As a city that prides itself on keeping it “weird,” Austin continues to forge its own path in commercial real estate. The market in the Texas state capital is evolving, but in true Austin fashion, its trajectory can be described as strong, and a little weird. From former food‑truck parks reborn as retail hubs to tech campuses rising near Barton Springs in downtown, the city’s growth mirrors its eclectic culture, striking a balance between innovation, state government, and major corporate headquarters.
Austin’s appeal remains high for both residents and businesses. For more than a decade, it ranked among the fastest‑growing large U.S. metros. Between 2022 and 2023, the “City of the Violet Crown” (named for the color of the sky at sunset), slipped to No. 2 per U.S. Census Bureau estimates, but the momentum stayed intact.
Austin’s economic foundation is diverse, driven by manufacturing, healthcare, professional services, and technology. Its technology identity dates to the 1960s, when IBM and Texas Instruments established operations to tap into the University of Texas (UT) research ecosystem and take full advantage of the city’s relatively low cost of living. This history earned the city the nickname “Silicon Hills.” The legacy stuck when Michael Dell started building computers for classmates at UT in 1984, a dorm-room project that grew into Dell Technologies. The company is still headquartered in Round Rock, a suburb of Austin, about 20 miles north of the city.
Expansion from major tech players has reinforced this legacy. For example, IBM’s announcement in November last year that it is fast-tracking its headquarters relocation underscores its commitment to Austin as a key U.S. hub, even as the company trims office space in other markets. The new office positions IBM closer to major enterprise tenants and the city’s tech corridor, where companies like Amazon, Indeed and Vrbo have anchored expansions in recent years.
On the corporate relocation front, Austin has been a magnet. CBRE analysis shows the Austin metro area ranked second nationally for headquarter moves between 2018 and 2024, with 81 companies relocating there. Notable relocations include Oracle, Tesla, and the main Texas facility of SpaceX.
Austin experienced 40.9% technology job growth between 2019 and 2023, the second‑highest rate among major markets, and posted a 15% office rent gain, which was the largest in the U.S. Austin ranks as the 5th best tech talent market in North America for the second consecutive year, according to CBRE’s Scoring Tech Talent report. The report also highlights Austin as having the highest growth rate of college-educated residents in their 30s across North America, rising 48.3% from 2018-2023. As of September 2025, more than 108 tenants were actively seeking space totaling over 3.52 million square feet. Driving this demand is the technology sector, which is currently pursuing more than 1.5 million square feet of office space across the Austin market.
Yet in Q3 2025, the Austin office market faced its third consecutive quarter of negative absorption, recording 207,559 square feet. Despite this downturn, the availability rate saw a slight improvement, dropping by 10 basis points to 30.7%. This decrease in availability, coupled with a 2.7% quarter-over-quarter contraction in sublease space, suggests some stabilization within the market. Encouragingly, leasing activity surged at the same time, exceeding 1 million square feet, a significant increase of 76.2% compared to the previous quarter.
Overlaying these fundamentals is real-world, return-to-office behavior. A flight to quality is underway, with tenants gravitating to Class A space, even as overall market vacancy remains elevated. High-quality, well-amenitized buildings in strong locations with access to transportation and a diverse tenant mix throughout Austin are performing better than older buildings without improvements in less convenient locations. In Q3 2025, 85% of leasing activity was captured in Class A buildings. Additionally, Austin has consistently ranked first in the nation in return-to-work efforts with an average peak day building occupancy rate of 96.6% for Class A buildings, compared to an average of 64.2% in all buildings as of November 5th, 2025, according to Kastle Systems’ weekly Back to Work Barometer.
Keeping Austin’s Class A momentum going, KBS acquired 515 Congress, more than 10 years ago. A 26‑story property, 515 Congress offers 12,000 square feet of ground‑floor retail and a marble‑clad, two‑story lobby framed by floor‑to‑ceiling glass.
Its location at Congress and 6th provides sweeping Capitol and Hill Country views while placing tenants’ steps from Lady Bird Lake and the 6th Street entertainment district.
Austin is working through a supply surge in multifamily. According to Cushman & Wakefield, in Q3 2025, the Austin multifamily market saw an increase in new supply, with 6% new units delivered, pushing the total existing units past 345,000. Despite this new inventory, the market also showed strong demand, with net absorption ahead of 2024’s pace, although the stabilized vacancy rate increased to 10.2%. Rent growth slowed to 1.5% year-over-year, while the development pipeline decreased significantly, suggesting a more balanced supply outlook for the future.
On the industrial and logistics front, Samsung is moving ahead with a $37 billion semiconductor investment in Central Texas, anchored by a $250 million state grant awarded in 2025 for the first phase of its six million square foot fabrication plant. Initial operations are expected by late 2026.
Headwinds remain, including interest rate uncertainty, shifting trade policy, and periodic sector‑specific layoffs. Yet Austin’s resilience — what KBS CEO and Eastern Regional President, Marc DeLuca, has defined as the “cyclical nature of CRE and the economy” — continues to anchor the city’s performance.
Whatever lies ahead, Austin’s mixture of innovation, talent, and cultural originality may prove more than enough to keep the city as strong as it is proudly “weird.”
This article first appeared in the 2026 edition of KBS Premier magazine, which can be found here. To learn more about KBS and the commercial real estate industry, visit KBS.com/Insights.
