Austin, TX Medical Office Market Report Q3 2026
Austin’s medical office market experienced mixed leasing conditions in Q3 2026, with asking rents reaching $40.69 per SF despite softer occupancy trends. Vacancy increased to 10.5%, rising 28 basis points from the previous quarter as available space outpaced tenant demand. Net absorption totaled negative 32,951 SF, reflecting a quarterly reduction in occupied medical office space. Despite these challenges, annual rent growth reached 1.7%, highlighting sustained pricing strength across the market. Healthcare expansion and growing suburban populations provide opportunities for future leasing activity, particularly near established medical campuses. With construction activity below earlier historical peaks, Austin’s medical office sector retains favorable long-term demand drivers that could support occupancy recovery.
Key Findings
- Strong Rental Performance & Pricing Power: Austin’s medical office market maintains strong rental fundamentals, with asking rents exceeding $40 per SF. Healthcare demand and affluent demographics support steady rent growth and sustained long-term pricing power.
- Healthcare Demand Supports Market Stability: The market benefits from established healthcare networks and growing suburban populations. Continued demand for outpatient services supports leasing opportunities and long-term market fundamentals.
- Healthcare Expansion Fuels Growth: Major healthcare systems continue investing across Austin’s expanding suburban corridors. Population growth and increasing demand for outpatient services support sustained medical office leasing activity.
Austin Demographics
Source: Oxford Economics
- Unemployment Rate: 3.5%
- Current Population: 2,671,099
- Households: 1,119,445
- Median Household Income: $104,953
Austin Medical Office Rents
Average asking rents reached $40.69 per SF in Q3 2026, reflecting 1.7% annual growth and sustained pricing momentum across Austin’s medical office market. Strong household incomes and healthcare networks support demand for well-located outpatient facilities, particularly in growing suburban corridors. Despite softer leasing conditions, landlords maintained modest rental increases as healthcare-oriented properties benefited from long-term demand drivers. Continued population growth and selective development could support additional rental gains.
Market Asking Rent Per SF
Source: CoStar Group, Inc.
Austin Medical Office Vacancy
Vacancy increased to 10.5% in Q3 2026, rising 28 basis points from the previous quarter as Austin’s medical office market recorded negative net absorption of 32,951 SF. The increase reflects softer near-term leasing conditions as available space expanded during the quarter. However, established healthcare networks and growing suburban populations provide a foundation for future tenant demand. With construction activity below previous peaks, a more measured supply pipeline could help stabilize vacancy as healthcare providers expand their outpatient services.
Vacancy Rate
Source: CoStar Group, Inc.
Austin Medical Office Construction
Activity increased with 271,912 SF under construction and 11,418 SF delivered during the quarter. Although the pipeline expanded from the previous quarter, development activity remains substantially below the elevated levels recorded in 2022. Higher construction costs and selective financing conditions may continue to influence new project starts, encouraging more targeted development near established healthcare campuses. As healthcare providers expand across growing suburban corridors, a measured construction pipeline could support long-term demand while limiting excessive new supply.
SF Under Construction
Source: CoStar Group, Inc.
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Sales
Investment activity in Austin’s medical office market totaled 28 transactions in Q3 2026, with an average sale price of $291 per SF. Investor interest reflects the region’s expanding healthcare networks and growing demand for outpatient facilities. Properties near established medical campuses and high-growth suburban corridors offer opportunities for buyers seeking long-term healthcare real estate investments. The average capitalization rate declined to 7.63% from 8.04% in the previous quarter, indicating modest quarterly compression in transaction yields. Austin’s favorable demographics and established healthcare infrastructure support the sector’s long-term investment outlook.
Austin Medical Office Cap Rate
Source: CoStar Group, Inc.
By the Numbers
Q3 2026 | Source: CoStar Group, Inc.
- # of Sales: 28
- Price Per SF: $291
- Vacancy Rate: 10.5%
- Rent Growth (YOY): 1.7%
- Asking Rent Per SF: $40.69
- SF Under Construction: 271,912
- SF Delivered: 11,418
- SF Absorbed: -32,951
