Office markets in Houston and Dallas have made strides recovering from the pandemic, but Austin tells a different story.
Austin boomed during the pandemic, as developers built enormous built-to-suit trophy towers for tech companies fleeing California. But, the bubble burst almost immediately, with interest rates cooling the market abruptly.
Office space absorption in Austin matches that narrative. Absorption was positive in Austin for 2021 and 2022 and abruptly turned negative in 2023, when the city reported a 1.5 million-square-foot occupancy loss. Absorption turned positive again in 2024, but was again negative in 2025, losing 3,600 square feet, according to a fourth-quarter office market report from JLL.
Absorption trends in Dallas and Houston show markets steadily recovering from the blow dealt by the pandemic. In 2021, annual absorption was negative 1.5 million square feet in Dallas and over negative 4 million square feet in Houston. Recovery hasn’t necessarily been linear, and the cities are stabilizing at different rates, with Dallas reporting 1.3 million square feet of positive absorption in 2025 — its first positive annual rate since 2019 — and Houston posting a negative absorption rate of 311,000 square feet last year, JLL’s report shows.
The markets of the Texas Triangles are on very different trajectories, but they’re all sporting elevated vacancy rates since the pandemic. Vacancies notched up slightly in Austin in 2025, ending the year at 26 percent, compared to 25.2 percent at the end of 2024. Houston’s vacancy rate similarly finished 2025 at 26.3 percent, after peaking at 27 percent in 2024. Vacancies are highest in Dallas, hitting 27.2 percent at year-end 2025, a slight uptick from the year before when the vacancy rate was 27.1 percent, according to JLL.
AI in Austin
The abrupt contraction of big tech’s Austin office space started leveling out in 2025.
For example, after leaving the 35-story, 804,000-square-foot Sail Tower mostly empty for two years, despite holding a full-building lease, Google is finally moving into the downtown office building at 601 West Second Street.
While Austin logged negative absorption for the year, net absorption was positive for the fourth quarter, at 23,700 square feet. Tech companies accounted for the three largest leases of the quarter. VMware renewed its lease for nearly 135,000 square feet at River Place; an unnamed e-commerce company subleased 108,000 square feet at Domain Gateway; and Nvidia renewed its 79,000-square-foot lease at The Crossing at Lakeline.
Tech companies make up nearly a third of tenants for pre-leased projects in the pipeline, according to JLL.
Austin has been burned by tech in the last five years, but it stands to benefit from the rise of AI in 2026, JLL said in its report.
Trophy development
Austin has the largest development pipeline of the three cities.
Nearly 1.7 million square feet of office space is planned or under construction in Austin, edging out Dallas’ 1.56 million-square-foot pipeline, and far surpassing the 760,000 square feet of office space in development in Houston, according to JLL.
Plus, Austin landlords stand to make the most money from that upcoming space.
At the end of the fourth quarter, asking rent for Class A properties was $60.89 per square foot in Austin, far surpassing Dallas’ rate of $42.35 per square foot, and Houston’s rate of $37.36, JLL’s report shows.
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