Office Space in Austin: How Much Will It Really Cost?
It’s no secret that Austin, Texas is a rising economic hotspot. Start-ups and established companies who are looking to make a splash are moving to the area. Whether it’s investment advisors, tax professionals, lawyers, insurance agencies, or entrepreneurs, the Austin area is booming with potential for career-focused individuals and ambitious companies that are itching to grow. More and more companies are looking for office space in Austin.
But, without a functional workspace – especially in a developing, growing career-scape like Austin – your company won’t glean the opportunities needed to reach your goals. That’s why we’re here to help you lease the office space that makes the most sense for your business.
Whether you lead a start-up or an established business, office space is a major expense. Finding the right space for your business can seem tricky or overwhelming. We did some digging to find factors to consider when looking for office space in Austin, Texas.
The Cost of Office Space, by Austin location
Austin is a booming market for career-focused individuals and serious businesses who are trying to establish themselves. Because of this, there are several marketable real estate areas that could provide the best fit for office space in Austin.
It can be hard to put a dollar amount on the price per square foot of office space in Austin. Even if you determine your cost per square foot, it won’t reflect your total cost. The first consideration for pricing office space is location. As a general rule, the area you wish to lease an office in, combined with the class of building, is going to affect the total price.
Office Building Class Definitions
When talking about commercial real estate, offices, office buildings and the like, you’ll often hear descriptors such as “Class A,” etc.
But just what do these building classes mean?
The Building Owners and Managers Association, or BOMA, lays these out as follows:
Most prestigious buildings competing for premier office users with rents above average for the area. Buildings have high quality standard finishes, state of the art systems, exceptional accessibility and a definite market presence.
Buildings competing for a wide range of users with rents in the average range for the area. Building finishes are fair to good for the area. Building finishes are fair to good for the area and systems are adequate, but the building does not compete with Class A at the same price.
Buildings competing for tenants requiring functional space at rents below the average for the area.
Cost of Austin Office Space, considering Class type
Putting this a bit in perspective, a Class A building in Downtown Austin is going to be one of the most expensive office options, especially if you’re looking to lease a sizable area. While there are some Class B and C spaces available downtown, it is mostly a Class A neighborhood.
Southwest Austin is a similarly expensive area, but for different reasons. The area has mostly Class A buildings for office space, with some Class B and C. The high cost here comes from the fact that there is simply not a lot of available space for lease.
Other areas, like West Austin and Northwest Austin will provide you with plenty of Class B options that are moderately priced. On the most affordable end, Northeast Austin typically has the least expensive rates in town.
What contributes to the Cost of Office Space in Austin?
Now that you’ve got a good idea of where prices deviate in Austin, it might help to explain the why behind those deviations. There are dozens of factors that contribute to the cost of office space.
Some that are strictly economic, while some might be considered specifically preference-based.
Amenities & Services
As you probably know with any kind of real estate, the neighborhood and location are going to significantly affect the price of your rental, as we saw above.
They don’t say location, location, location for nothing, right?
But neighborhood and location aren’t the only factors that contribute to office space costs in Austin, Texas. You’ll need to take other costs into account. We’ve already touched on one: Building Class, but there are others, such as building amenities, operating costs (electric, janitorial, and building maintenance), furnished versus non-furnished office space, taxes, insurance, and usable space cost.
For example, if you’re looking for a furnished office space equipped with meeting rooms, utilities included, a doorman, and plenty of opportunity for growth, then you’re going to be paying quite a bit more in amenity costs than you would if you planned to rent a single office space for meeting purposes.
It all comes down to what you need, what amenities are must-haves for you, and what you can do without.
Building Class in more detail
We’ve seen how BOMA breaks it down and how the location might play a role, but let’s now consider class and amenities.
Class A buildings have amenities such as fitness centers, on-site restaurants, on-site management, incredible common areas, and top-of-the-line workspaces. Class B and C buildings are clean, well-kept and located in nice areas, but do not offer all of the amenities as Class A buildings. The class of office you need depends on your business and your goals.
You’ll also need to factor in additional costs such as building fees, amenities, and services that may not be included in your lease (water, sewer, security, etc.).
“Price Per Square Foot”: Breaking down the Lingo
If you Google office space in Austin, you’ll likely see a bunch of figures and acronyms that don’t always make sense.
Maybe you’re seeing things like “$10/SQFT” or “2.35/SQFT monthly.”
There are also terms like “RSF” and “USF.”
If these sound a little confusing to you, don’t worry – you’re definitely not alone!
Understanding some Terminology
First things first, SQFT means Square Foot, which basically means the area of a square with sides measuring one foot.
So if you’re seeing a figure like “10/SQFT,” that means you’re paying $10 per every square foot of the unit you’re hoping to lease. Translation? If you’re looking at a unit that’s 2,500 SQFT and the price per square foot is $10, you’re looking at an estimated base cost of $25,000 annually (2,500 x $10).
In other terms, “$2.35 per square foot monthly” simply means that you’ll be paying $2.35 per square foot every month for your agreed-upon terms. So, if you’re paying $2.35 per square foot monthly in your 2,500 square foot rented office space, you’ll pay $5,875 every month, which translates to $70,500 yearly.
USF stands for Usable Square Feet and refers to the square footage actually “usable” in the office space. This might be thought of as the private space you use to host your business, equipment, furniture, and personnel. On the other hand, RSF means Rentable Square Feet and refers to everything the USF does, in addition to the common areas of the building like the restrooms, hallways, elevator shafts, stairwells, etc.
Be sure to clarify the details when working out your terms.
How important is the Price per Square Foot (PSF)?
All of the above aside, if you only take one thing from this article, let it be this:
Your price per square foot is not the final price
Remember all of those factors we said go into making your total office space cost?
Starting with square footage helps create a relatively reliable calculation, but it’s still not set in stone. All of your costs, your final price, and other expenses are going to be listed in your lease or contract, so read carefully.
Instead of worrying about square footage or the price per square footage alone, consider how your company will fit into the space. Think of your employees, clients, vendors, equipment, and anything else that will fill your new office. Remember that RSF & USF from earlier?
- Touring the space is important – can you fit everything into your new office?
- You can calculate square footage per person, but the number on paper might not be what you actually need. Consider each employee and department when touring an office.
- Does the access and parking work well for your employees, guests, and vendors?
Check out our article for tips on determining how much office space your business needs, entitled How Much Office Space Do I Need?
Final Notes on Leasing Offices in Austin
As you’ve noticed, there are countless moving pieces involved in finding the ideal office space in Austin. From calculating the base price to finding all of the amenities your business needs, the process can be trying, to say the least. At the end of the day, remember that you are looking for an office that meets the needs of your business and stays within your budget. A luxury, high-rise office can actually be the worst space in the world if it doesn’t work for your business.
Executive Workspace is here to help you decide what type of office space makes the most sense for your business. We’ll also help you find a space that fits your budget, whether you want a downtown office with all the bells and whistles, or a simple, but effective, meeting space in North Austin. With multiple Austin locations, you are sure to find your perfect office.
Download our free ebook, Your Guide to Office Space in Austin for even more information.