Austin Office Market
Annual full-service rental rates spiked to a new high of $45.27/SF, reflecting quarterly and annual increases of 1.0% and 9.3%, respectively. Overall vacancy increased by 20 basis points quarter over quarter to a record high of 23.4% as historically low recent net absorption has been driven by business and professional and technology companies continuing to shed excess space. The under-construction pipeline continued to empty out, ending the quarter with 100,453 SF under construction as restrictive fiscal policies and rising building costs have curbed new office groundbreakings. Quarterly leasing activity decreased to 1.1 MSF as compared to the previous quarter and remains well below the 16-year fourth-quarter average of 1.9 MSF as corporations slow leasing decisions to evaluate the impacts of artificial intelligence and hybrid work policies on space utilization.
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Austin Industrial Market
The market recorded 444,293 SF of positive absorption in the fourth quarter of 2025, marking the 26th consecutive quarter of positive absorption. Overall rental rates decreased by 2.4% quarter over quarter to $14.45/SF, reflecting a decline of 3.2% from the historic high achieved during the first quarter of 2024. The construction pipeline delivered 2.0 MSF during the fourth quarter of 2025. The under-construction pipeline continues to be elevated at 12.3 MSF, despite decreasing by 8.3% quarter over quarter. After three consecutive years of new deliveries outpacing annual demand, the imbalance persisted through year-end. Through the end of 2025, developers completed 8.9 MSF of new space versus 3.0 MSF of net absorption, creating a 5.9 MSF demand deficit that has driven the vacancy rate up by 320 basis points year over year to a record high of 15.1%.
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