Austin's Sublease Market Absorbs Over 1 MSF in Seven Months
More than 1 MSF of Austin office sublease space has been absorbed since September, though large tech-era vacancies remain.
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Good morning. Austin’s office sublease market is finally showing signs of recovery, with more than 1 MSF absorbed since September as companies slowly return to the leasing table. But despite the momentum, a handful of massive tech-driven vacancies still account for more than half of the city’s available sublease space.
🎙️ This week on No Cap: Harbor Group International’s Richard Litton breaks down scaling to $21B, the shift from office to credit, and where he’s finding opportunity in a reset CRE market.
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Market Snapshot
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Austin Absorption
Austin's Sublease Market Absorbs Over 1 MSF in Seven Months
Austin’s battered office market is showing early signs of recovery, though a handful of massive listings still loom over the sector.
By the numbers: Austin’s available sublease inventory fell by more than 1 MSF since September, dropping from roughly 4.4 MSF to 3.3 MSF by late April, according to CoStar data, signaling improving tenant demand.
Big blocks still dominate: Despite the improvement, the market remains heavily concentrated in oversized listings. Eight subleases larger than 100,000 SF account for nearly 1.8 MSF, more than half of all available sublease inventory.
Tech firms reshuffle space: Some long-vacant offices are finally landing tenants. Elon Musk’s xAI recently absorbed Athenahealth’s 112,000 SF Seaholm sublease, while Meta has trimmed its Sixth and Guadalupe listing from 589,000 SF to about 488,000 SF after adding tenants including PwC.
New supply keeps hitting the market: The recovery remains uneven as companies continue to shrink their office footprints. Atlassian recently listed its entire 158,000 SF East Austin office for sublease, while major blocks from State Farm, Superior HealthPlan, Home Depot, General Motors and 3M also remain available.
Why subleases are winning: In a cautious leasing environment, subleases are attracting tenants with discounted rents, shorter lease terms, and move-in-ready buildouts. The tradeoff: tenants typically sacrifice long-term flexibility and control over the space.
➥ THE TAKEAWAY
Reset continues: Austin’s office market may finally be stabilizing, but the recovery still hinges on clearing a backlog of oversized tech-era office footprints as smaller tenants slowly return to the market.
Around Texas
➥ Republic National Distributing is cutting thousands of jobs and shedding facilities across multiple states as it sells major operations to Reyes Beverage ahead of a May deal closing.
➥ Dallas–Fort Worth leads the nation in industrial development with the largest pipeline, strong deliveries, active sales, and steady fundamentals despite rising vacancy.
➥ A 318-unit Texas multifamily portfolio entered special servicing after failing to secure a tax exemption under new state laws, highlighting growing risks for deals reliant on such incentives.
➥ Houston is investing heavily in walkability and street-level retail to revive downtown activity and boost demand.
➥ A vacant 442K SF Houston office building is headed for foreclosure after its sole tenant left and owners failed to refinance or reposition the aging asset.
➥ San Antonio apartment rents fell a record 6% year-over-year as elevated supply forces landlords to cut prices to retain tenants.
➥ Ashland Greene faces foreclosure on a 1,530-unit DFW portfolio after defaulting on $177M in floating-rate debt tied to peak-era acquisitions.
Follow the Money
| OFFICEDALLAS-FORT WORTH AT&T is planning a $1.35B, 2.3M SF headquarters campus in Plano, more than doubling its current footprint as it bets on in-person work. |
| DATA CENTERAUSTIN PowerHouse is planning a 500-acre data center near Austin but is seeking county oversight to bypass city control amid local opposition. |
| BROKERAGEDALLAS-FORT WORTH DuWest Realty and DBA merged to form a larger brokerage platform as DFW deal activity continues across sales, leasing and development. |
| DATA CENTERDALLAS-FORT WORTH CyrusOne is securing a $1.05B CMBS loan to refinance two nearly fully leased Texas data centers, underscoring strong demand but concentrated tenant risk. |
| STUDENT HOUSINGSAN ANTONIO S3 Capital provided a $116M loan to finance a 260-unit student housing project near Texas State University, expanding beyond traditional multifamily lending. |
| OFFICEDALLAS-FORT WORTH Pudu Robotics moved its U.S. headquarters from Silicon Valley to the Dallas area to support expansion and improve logistics across the Americas. |
| SELF-STORAGEAUSTIN A two-property, 1,087-unit self-storage portfolio near Austin traded hands, highlighting continued investor interest in the sector. |
📈 CHART OF THE WEEK
DFW office leasing activity has stabilized at roughly 19 MSF annually through early 2026, signaling a resilient market returning to near pre-pandemic norms despite broader office sector challenges.
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