Shooting up from the downtown skyline is a gleaming 66-story glass behemoth, a place “where Fortune 500 companies, high-rise residents and premier retailers come together to create a community of their own,” as sleek marketing brochures put it. The tech giant Meta, formerly Facebook, leased all 19 levels of office space as construction was underway in early 2022.
And the vast majority of projects are blazing ahead without companies lined up to move in. Roughly 87 per cent of new office space is expected to open vacant, data from Cushman & Wakefield shows. Interest rates were rock-bottom until early 2022, making it easy for developers to get financing for dozens of new projects. And because it’s common in Texas for commercial real estate to be built entirely on spec, developers could get loans without any guarantee that they’d be able to lease the space.
Meta’s goal is to “build a best-in-class hybrid work experience,” company spokesman Tracy Clayton said. The company’s commitment to Austin is also made clear by the roughly 1000 employees who live there, Clayton said.Meta’s name is still on the lease at Sixth and Guadalupe, after all, even while the company looks for new tenants. Another building, called the Republic, has leases lined up for a law firm and a private equity firm.
Remarkably, there’s a craving for even more space. The Downtown Austin Alliance says shows developers have proposed an additional 362,300 sq m of office space – and would move forward if banks were not shying away from new loans. And policymakers are still pushing hard to cool the economy down. Officials at the US Federal Reserve have made clear that they will keep interest rates high for as long as necessary. No one knows how long their aggressive moves will slow growth, especially because the totality of the Fed’s moves may not have hit yet.