Market Data

Since 2020, downtown has seen 43 new buildings deliver to the market, bringing an additional 14.1 million sq. ft. to the Austin skyline. Due to the residual effects of the pandemic, the commercial real estate market has been forced to recalibrate and find new ways to bring people back downtown. With the emergence of the hybrid work model, developers have begun to rethink the need to bring new office space to the market, with some projects transitioning to hotel and residential use.

The overall acceptance of the hybrid work model has caused weekday foot traffic downtown to fall to an average of 64% (compared to 2019 levels). The decreased foot traffic has forced numerous companies to reevaluate their space needs, with many opting to downsize their physical footprints. This has caused vacancy rates to spike significantly, climbing to over 20%.

As Austin has grown, so has our downtown residential population. We’ve also seen a boom in housing development that shows no signs of abating. Factoring in the housing units in the pipeline, the population of downtown could exceed 20,000 within the next few years.

There are currently more than 3,300 residential units under active construction, with an additional 6,800 units planned in the pipeline. The influx of new product has forced the market to rebalance, with average asking rates decreasing $0.35 per sq. ft.

The hotel market has rebounded significantly since the COVID-19 pandemic, with 12-month occupancy rates rising from a low of 24.4% in February 2021 to an average of 67% in Q1 2024. The return of in-person events and conferences has helped bolster occupancy rates and revenue, while the return of active tourism has helped drive demand in the hotel sector.