How Austin office is actually pricing
A first cut at what the post-2021 overbuild has done to Class A and Class B rents downtown and in the Domain.
The story everyone tells about Austin office is that the post-2021 overbuild crashed rents and that the market has not recovered. The story is partly right, but partly wrong in a way that matters if you want to actually deploy capital here.
What I am seeing in the data
I pulled the public lease comps I have access to (CoStar via my college account, the city’s permit feed, and a handful of broker emails I get) and ran a quick split between Class A and Class B downtown over the last 18 months.
Class A asking rents are still down from peak (roughly 12 percent off the 2022 high in the trophy buildings). But concessions tell a more honest story: free rent has roughly doubled, and TI packages are 20 to 30 percent higher than 2022 norms. Effective rents are down closer to 22 percent, not the 12 percent the asking-rent story suggests.
Class B is a different market entirely. Asking rents are flat or slightly up. Concessions are normal. The bid for B is driven by tenants getting priced out of A and by smaller firms that never wanted trophy space to begin with.
Why this matters
The mistake I see in the public commentary is treating “Austin office” as one market. It is two markets, and they are moving in opposite directions. If you are underwriting a Class A acquisition off the trophy asking rents, you are mispricing the deal by the size of the concession package. If you are underwriting Class B off the same headline trends, you are leaving money on the table.
The Domain is its own third thing — closer to Class A behavior on rent but with a tenant mix more like B. I will write that up separately once I have more comps.
Open questions
- How sticky are the current concession packages? When the trophy buildings refinance in 2027-2028, do TI budgets actually compress, or has the new normal stuck?
- What is the actual occupancy at the loudest sub-market (downtown trophy)? Asking rents are public; signed rents are not, and the gap between physical occupancy and economic occupancy is wider than usual.
- Is the I-35 industrial story a hedge against the office story or a separate bet? I think separate, but I want to put a number on the correlation.
If you work on this side of the Austin market and any of this is wrong, I would love to know. deephayer940@gmail.com.