Bisnow: Austin's Office Slump Is Fueling Mixed‑Use Projects

Austin’s office spaces are increasingly being redeveloped into mixed-use sites as the market shows early signs of recovery but continues to grapple with elevated vacancy rates.

“You walk into a lender's office and show a beautiful presentation of an office park, and the conversation is going to be pretty tough,” Shravan Parsi, CEO and founder of Austin-based mixed-use and multifamily developer American Ventures, said during a Bisnow event panel.

“However, when you present a mixed-use community that is fully integrated, with multiple demand drivers backing the same parcel … I think the chance of having a good conversation is pretty high.”

The office market’s elevated vacancy rate, which sat at around 25.8% in the second quarter, according to a JLL report, can be attributed to Austin’s post-pandemic boom of office tower deliveries and shifting hybrid work habits, panelists said at Bisnow’s Future of Austin Office & Mixed Use event.

“Single-use office is one of the toughest asset classes to get financed in America right now,” Parsi said. “So the capital moved into the fully integrated communities — and the developers followed it.”

With mixed-use sites, “location is critical,” Hines Managing Director Alex Ohrn said. “It’s an old cliché in real estate, and it's as true today as it ever been.”

In addition to a mix of uses, new office properties must be conveniently located for tenants and come with the finishes and amenities that have driven the flight to quality, Ohrn said.

“It has to be the right product quality for what we’re looking at,” Ohrn said. “People want to go here. They want to shop here. They want to stay here. They want to live here. They want to go out, meet friends for drinks, and so that creates this really great experience.”

Read the full article at Bisnow.