Activity for office in Austin is starting to slow down, despite a strong overall year. This is highlighted by net absorption in the fourth quarter falling to negative territory at -94,400 square feet, according to a market report from Colliers.
"Leasing activity slowed considerably," Colliers noted, adding that this trend was reflected by "increased move-outs and fewer large lease commitments."
However, for the full year 2025, demand was strong, with net absorption coming in at 706,000 square feet.
The largest lease in the fourth quarter posted in the report was Vmware's 134,600 square foot renewal in the Northwest submarket. NVIDIA Corp and Harmony School of Excellence Austin took the next largest spaces, with their 79,300 and 50,000 square foot renewals, respectively.
Vacancy continued its upward trend, increasing by 40 basis points year-over-year to 22.3 percent. That was a result of tenants being selective and insisting on higher-quality assets, according to Colliers.
On a positive note, asking rents surged to a record of $46.19 per square foot, more than $3 higher than the total posted at the end of 2024.
Just 22,800 square feet of office supply hit the market, well below the 154,300 square feet in the fourth quarter of 2024. Also, only 724,300 square feet was under construction, compared to the previous 1.6 million square feet that was underway.
"Demand for well-located, higher-quality space remains competitive," Colliers said.
"Taken together, these dynamics point to a market in transition, gradually working through excess availability and moving toward
a more balanced supply-and-demand environment."
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