After strong 2017 finish, outlook bright for Austin office market: The Austin-area’s office market rolled to a strong finish in 2017, new reports show, propelled by Fortune 500 companies including Facebook Inc., Google, Indeed and HomeAway signing sizeable office leases in the market last year.
Major lease transactions were the theme of 2017, according to the latest office market report from the Austin office of Cushman & Wakefield, a global commercial real estate services firm.
The trend of blue-chip tenants taking up large chunks of space spilled over into 2018, kicking off with Parsley Energy’s commitment to lease 302,000 square feet of office space in a high-rise planned for 300 Colorado St. in downtown Austin.
“With several large additional transactions in the works for 2018… the outlook for Austin seems bright,” the report said. “A steady stream of corporate migration and expansion, in addition to a healthy pipeline of younger start-up companies looking to call Austin home, seems to be the norm. With leasing activity on the upswing and multiple new office developments on the horizon, we can expect to see Austin’s office market continue to strengthen.”
Cushman & Wakefield said 2017 ended with rents for the highest-quality office space (Class A) in the Austin region averaging $39.09 per square foot per year, up from $36.95 per foot in the final quarter of 2016.
The occupancy rate for top-tier office space averaged 90.2 percent, edging down from 91.7 percent, on average, in the fourth quarter of 2016, the report said.
White-collar job growth fuels demand for office space. Cushman & Wakefield said the Austin region wrapped up 2017 much like it began, with job growth continuing to outpace national averages and a jobless rate that is one of the lowest in the country — 2.7 percent compared with 4.1 percent nationally.
“January has already set the pace for the market for 2018,” said Patrick Ley, brokerage principal with ECR | Equitable Commercial Realty in Austin. “With continued large corporate announcements fueling the new construction absorption like Parsley Energy (downtown) and Indeed at the Domain, developers are remaining confident on pre-leasing activity.”
Hudson’s on the Bend reopening under new ownership: Hudson’s on the Bend, a landmark restaurant in the Lakeway area for decades, is coming back after its abrupt closure last year.
An ownership group that includes real estate developer and philanthropist Dilum Chandrasoma, musician Kris Kimura, former J. Black’s general manager Eric Leonard and entrepreneur Lysa Nguyen purchased the restaurant in December. They plan to reopen in mid-March at the same location under the name Hudson’s Hill Country, with the kitchen under the stewardship of executive chef John Sturdivant, formerly of Z’Tejas.
Chandrasoma was a regular at Hudson’s on the Bend for about 25 years and said last week that he wants to bring back the classic ambiance and nostalgic feel that made it so popular for so long. He describes the reboot as “a modern classic of Hudson’s,” with a menu and vibe that “made Hudson’s an Austin icon.” The new owners say they have no major changes in store for the space.
In addition to Hudson’s Hill Country, the group also recently opened Parker Jazz Club in the space beneath the old Spaghetti Warehouse on Fourth Street.
Chef and co-founder Jeff Blank opened Hudson’s on the Bend in 1984 and turned the game-centric restaurant on a bend in the Colorado River into a spot that could serve as a destination-dinner retreat and comfortable home for regulars.
He sold the business in 2016 to an owner who closed it for several months to conduct a substantial renovation. Hudson’s reopened in November 2016 under the guidance of chef Billy Caruso and sommelier Chris McFall but closed again after just a few months, with little explanation from the owner.
Texas regulators want gas utility customers to see tax-cut savings: Texas gas utility regulators, taking a cue from some business leaders in sectors ranging from retail to air travel, say they’ll attempt to ensure that benefits of the federal government’s recent corporate tax cuts are passed on to regular people.
“We will look at the effect on gas rates to guarantee companies share their savings with their customers, allowing Texans to keep more of their paycheck as (the new tax law) intended,” said Christi Craddick, who chairs the Texas Railroad Commission. The commission regulates gas utility rates in the state.
A number of major companies — including Southwest Airlines, Apple and Walmart — have opted to award one-time bonuses to their employees in the wake of the $1.5 trillion, GOP-backed tax overhaul that President Donald Trump signed into law last month.
Craddick has directed the Railroad Commission staff to assess the law — which reduced corporate tax rates from 35 percent to 21 percent effective Jan. 1 — and recommend ways to ensure that it is reflected in the gas utility bills paid by Texans.
She didn’t say how long the assessment might take, but commission spokeswoman Lauren Hamner Spreen called it a priority.
“I can just tell you without question that (Texas gas utility customers) will see the impact of it at some point soon,” Spreen said. “We are going to ensure that, because of that huge reduction (in the corporate tax rate), customers will realize those savings in their bills.”
It’s not clear at this point whether the commission will proactively examine all gas utility rates or do so as individual gas utility companies come before it to advocate for new rates. Spreen said the precise mechanism will be determined by the entire Railroad Commission once it receives the staff recommendations.