8 Challenges Facing Austin Office

A vibrant, young workforce fuels the Austin economy, but with the growing demand for office space comes eight challenges.

1. Density & Air Quality

At Bisnow’s Austin Office of the Future event at the Hyatt Regency Thursday, Cousins SVP Tim Hendricks (left, with Dubois Bryant & Campbell's Bill Bryant and Swinerton Builders' Scott Tomhave) said there’s the challenge of keeping fresh air circulating as more people and computers are packed into smaller spaces. (Can't we just tell people to breathe more efficiently?) The denser space trend isn't going away any time soon, he adds. 

2. Parking

The crowd of 200 resembled the Austin traffic. Tim says parking is more of a problem in the suburbs because there are more transportation opportunities and off-site parking available downtown. In the suburbs, parking is limited and land costs make it more expensive. Most parking will need to be structured, but even though construction costs haven’t gone up dramatically, there’s no income coming from a parking garage, Tim says. Cousins’ latest suburban project, Research Park Plaza V has a 4/1,000 parking ratio. Here’s a video tour of the 173k SF project, slated to open this year. 

3. No Office Space For Small Biz

HPI managing director Jeff Pace (right, with client, RetailMeNot global facilities director Jeanne McNeil) says young companies in growth mode have a hard time finding the right office space because occupancy is so high that landlords can reject one- or two-year leases. For client RetailMeNot (which took 100k SF at 301 Congress and transformed it into a creative atmosphere), space for growth will be a challenge, too. 

4. Finding the Right Space

Finding the right space near transit opportunities and parking can be difficult. Growing companies may jump from three people to 50, which makes co-working spaces like WeWork more appealing because you're not locked in to a long-term lease. WeWork just took over 35k SF at 600 Congress last week, says VP Matthew Shampine (left, with Link Coworking's Liz Elam). Already, the space is about 60% leased, some by companies that moved to Austin when WeWork did, Matthew says.

5. Creative Office Designs

Avison Young principal Burke Kennedy (left, with Prosperity Bank's Justin Westmoreland) says many office tenants want creative spaces but don’t know how to define them. Does it mean aesthetics like sealed concrete and exposed ceiling or does it mean a different layout or crazy artwork? It’s important to learn how divisions work, Burke says. Then you can prevent situations where salespeople are right next to developers in an open space; those two personalities overlapping can kill creativity. (And makes it harder to plan strategy for inter-office Capture the Flag.)

6. Costs of Creativity

Clients often look for space that promotes collaboration and flexibility, but is also multifunctional. All those tend to lead to open space, says S. Tipton Studio principal Sandy Tipton (left, with colleagues Kate Blok, Andrea McCurdy and Kelsey Brown). Open tends to be cheaper, but there are costs to consider if you’re pulling out a ceiling or putting in glass walls. Also, in open spaces, furniture becomes a bigger budget item because it’s serving multiple uses, she says.

7. Energy Costs

Environmental Systems Design senior associate Jason Schutz (left, with Bisnow Texas business manager Karen Pierre) says offices use more electrical power today. Buildings designed 20 or 30 years ago create engineering challenges because there are more people and technology in smaller spaces creating need for more cooling. In the '90s, MEP services were about 25% of construction costs; today it's more like 50%. To get a ROI on technology, Jason says, longer leases are usually the way to go. 

8. Outgrowing Space & Lease Terms

Aquila Commercial principal Kristi Svec Simmons (left, with Avison Young's Carl Condon) says landlords want longer lease terms, but there are some clients who have out-of-the-ordinary needs. She has a couple of clients who need 10k SF today but know they’ll need 30k SF in about 12 months and they want the lease to reflect that.