Office vacancies in Austin at record highs to start 2025

AUSTIN – The Austin Business Journal reports that as Austin’s downtown skyline climbed higher and higher in 2024, so too did the city’s office vacancy rate. Downtown has seen years of development and expansions that have resulted in glittering high-rise additions — such as the impressive Sail Tower on Lady Bird Lake and Austin’s current tallest tower, Sixth and Guadalupe. But as striking as those additions have been, the Central Business District is having trouble filling up all of its office space and vacancy rates are at an all-time high. Austin as a whole is experiencing record office vacancy — estimated at 17.6% citywide as of the first quarter this year, according to CoStar — but things are even worse downtown. Office vacancy in the CBD is estimated at 22.3% to start the year, the highest level since it began tracking the data in 2000, CoStar analyst Israel Linares said.

Some other real estate analytics firms put the figure even higher. A recent report from CommercialEdge pegged Austin’s citywide office vacancy as 27.7%, the second-highest in the nation behind only San Francisco. A number of factors are responsible for the elevated vacancy rates, experts say. Part of the trend stems from a rush of development downtown beginning in the 2010s that has resulted in several new towers, which now are drawing tenants away from older towers. Another major factor is uncertainty regarding office needs in the post-Covid world, in which hybrid and remote work are commonplace. In addition, the large amount of office space in Austin available for sublease has increased competition for tenants, even though space up for sublease isn’t reflected in vacancy rates because it’s technically leased. The upshot is an overall Austin leasing environment — particularly downtown — that’s “difficult” for the owners of office buildings, to say the least.