Q3 2023 Austin Office Market Report
Austin’s office market continues to be negatively impacted due to the growing prevalence of flexible workplace arrangements. Tenants, particularly in the tech sector, are opting for smaller office spaces, posing a challenge for top-tier property landlords. As a result, average asking rents for top-tier space increased moderately to $43.71 per square foot.
The volume of leases in Austin continues to slow in 2023. Activity in the third quarter saw a 40 percent decline, leading to a forecasted rent decline to 2019 levels by next year. Expansion plans in all office sectors are restrained and unlikely to result in large-scale leases, emphasizing the demand for reduced footprints.
Not only has Austin faced over 500,000 square feet of negative net absorption for three consecutive quarters, erasing gains from the previous years, there was also an absence of new construction. Several projects have been delayed in response to market conditions. Despite national economic challenges, Austin’s job market remains robust, adding over 35,000 jobs year-over-year. The Texas capital continues to be a leading job market across the country.
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