PIPELINE
THREE PROJECTS ARE SET TO DELIVER IN 2026.
Development activity downtown continues to cool, with three projects set to deliver by the end of 2026.
Construction on One Ladybird Lake broke ground at the beginning of 2026, with an anticipated delivery date in 2028 Permit applications for proposed projects have started to gain steam as market sentiment continues to improve Waterline, the tallest building in Texas, is scheduled to open later this year 1 Hotel Austin, the anchor of Waterline, is accepting reservations for August 2026.
The number of planned projects that have been deemed "inactive" has slowed in 2026, as market conditions continue to improve
OFFICE MARKET
OFFICE VACANCY SHOWS SOFTENING
Overall vacancy in the downtown office market showed a modest decline in the first half of 2026, driven by several notable lease transactions and the lack of new product being delivered to the market
Average office asking rates appear to have stabilized in 2026, holding near the $60 per sq. ft. mark.
Some notable lease transactions in 2026, including xAI leasing the entirety of the Seaholm Power Plant, and co-working operator The Malin subleasing an entire floor from Meta at Sixth and Guadalupe
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HOTEL OCCUPANCY TRENDS DECLINE AS PRODUCT INCREASES
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)2025(Q3-Q4)2026(Q1-Q2)
Historically, the spring festival season sees the largest spike in occupancy rates However, as new product has been delivered, coupled with a condensed SXSW and Austin Convention Center redevelopment, occupancy rates have gradually declined
Despite the gradual decline in occupancy rates, the Average Daily Room Rate experienced a solid uptick of 3% period-over-period compared to 2025 levels
More than 690 hotel units will deliver to the downtown market by the end of 2026
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HOTEL MARKET
RETAIL MARKET
REMAINS THE DARLING OF AUSTIN REAL
The Austin metropolitan area retail market remains tight, and Downtown Austin is no exception. The demand for space in the downtown retail market has outpaced the available supply, creating difficulty for prospective tenants that want to be part of the Austin story.
There have been more than twenty new retail business openings in downtown so far in 2026, with close to half of those openings related to the Food & Beverage industry
RETAIL MARKET
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)2025(Q3-Q4)2026(Q1-Q2)
Source: CoStar; Downtown Austin Alliance, Q2 2026
Source: CoStar; Downtown Austin Alliance, Q2 2026
MULTIFAMILY MARKET
Approximately 2,000 new residential units delivered to the downtown market in 2025, encompassing 740 condominium units and 1,250 multifamily units
This influx of new product has provided ample opportunities for potential renters to take advantage of downtown living, with effective rent concessions increasing to 7.4% in the first half of 2026.
Average occupancy levels have slowly increased since bottoming out in the first half of 2024, rising from 83 4% in 2024 to 89 1% in the first half of 2026
After the delivery of Waterline in late 2026, strong tenant demand is expected to continue, increasing occupancy
Source: CoStar; Downtown Austin Alliance, Q2 2026
Source: CoStar; Downtown Austin Alliance, Q2 2026
VISITS DOWNTOWN
Foot traffic activity downtown has returned to 93% of prepandemic levels.
While visitor activity is typically highest during the spring festival season, 2026 saw a decline of approximately 300,000 people during the month of March compared to 2025, as South by Southwest was condensed to seven days. The summer months typically see a decline in visitor foot traffic; however, this year visitor traffic has been higher than normal.
Q2 2026 SUMMARY
The current development cycle is coming to a close, with three projects slated to complete by the end of year This will allow the market the ability to absorb all the new product that has delivered over the past five years, with more than 20 new projects in the pipeline ready to kick off in the next cycle Office vacancy began to compress in the first half of 2026, driven by a lack of new product and numerous significant leases signed this year. Hotels saw strong spring festival demand with occupancy near 70%, though increased competition has softened asking room rates
While retail demand remains robust, the lack of affordable space is compressing the market
The housing market has seen a sharp spike in effective rent concessions in order to boost occupancy in the midst of the housing boom.
Foot traffic has rebounded to 93% of pre-pandemic levels, driven by growing numbers of downtown residents and strong entertainment district activity Inbound commuter trends continue to be influenced by macroeconomic trends.
Overall, downtown maintains its appeal as a cultural and employment hub, continuing to draw new tenants, employees and residents in with its vibrant landscape.
QUESTIONS?
Luke Goebel, Economic Development Manager lgoebel@downtownaustin com