Austin Office Market
Annual full-service rental rates recorded a historic high of $45.07/SF, reflecting a 5.7% increase over the fourth quarter of 2024 and a 10.2% increase year over year. Direct and sublet availabilities declined by 30 basis points each on a quarterly basis. However, vacancy increased by 60 basis points on a quarterly basis to 23.6% as the market continues to work through the elevated level of deliveries that occurred during the past several years. The under-construction pipeline continued to contract, ending the quarter with 2.0 MSF under construction as restrictive fiscal policies and rising building costs curbed new office groundbreakings in the market. Financial uncertainty has decreased quarterly leasing activity to 1.4 MSF, well below the 16-year first-quarter average of 2.0 MSF.
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Austin Industrial Market
The market recorded 1.6 MSF of positive absorption in the first quarter of 2025, marking the 23rd consecutive quarter of positive absorption. Overall rental rates increased 0.7% quarter over quarter to $14.63/SF, reflecting a decline of 3.1% from the historic high achieved during the first quarter of 2024. The construction pipeline delivered 3.6 MSF during the first quarter of 2025. The under-construction pipeline ended the quarter with 14.6 MSF remaining under construction, below the previous quarter’s pipeline of 16.2 MSF. After three years of new deliveries outpacing annual demand, vacancy increased by 360 basis points year over year to a recent high of 12.6%.
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