, despite a pending recession. Likewise, Tesla’s GigaTexas facility which came online earlier this year continues to drive demand amongst automotive suppliers and third-party logistics companies, which will be required for the carmaker to continue operations despite a macroeconomic slowdown.

All of this serves to support a spec development pipeline that has grown to record size in the last year. At the end of Q3, Colliers research is tracking more than 38 million square feet of spec development in the pipeline, including projects currently under construction, planned (relatively imminent), and proposed (future phases of development and projects with longer lead times. Prior to the macroeconomic headwinds that have surfaced to challenge spec developers, we had anticipated seeing nearly 25 million square feet of new industrial product almost 50% of our market size—on the ground by the end of 2023. We now expect to see a healthy amount of these deliveries push into 2024, which we believe will bring the market into a better balance between supply and demand.



Speculative Development Pipeline

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Q3 2022 Austin Industrial Report

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Related Experts

Clarisse Rodriguez

Research Associate


Clarisse graduated in the spring of 2022 from St. Edward's University in Austin with a major in Entrepreneurship and a minor in Writing. A month after graduating, Clarisse started at the Colliers Austin office in a hybrid role as a Research Associate and Junior Broker, specializing in Office Tenant Representation.

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Travis Hicks

Senior Vice President


Travis joined Colliers in 2014 as Vice President and specializes in Tenant and Landlord representation services for Industrial users.  Travis has more than fifteen years of commercial real estate experience including more than 400 transactions totaling 4.5M SF.  His comprehensive understanding of the Austin industrial market and his experience navigating complex transactions for both Tenants and Landlords enables him to provide the highest level of service to his clients. 

​Prior to joining Colliers, Travis was a Leasing Director for PS Business Parks, Inc., a national REIT, where he was responsible for executing the marketing and leasing strategy for a portfolio of 900,000 SF consisting of 16 industrial, flex, value office and retail buildings in three Austin submarkets.  He started his commercial real estate career in 2006 with UGL Equis (now DTZ) where he provided tenant representation services for office and industrial clients. 

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Chase Clancy

Vice President


Chase Clancy joined Colliers International as an industrial leasing specialist in 2018.  Utilizing a deep knowledge of the industrial market, Chase prides himself on building relationships and working with integrity to achieve his clients' long-term goals.

Prior to joining Colliers, Chase worked as a commercial agent for Don Quick & Associates, earning invaluable experience as an industrial and office landlord representative.  Chase uses his understanding of both sides of the transaction to help maximize value for his clients.

Originally from the Pacific Northwest, Chase grew up in Tacoma, Washington, and earned his Bachelor of Arts from Seattle University.  In his free time, he enjoys playing guitar, golf, hunting, photography, exploring new restaurants and traveling with his wife, Amy, and two sons, Ace and Gus.

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