Since 2022, the American economy has experienced a massive surge in inflation, leading to widespread concerns about its potential impact on various sectors. However, Austin, Texas, appears poised to emerge as a notable exception to this trend. Thanks to a combination of factors, including strong local and national economic indicators, attractive interest rates, and the allure of the vibrant city, commercial real estate in Austin is poised to thrive in the next 24 months despite the inflationary pressures. This article explores the reasons behind this optimistic outlook.

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These are the 4 Reasons Why Austin’s Commercial Real Estate Will Surge in the Next 24 Months:

1. Robust Local and National Economic Data [read: More businesses and people are arriving in Austin every day and that trajectory and that trend will continue]

Austin’s economy has been on an upward trajectory for several years. The city’s diversification into tech, healthcare, and other industries has made it a hub for job seekers and businesses alike. This robust economic growth has been further bolstered by its friendly business environment, low taxes, and the presence of major corporations like Tesla, Apple, and Amazon, which have chosen Austin as their base of operations.

Nationally, despite concerns about inflation, the United States has been experiencing significant economic growth, which is typically favorable for the real estate sector. A strong national economy can lead to increased consumer spending, greater business expansion, and a growing demand for commercial spaces.

2. Inflation Hedge: Tangible Assets [read: with the value of paper money going down, savvy investors buy tangible, income-producing, assets. Like commercial real estate for example]

Commercial real estate often acts as a hedge against inflation. As the purchasing power of the dollar diminishes, real assets like property tend to retain or increase in value over time. Investors and businesses often turn to real estate as a way to preserve their wealth and generate stable income streams in periods of inflation.

Austin’s real estate market has shown remarkable resilience in the face of economic challenges in the past. During the Great Recession of 2008, Austin’s commercial real estate market performed relatively well compared to many other cities, thanks to its diversified economy and strong population growth.

3. Attractive Interest Rates [read: small businesses drive local economies. More small/med/large businesses are flooding into Austin from California and New York to take advantage of tax savings]

The Federal Reserve has signaled its intent to keep interest rates low for the foreseeable future, despite concerns about inflation. Low-interest rates make it more affordable for businesses and investors to borrow capital for property acquisition and development. This has a significant impact on the commercial real estate sector, as lower financing costs can boost demand and encourage investment in the market.

4. The Austin Allure [read: Austin is attracting small businesses to support and supply large manufacturers like Tesla and Samsung. We are working with those businesses to find space to lease and buy, but that space is currently in short supply]

Austin’s unique cultural appeal and high quality of life have attracted a steady influx of residents and businesses over the past decade. The city’s vibrant arts scene, live music, outdoor activities, and booming culinary scene make it a destination for talent from across the country. This population growth has driven up demand for commercial real estate, particularly in the retail and office space sectors.

Conclusion

Despite concerns about inflation affecting the national economy, Austin’s commercial real estate market seems well-positioned to thrive in the next 24 months. Strong local and national economic data, the city’s allure, and the benefits of commercial real estate as an inflation hedge all contribute to this optimistic outlook. With low interest rates encouraging investment and a robust, diversified economy, Austin remains an attractive destination for businesses and investors seeking stability and growth in a time of economic uncertainty. As the saying goes, “Everything is bigger in Texas,” and the commercial real estate market in Austin is no exception, poised to continue its impressive growth in the face of inflation.

Zach Roesinger is a commercial real estate agent for Compass Real Estate : All American Realty Group and helps his clients with the acquisition and disposition of investment sales as well as the leasing and ground-up construction of warehouse, industrial and retail properties in Austin and throughout Central Texas. He can be contacted via email (zach.roesinger@Compass.com) or direct via 512.949.1418. 

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