Austin Office Market Report

Resilient demand unable to keep pace with development. Entering the second half of 2023, Austin’s vacancy rate stood near 19 percent, about 500 basis points above the metro’s long-term average. The ongoing lift has been a byproduct of aggressive construction, however, rather than soft demand. In fact, net absorption from April through June 2023 measured at a five-quarter high. This allowed occupied office stock to hit an all-time record in June 2023, surpassing the pre-pandemic peak by over 2.4 million square feet. At the same time, Austin’s inventory expanded by an eye-catching 13.5 percent since 2019. Only three other markets in the country — Salt Lake City, San Jose and Nashville — came anywhere close to that pace at 8.8, 8.3 and 8.1 percent, respectively, which were still considerably below Austin’s surge. As of September, an additional 5.2 million square feet was underway in the metro with scheduled delivery dates in 2024-2025, likely maintaining vacancy pressure in the coming years.