It looks like office leasing IS leveling out in Austin. Here’s why:
Vacancy rates have declined
Vacancy rates have declined due to several factors. One is the sale of the Highpoint campus (former 3M campus on RR2222) to an owner occupant that took over 1million SF off the market. The other factor is the steady flow of large leases that happened in 2025 from NXP Semiconductor, XAI and NVIDIA.
New construction on hold
For three years running, construction of large speculative office projects has continued to be paused. This pause is giving the market time to absorb excess supply and allowing vacancies to trend lower by late 2026 signaling the beginning of a gradual recovery. (Costar, 2026)
Professional and financial services stepping up
Leasing by technology companies remain healthy but have eased from leasing levels recorded just before the pandemic. To fill the gap, professional and financial service companies have recorded strong leasing activity in the past quarter.
All of this means that rental rates for office space in Austin are stabilizing (and not necessarily going down), BUT there are still strong concessions available, particularly for newer, Class A office buildings, such as free rent (in some cases 4 to 8 months) and generous tenant improvement packages.
To learn more about the Austin office market or to go over your specific situation, call me at 512-736-5933 or email me at oddo@toweratx.com. Thank you, Chris Oddo
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