It is the second year in a row the appraised values of downtown office buildings have jumped by more than 30 percent, the Austin American-Statesman reported Tuesday. Intense demand for scarce downtown office space has pushed up market values. Office towers are full of tenants and new condo proposals spring up every few months. Capitol Market Research reports occupancy rates of 96.1 percent on the 7.2 million feet of downtown office and 97.6 percent on more than 1.4 million square feet of retail space. The Travis County Appraisal District sent property appraisal notices last week.
Higher appraisals mean higher tax bills for building owners, who can pass the cost on to tenants.
Some experts worry that at some point, the rising costs of leasing office space downtown will inevitably slow the growth while causing the price of office space throughout Austin to increase. He said suburban property owners might seize the opportunity to raise their rents and still charge less than downtown office space. Increases in property taxes are not the only rising expenses faced by downtown renters. They typically will have to pay more for insurance and other expenses. That will squeeze not only the law firms and banks, traditional downtown tenants, but small retail shops trying to sell coffee or pastries at street level.