Texas Office Markets Diverge in Recovery

Austin Struggles Amid Tech Retreat

Houston and Dallas are showing clearer signs of recovery in their office markets, but Austin continues to face challenges, reports The Real Deal. After rapid growth during the pandemic, Austin’s office absorption turned sharply negative in 2023, slightly rebounded in 2024, and slipped again by the end of 2025, according to a recent JLL report.

While both Dallas and Houston remained volatile, Dallas achieved positive annual absorption for the first time since 2019. Houston narrowed its losses but still posted a negative absorption rate in 2025. In contrast, Austin ended 2025 with a 26% vacancy rate as tech sector contraction took its toll.

Vacancy and Leasing Across the Triangle

Vacancy remains stubbornly high in the Texas office markets. Austin’s year-end rate of 26% mirrors Houston’s 26.3%, while Dallas leads with 27.2%—all elevated compared to pre-pandemic levels. Tech companies, despite earlier downsizing, accounted for the three largest leases in Austin’s fourth quarter, suggesting renewed sector activity.

• VMware renewed for nearly 135 KSF at River Place
• An e-commerce company subleased 108 KSF at Domain Gateway
• Nvidia renewed a 79 KSF lease at The Crossing at Lakeline

The leasing momentum coincides with major capital moves in the market, including a record-setting office transaction that further underscores investor confidence in Austin’s long-term fundamentals.

Development Pipeline and Rent Trends

Austin continues to invest in its office future, boasting a 1.7 MSF development pipeline—edging ahead of Dallas and well beyond Houston. Class A asking rents in Austin reached $60.89 PSF at the end of 2025, significantly higher than both Dallas ($42.35 PSF) and Houston ($37.36 PSF).

Looking ahead, Austin may benefit from an AI-driven demand uptick as tech companies form nearly a third of tenants in pre-leased new projects. The city’s future remains closely tied to evolving tech and AI trends in the office market.