STATE DOWNTOWN of AUSTIN
DEVELOPMENT
PIPELINE
PIPELINE CONTINUES TO SHRINK AS MARKET COOLS.
Development activity downtown continues to cool, with two projects delivered in Q3 2025 and no new projects kicking off.
After a relatively quiet period over the past year, some positive momentum has continued Endeavor Real Estate announced plans to move forward with redeveloping the former Waterloo Records site at 6th & Lamar St.
Two residential projects located in the Rainey Street district delivered this quarter, bringing an additional 922 residential units to the market
As the market continues to exhibit signs of slowing down, two hotel projects were removed from the Proposed & Planned pipeline after no movement has been made over the past two years
DOWNTOWN
HITS
A NEW HIGH
Overall vacancy in the downtown office market hit a new high, reaching 22 3% in Q3 2025 This vacancy will continue to climb as new office product is delivered to the market over the next 18 months Downtown asking rates hit a new historic high this quarter, surpassing $60 per sq. ft. across all asset classes, while "trophy" level assets are pushing closer to $65 per sq ft PwC subleased 32,000 sq ft at Sixth & Guadalupe, and DRW inked a deal for approximately 25,000 sq. ft. at 300 W 6th Street
SOFTENING FUNDAMENTALS AFFECT DOWNTOWN.
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)2025Q3
The demolition of the Austin Convention Center has affected large group bookings of hotels downtown, with occupancy falling to 53.1%.
The summer months typically lack large scale events that create a strong draw for tourists; however, October brings both the Austin City Limits music festival and the Formula 1 race weekend at Circuit of the Americas, both are strong tourism draws for the metro
An additional 890 hotel units are expected to deliver to the market downtown over the next 18 months, causing future planned hotel projects to reevaluate kicking off construction
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)2025Q3
HOTEL MARKET
Source: CoStar; Downtown Austin Alliance, Q3 2025
RETAIL THROUGHOUT AUSTIN METRO REMAINS TIGHT.
With downtown's tight occupancy, retail asking rates have grown exponentially since the 2nd half of 2024
Storefront activity has been robust, with several high profile national and local tenants making announcements of upcoming moves to downtown. 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)2025Q3
RETAIL MARKET
Source: CoStar; Downtown Austin Alliance, Q3 2025
Source: CoStar; Downtown Austin Alliance, Q3 2025
HOUSING MARKET
Occupancy slowly gained momentum in Q3 2025, increasing 100 basis points to 88 7% Also, the average asking rate increased to $3 66 per sq ft , with a yearly growth rate of 4.3%.
The influx of new product offered ample opportunity for potential renters, with overall stock of multifamily units increasing to more than 14,000 units.
With an anticipated 1,100 units delivering to the market over the next two years, the market could experience another spike in rent concessions as the new product is absorbed by the market.
Source: CoStar; Downtown Austin Alliance, Q3 2025
Source: CoStar; Downtown Austin Alliance, Q3 2025
VISITS DOWNTOWN
Foot traffic activity downtown has returned to 94% of Visitor activity since 2019, and 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 summer months typically see a slowdown in foot traffic activity, as people leave town for summer vacations This in turn affects the weekday employee count downtown
Total Downtown Monthly Visits
To
Tuesday, Wednesday, and Thursday continue to be the most popular days for in-office work downtown
The average weekday downtown employee count fell in Q3 2025, due to employees traveling during the summer months This count is a combination of Inbound Commuters and Resident Employees.
Inbound Commuters have continued to increase yearly, reaching approximately 83% of Q3 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
Downtown Austin’s economy continued to show both resilience and transition in Q3 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 22.3% even as average rents climbed, reflecting a soft but evolving market
Hotels saw a decline in occupancy rates and Average Daily Rates, driven largely due to the downtime of summer months and the lack of large scale events that drive tourism
Retail demand remains high, particularly for affordable spaces, while housing continues to experience downward rent pressure amid significant new supply
Foot traffic has rebounded to 94% of prepandemic levels, driven by growing numbers of downtown residents and strong entertainment district activity, with Tuesdays through Thursdays marking peak weekday visitation
Overall, downtown maintains its appeal as a cultural and employment hub, though affordability, construction, and market saturation present ongoing challenges
