Austin’s industrial market continues to soften as vacancy reaches a two-decade high of 13.3%, driven largely by an unprecedented wave of uncommitted big-box logistics development. Deliveries have outpaced demand for six consecutive quarters, and although 860,452 SF was absorbed in 25Q3, it was not enough to offset the rapid expansion of supply.

 

Since 2021, inventory has grown by nearly 50%, with properties built during this period now making up 60% of all vacant space. Pre-leasing remains weak, with only 35% of the 10.4 million SF delivered in early 2025 leased prior to completion, while leasing activity has slowed sharply, leading to negative rent growth. With 7 million SF of uncommitted space still underway, vacancy is expected to rise further before stabilizing in late 2026.

 

Key Findings

• Austin’s industrial vacancy rate has climbed to 13.3%. This sharp rise is driven by a massive wave of speculative big-box development and six consecutive quarters of deliveries outpacing absorption.
• Developers continue to build aggressively, with 15.3 million SF under construction, the fourth-largest total nationally. Nearly 7 million SF of this space remains unleased.
• Investors are targeting recently built industrial properties, which make up 40% of sales volume, and assets over 100,000 SF, accounting for 57% of transactions.

 

Austin Industrial Supply & Demand Dynamics

Source: CoStar Group, Inc.

 

 Austin Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 3.5%
• Current Population: 2,602,167
• Households: 1,083,490
• Median Household Income: $105,607

 

Austin demonstrates resilience and long-term growth potential despite a cooling in its labor market. Much of the newest job expansion has come from non-cyclical sectors such as education, health services, and government, which together account for 40% of the one million jobs created since August 2024. Austin’s business-friendly environment, absence of state corporate and income taxes, and deep talent pipeline continue to attract companies at a nation-leading pace, aiding population growth.

 

Top Tenant Leases

Source: CoStar Group, Inc.

• Zellerfeld
• Colt Recycling
• Base Power
• Avride

 

Population, Labor Force, & Income Growth

Source: CoStar Group, Inc.

 

 Austin Industrial Construction

Austin’s industrial construction pipeline remains one of the most active in the nation, with developers breaking ground on 8.7 million SF in 2025 amid confidence in long-term demand. Nearly half of this new space is unleased, reflecting a shift toward build-to-suit and owner-occupied projects, which now exceed historical averages. With 15.3 million SF underway, submarkets like Round Rock and Southeast Austin are driving much of the activity, supported by major projects like Samsung’s 2.8 million SF semiconductor facility. However, a mismatch between delivered building sizes and tenant requirements is contributing to rising availability, signaling elevated vacancy risk.

 

Construction Starts (SF)

Source: CoStar Group, Inc.

 

Under Construction (SF)

Source: CoStar Group, Inc.

 

 Austin Industrial Sales

Sales across industrial are adjusting to rising vacancies and softening fundamentals, pushing asking rents down and motivating sellers to recalibrate pricing. This has opened the door for investors seeking long-term value, particularly in recently built properties, which made up 40% of sales activity. Suburban assets remain highly sought after, with stabilized buildings trading above $200/SF and non-stabilized properties in northern suburbs selling for $140–$170/SF. Institutional buyers have reemerged as major players, led by Ares Management, helping drive quarterly sales volume to $28.5 million. While sales slowed in 25Q3 amid inflation concerns, Austin remains one of the nation’s most actively traded industrial markets.

 

Austin Industrial Sales Volume

Source: CoStar Group, Inc.

 

By the Numbers

Q3 2025 | Source: CoStar Group, Inc.

• Sales Volume: $28.5M
• Price Per SF: $165
• Cap Rate: 7.5%
• Vacancy Rate: 13.3%
• Rent Growth: (1.0%)
• Asking Rent Per SF: $14.26
• Under Construction: 15.3M SF
• Delivered: 1.7M SF
• Absorbed: 860K SF