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Office Market Insight

Austin Q3 2023 Market Stats

Avg. NNN Rent
Vacancy Rate
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Embracing the New Era of Work: Smaller Office Leases Dominate in Austin

In recent years, the nature of work has undergone a seismic shift, driven in large part by the COVID-19 pandemic. As hybrid work becomes the new norm, the implications for the office market are evident. Smaller leases have dominated the Austin market, reflecting the growth of hybrid work arrangements and the ‘move-and-shrink’ trend.

Many recent reports in commercial real estate indicate that the bulk of leasing activity is taking place in the size range below 5,000 SF. As we study the several hundred transactions completed by ECR YTD here in the Austin market, the majority of the leases completed support this data. As companies reevaluate their real estate footprint, the trend is showing strength in smaller-sized leases versus leases over 10k SF.

The dominance of smaller lease sizes signifies a significant shift in market dynamics. This trend reflects the evolving needs and preferences of businesses particularly in the context of the rise of hybrid work models and flexible office arrangements. The appeal of smaller lease sizes lies in their compatibility with the ‘move-and-shrink’ trend, mirroring a strategic response to economic uncertainties and the transformative impact of COVID-19. Companies increasingly recognize the practicality of compact office spaces, aligning with the efficiency and cost-effectiveness demanded by contemporary business models. This dominance of smaller leases not only mirrors the agility of businesses in adapting to changing circumstances but also reshapes the landscape of the real estate market, emphasizing the growing importance of flexibility and adaptability in the way companies approach their office space needs.

With the challenges, there is optimism for the future of the Austin office market. By Q3 2023, the Austin region has surpassed job pledges made in all 2022. Opportunity Austin recently estimated that companies added or pledged to add more than 10,000 jobs through expansions and relocations from July to September. That estimate has pushed the tally so far to nearly 15,000 jobs pledged across 58 expansions and 25 relocations through the end of September. Overall, the rise of hybrid work in Austin has brought about positive transformations in the office leasing landscape. Smaller office leases have emerged as a dominator due to the growing flexibility in work arrangements. The office market is poised to bounce back as businesses continue to embrace the evolving work paradigm.

Austin Sublease Activity

Quarter Class A Office Class B Office Class C Office Total
2018 Q1 1114427 465834 22831 1603092
2018 Q2 1135173 703671 27356 1866200
2018 Q3 1158644 596011 62841 1817496
2018 Q4 1025760 685090 51813 1762663
2019 Q1 959386 616030 32816 1608232
2019 Q2 907874 659263 19732 1586869
2019 Q3 641646 632070 27772 1301488
2019 Q4 943674 657355 20145 1621174
2020 Q1 1293038 699123 20254 2012415
2020 Q2 1912374 808228 35809 2756411
2020 Q3 2295295 946767 44659 3286721
2020 Q4 3024439 1070789 48013 4143241
2021 Q1 2905258 1016242 59778 3985265
2021 Q2 2067050 823289 51786 2942421
2021 Q3 1760065 731252 38713 2530284
2021 Q4 1889479 845798 45870 2781147
2022 Q1 1468352 909732 51755 2429840
2022 Q2 1905530 888513 30219 2824263
2022 Q3 2536072 1265781 28336 3829191
2022 Q4 3331840 1437075 32726 4812712
2023 Q1 3898586 1450787 39880 5389254
2023 Q2 4436146 1478106 34539 5948791
2023 Q3 4772705 1546187 15571 6334463

Austin In the News

US Office Leasing Picks Up, But for Smaller Spaces August 2023 CoStar Sublease Availability Growth Slows for Austin Office, Hints at a Peak August 2023 Bisnow More Office Tenants Looking at Owners’ Books Before Signing Leases July 2023 Bisnow Vacancies in Both Prime and Vintage Buildings are Softening Office Demand in Austin September 2023 CoStar


Austin Q3 2023 Office Development Pipeline




Austin Submarket Map


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