The Austin Office Market in Q3 2026: The Last Big Tower Lands
Austin’s office market just passed a milestone: the last major tower of the building boom is finished. Waterline has delivered downtown, and there is nothing of its size behind it. Vacancy is still high, but tenants have taken more space than they’ve given back every quarter this year, rents held, and the pipeline of new buildings has shrunk to a fraction of what delivered over the past year.
Here’s where things stand at the end of the third quarter, with the numbers courtesy of CoStar’s current Austin office report (data as of October 17, 2026).
The market at a glance
- Vacancy: 15.9% — down half a point from a year ago. Still well above Austin’s long-run average of about 11%, but no longer climbing.
- Net absorption: about 2.8 million SF over the trailing twelve months, including roughly 800,000 SF in the third quarter alone. Absorption has been positive in each of the first three quarters of 2026.
- Asking rents: about $46/SF full-service on average, up 3.1% year over year. Landlords are holding face rents and competing with free rent and improvement dollars instead.
- Under construction: about 764,000 SF across 53 buildings, roughly half of it already leased. About 2.5 million SF delivered over the past year; CoStar expects 2027 deliveries to fall to about 113,000 SF.
What it costs, by building class
- Class A (4–5 Star): about $58/SF asking, with 21.4% vacancy. On a triple-net basis, the CBD and Domain run roughly $38–$46/SF NNN, the newest trophy towers about $53, and comparable suburban buildings in the Northwest and Southwest closer to $24–$33.
- Class B (3 Star): about $39/SF, with 12.8% vacancy.
- Class C (1–2 Star): about $35/SF, with 11.4% vacancy.
The pattern from earlier this year is holding: the newest, most expensive buildings carry the most empty space and also get nearly all of the demand. Buildings finished since 2020 absorbed about 1.3 million SF this year, while older Class A buildings gave back roughly 430,000 SF. If your building is older than 2020, you’re competing on price and concessions.
Where the deals are
Downtown is still the most expensive address in the market at about $62/SF asking, with 22% of it vacant. East Austin is next at about $52 and carries the highest vacancy in the city at nearly 27%. The Domain and North Austin sit around $48 with 11.5% vacancy. For value, look west and north: Northwest Austin quotes about $39.50 and absorbed 1.2 million SF over the past year, more than any other submarket, and Round Rock remains the tightest of the major submarkets at under 5% vacancy.
The third quarter’s big signatures were a mix of law, tech, and engineering: Jackson Walker took 117,000 SF at The Republic downtown, Tesla signed 82,000 SF at 717 Parmer, Qualcomm committed to 66,000 SF at Parmer Business Park, Virtu Financial added 54,000 SF at The Republic, and Freese and Nichols took 39,000 SF at Quarry Oaks III in the Northwest.
On the sales side, office buildings have changed hands at a faster clip this year: about $681 million across 326 sales through the third quarter, at an average of roughly $336 a foot. One Eleven Congress sold for $208 million in July (about $400 a foot), 405 Colorado went for $151 million (about $733 a foot for a new downtown tower), and Research Park Plaza V in the Northwest traded for $42 million at a 9.9% cap rate. Prices overall are still about 17% below their 2021 peak, which is exactly why buyers are back.
What this means for you
If you’re a tenant, you still have leverage, and this is the quarter to use it. Vacancy near 16% means landlords are competing for good credit with free rent and TI dollars, especially in the newer buildings where the empty space is concentrated. But with Waterline delivered and almost nothing starting behind it, the supply of large, high-quality blocks will thin through 2027. CoStar’s forecast has vacancy drifting down to about 14.8% next year and rent growth picking up. If your lease expires in the next 12–18 months, start now.
If you’re an owner, the numbers are moving your way: positive absorption every quarter this year, a pipeline that is nearly empty, and sale prices that have stopped falling. But tenants are still shopping hard and choosing the newest, best-located space. Buildings that are priced honestly and marketed actively are leasing. Overpriced or quietly listed space is not.
What the averages can’t tell you is your building, your block, and your timing. If you want a read on your specific situation — what your space should rent for, or what you should be paying — that’s the question we answer every day.
Source: CoStar Austin Office Market Report, data as of October 17, 2026. See our Austin Office Market guide for the full rate and vacancy picture, or browse office space by area: Downtown, Central, North & Domain, Northwest, South, Southwest, East, Cedar Park & Round Rock.
