Vacancy reached roughly 14.5% in Q1, a more than 20-year high, as the market continues to absorb a surge of new supply. Inventory growth since 2022 has been driven by large-scale logistics development, with pressures most evident in big-box space where speculative deliveries have outpaced demand and extended lease-up timelines. Tenant decision-making has become more cautious amid policy uncertainty, slowing leasing activity and pushing volumes to multi-year lows. While demand remains positive, absorption has moderated, particularly in non-owner-occupied space. Rising availability has placed downward pressure on rents, with overall asking rates declining and logistics space averaging roughly $12.60–$12.70 per square foot.
Key Findings
- Elevated vacancy continues to define market conditions as supply outpaces demand, particularly in large-format logistics space. Vacancy is 14.5%, with over 15 million square feet underway.
- Leasing has slowed amid economic uncertainty, though demand remains for modern, high-quality assets. Absorption totaled roughly 678,000 square feet.
- Rent growth has turned negative as landlords compete for tenants. Asking rents are down about 1.1% year over year to roughly $14.17 per square foot.
Austin Industrial Supply & Demand Dynamics
Source: CoStar Group, Inc.
Austin Demographics
Source: CoStar Group, Inc.
- Unemployment Rate: 3.7%
- Current Population: 2,633,441
- Households: 1, 101, 270
- Median Household Income: $103,270
Austin’s population stands near 2.6 million and continues to expand at a pace that ranks among the strongest nationally, even as growth has eased from earlier highs. The metro added roughly 43,000 residents over the past year, supported by steady domestic inflows and international migration. Much of this expansion is occurring in suburban submarkets, with Williamson County capturing a large share of new residents due to its relative affordability, available land, and ongoing infrastructure development.
Top Tenant Leases
- Compal USA Technology
- Digital Brands Group, Inc.
- Firefly Aerospace Inc
- Valstad
Population, Labor Force, & Income Growth
Source: CoStar Group, Inc.
Austin Industrial Construction
Development activity continues to concentrate in high-growth suburban submarkets, led by Round Rock and Southeast Austin. Round Rock remains anchored by Samsung’s 2.8 million square foot semiconductor facility in Taylor, which is expected to support long-term demand and attract a network of suppliers and related users. In contrast, Southeast Austin faces more pronounced near-term lease-up risk, with a significant share of space under construction remaining unleased and preleasing levels notably below historical norms, reinforcing near-term supply-side pressure.
SF Construction Starts
Source: CoStar Group, Inc.
SF Under Construction
Source: CoStar Group, Inc.
Austin Industrial Sales
Sales activity has slowed alongside softer fundamentals and higher borrowing costs, placing downward pressure on pricing and increasing investor selectivity. Despite this, Austin remains an active industrial market relative to its size, supported by long-term growth expectations. Activity has concentrated in newer assets, with investors targeting modern product and selectively taking on lease-up risk at adjusted pricing. Stabilized assets in high-growth suburban submarkets continue to command premiums, while vacant or partially leased properties trade at a discount. Institutional capital has re-emerged as a key driver, with sentiment remaining constructive despite near-term volatility.
Austin Industrial Sales Volume
Source: CoStar Group, Inc.
By the Numbers
Q4 2025 | Source: CoStar Group, Inc.
- Sales Volume: $3.8M
- Price Per SF: $173
- Cap Rate: 7.6%
- Vacancy Rate: 14.5%
- Rent Growth: -1.1%
- Asking Rent Per SF: $14.17
- SF Under Construction: 15.3M
- SF Delivered: 2.4M
- SF Absorbed: 678K
