STATE DOWNTOWN of AUSTIN
DEVELOPMENT
FOUR PROJECTS ARE SET TO DELIVER IN 2025.
Development activity downtown continues to cool, with two projects delivered in Q2 2025 and no new projects kicking off.
After a relatively quiet period over the past year, some positive momentum has continued A site plan was approved for One Ladybird Lake, and PUD applications were submitted for 600 E Riverside and 6th Street & Lamar.
Three residential projects located in the Rainey Street district and The Republic office tower near Republic Square are set to deliver by the end of 2025.
Even with positive momentum, more than five prospective projects in the development pipeline are considered inactive
OFFICE MARKET
DOWNTOWN OFFICE VACANCY HITS
A NEW HIGH
Overall vacancy in the downtown office market hit a new high, reaching 22% in Q2 2025 Vacancy will continue to climb as new office product is delivered to the market over the next 18 months Despite the increase in available product, average office asking rates continued their upward trajectory, climbing to $59.97 per SF across all office classes
Notable movements occuring this past quarter were the announcement of two subtenants taking space at Sixth & Guadalupe, totaling approximately 61,000 sq ft
DOWNTOWN HOTEL OCCUPANCY SURPASSES 70%.
Spurred by the spring festival season, hotels in downtown posted solid numbers with occupancy surpassing 70%.
Despite strong occupancy numbers, average daily room rates saw slight decreases compared to previous periods This can be attributed to the influx of new rooms delivered to the market, causing increased competition from operators. An additional 890 hotel units are expected to deliver downtown over the next 18 months
HOTEL MARKET
RETAIL THROUGHOUT AUSTIN METRO REMAINS TIGHT.
Q2 2025
RETAIL MARKET
The Austin metropolitan area retail market remains tight, and downtown Austin is no exception
Asking rates and rent growth have been sporadic, while leasing activity has remained low There are a growing number of speculative properties available awaiting new tenants.
Downtown Austin continues to be in high demand, especially for those seeking affordable retail and 2nd generation restaurant spaces
2019(Q1-Q2)2019(Q3-Q4)2020(Q1-Q2)2020(Q3-Q4)2021(Q1-Q2)2021(Q3-Q4)2022(Q1-Q2)2022(Q3-Q4)2023(Q1-Q2)2023(Q3-Q4)2024(Q1-Q2)2024(Q3-Q4)2025(Q1-Q2)
CoStar; Downtown Austin Alliance, Q2 2025
Source:
Source: CoStar; Downtown Austin Alliance,
After experiencing a sharp uptick in demand in the years following 2020, downtown's housing market went through a period of correction as an abundance of product delivered to the market, compressing occupancy throughout the market
The influx of new product offered ample opportunity for potential renters. In the past 18 months, the average asking rate fell by an average of $3 40 per sq ft With an anticipated 1,100 units delivering over the next two years, the market could experience another spike in rent concessions as the new product is absorbed
Do
Source: CoStar; Downtown Austin Alliance, Q2 2025
Source: CoStar; Downtown Austin Alliance, Q2 2025
VISITS DOWNTOWN
Foot traffic activity downtown has returned to 92% of prepandemic levels Visitor activity is highest during the spring and fall festival seasons, which include popular events such as South by Southwest and Austin City Limits Festival.
Downtown's cultural and historic districts continue to attract strong foot traffic, especially on weekend nights The return of collegiate sports during fall months drives strong foot traffic in entertainment districts, as fans look to capitalize on sociable settings to enjoy the entertainment
Tuesday, Wednesday and Thursday continue to be the most popular days for in-office work downtown
The average weekday downtown employee count has reached approximately 92% of Q2 2019 levels This count includes a combination of inbound commuters and resident employees.
Inbound Commuters have continued to increase yearly, reaching approximately 80% of 2019 levels
Rapid growth of residents living and working downtown has been the main driver in weekday employee foot traffic
Overall, Downtown Austin has maintained its appeal, offering several activities and amenities that continue to attract talent and investment
DOWNTOWN DAILY VISITORS
Q2 2025 SUMMARY
Downtown Austin’s economy show both resilience and transition in Q2 2025. Development activity has slowed, with only two projects delivered and several stalled, though key residential and office projects remain in the pipeline
Office vacancy reached a record 22% even as average rents climbed, reflecting a soft but evolving market
Hotels saw strong spring festival demand with occupancy above 70%, though increased competition has softened room rates.
Retail demand remains high, particularly for affordable spaces
Housing continues to experience downward rent pressure amid significant new supply.
Foot traffic has rebounded to 92% of pre-pandemic levels, driven by growing numbers of downtown residents and strong entertainment district activity Tuesdays through Thursdays mark peak weekday visitation.
Overall, downtown maintains its appeal as a cultural and employment hub, though affordability, construction and market saturation present ongoing challenges.
QUESTIONS?
Luke Goebel, Economic Development Manager lgoebel@downtownaustin com