Vacancy reached 13.9%, a two-decade high, reflecting a sharp reversal from the market’s prior cycle low and highlighting how speculative development has pulled demand forward. The vacancy increase has been concentrated in newer inventory, with product delivered since 2021 accounting for the majority of vacant space, underscoring lease-up challenges for recently completed big-box logistics facilities.
Tenant decision-making has become more cautious, particularly among larger users, where fewer leases over 100,000 square feet were executed versus the prior year. As availability rose, logistics asking rents began to decline, with average asking rates around $12.50 per square foot, down from the 2024 peak, and landlords increasingly competing on economics rather than scarcity.
Key Findings
- Market conditions softened further in late 2025 as speculative deliveries continued to outpace tenant demand, pushing vacancy higher and extending the lease-up cycle for new product.
- Rent momentum shifted decisively in favor of tenants, with logistics landlords leaning into concessions and rate flexibility amid elevated availability in big-box facilities.
- Capital markets showed early signs of re-engagement as a pricing reset created entry points for long-hold investors, though transaction velocity cooled late in the year as fundamentals weakened.
Austin Industrial Supply & Demand Dynamics
Source: CoStar Group, Inc.
Austin Demographics
Source: CoStar Group, Inc.
- Unemployment Rate: 3.5%
- Current Population: 2,608,790
- Households: 1,087,122
- Median Household Income: $106,086
The metro’s population has reached approximately 2.6 million residents, with growth still among the strongest nationally even as the pace has moderated from the prior decade. New migration has flowed to suburban areas, particularly Williamson County, where household formation is being reinforced by relative housing affordability and expanding amenity infrastructure. Austin’s younger age demographic, with an outsized concentration of residents aged 25–44, supports long-term consumption and labor force expansion, both of which are critical inputs to industrial demand.
Top Tenant Leases
- Valstad
- Firefly Aerospace Inc
- Comapal USA Technology
- Digital Brands Group, Inc.
Population, Labor Force, & Income Growth
Source: CoStar Group, Inc.
Austin Industrial Construction
Austin remains in an elevated construction cycle, with total industrial space under construction increasing to 14.1 million square feet at the end of 2025, placing the metro among the most active development markets nationally. Construction has shifted to high-growth suburbs, with Round Rock and Southeast Austin accounting for more than half of the space underway. The Round Rock submarket is being reshaped by Samsung’s owner-occupied semiconductor fab in Taylor, a multi-phase project that is likely to deepen industrial’s presence in the northern corridor. Meanwhile, Southeast Austin carries near-term lease-up risk, given that a large part of its pipeline remains uncommitted.
SF Construction Starts
Source: CoStar Group, Inc.
SF Under Construction
Source: CoStar Group, Inc.
Austin Industrial Sales
Investment activity in Austin remained mixed throughout 2025, shaped by the combination of softer occupier fundamentals and improving price discovery. Elevated vacancy and declining rents have strained property-level performance, particularly for newer big-box assets, and higher cost of capital has continued to pressure valuations and seller expectations. Transaction activity has shifted toward newer product, with a meaningful share of volume concentrated in assets delivered within the last few years, including properties still in lease-up where buyers are willing to assume stabilization risk.
Austin Industrial Sales Volume
Source: CoStar Group, Inc.
By the Numbers
Q4 2025 | Source: CoStar Group, Inc.
- Sales Volume: $26.7M
- Price Per SF: $172
- Cap Rate: 7.5%
- Vacancy Rate: 13.9%
- Rent Growth: -2.1%
- Asking Rent Per SF: $14.13
- SF Under Construction: 14.1M
- SF Delivered: 2.2M
- SF Absorbed: 803K
