Austin Office, Q1 2026

The headline for Austin office in Q1 was a 210-basis-point drop in CBRE’s availability rate to 28.3%, and +283,000 SF of net absorption — the second consecutive positive quarter after years of contraction. Active demand sits at 4.4 million SF across 110+ tenants, with 2.4M SF of that from tech occupiers. On the surface, this is the clearest recovery signal we’ve had since 2022.

Look closer and the picture is more nuanced.

The 3M campus distorts everything

SB Energy’s acquisition and owner-user conversion of the former 3M campus at 6801 River Place Boulevard pulled roughly 1.2 million SF out of the tracked vacancy pool in a single transaction. Different brokerages handled it differently, which is why Q1 vacancy readings span a 470-bps range: 22.4% (Colliers) to 27.1% (Cushman & Wakefield). Partners reported +1.1M SF of absorption — almost entirely the SB Energy effect. Stripping the conversion out, underlying absorption was modestly negative to flat across most measurement frameworks.

The narrow read: CBRE’s +283,000 SF and Colliers’ -166,129 SF are the cleanest reads on organic occupancy. Reality sits between the two.

Flight to quality is the whole story

Class A absorption was +481,000 SF. Class B was -198,000 SF. The CBD posted +402,000 SF, Northwest +93,000 SF, and Northeast and Southwest both lost ground. Three deals — IBM (320K SF sublease at Domain 12), NXP (225K SF new lease at Champion Office Park), and xAI (112K SF sublease at Seaholm Power) — account for the bulk of the positive readings.

CBD Class A asking rents are tightly clustered across brokerages between $67–$69/SF. Northeast asking rents sit at $27.53/SF with 46.7% vacancy. Price alone is not clearing the structural vacancy in the outer submarkets.

Sublease compression is the durable signal

Savills tracks sublease availability at 2.9M SF, down from 4.1M SF a year ago — a 29% YoY decline. The IBM Domain 12 absorption alone took 320K SF of sublease inventory off the table. This compression is mechanical, driven by occupancy events rather than expirations, and it is the single most constructive vacancy signal in the data.

That said, 2.9–3.3M SF of sublease space still competes directly with direct landlord space, particularly in the CBD (7.5% sublease availability) and Northeast (14.2%).

Supply pipeline has effectively closed

CBRE recorded zero new construction starts in Q1 2026. The active pipeline is 756,000 SF, down 55% YoY, and 93% of that is Waterline Tower A in the CBD. The only Q1 delivery was Workbench in the East submarket at 48,000 SF — and it delivered 86% pre-leased.

With no replacement supply entering and existing projects delivering through Q3 2026, the structural conditions for a tighter supply environment in 2027–2028 are forming. The 901 S Congress mass-timber project (Related Companies) was revised back to a five-story concept post-period — a wildcard worth watching.

Cap rates and the bid-ask standoff

307 active sales listings versus 27 closed sales. Average 221 days on market. Sigma’s asking price of $398/SF against Partners’ T12 average closed price of $152/SF tells the story — sellers haven’t repriced to meet buyer underwriting at current debt costs (6.41% average mortgage rate, 6.5% average cap rate). No institutional yield buyers in the documented Q1 transaction set. Owner-users (SB Energy, Central Health) and private capital (Serpa Partners, CapRidge) are the marginal buyers. Starwood Capital exited Cielo Center at $125/SF; R2 Companies sold Northview at $80.94/SF.

What this means

• Owners with CBD or Northwest Class A: the leasing momentum is real, and concession pressure is easing in the top tier. Hold face rates; the active demand pool will support you.
• Owners with Class B or outer-submarket product: the comp is sublease, then negotiated direct. Asking rents in Northeast and East are not clearing space — only repositioning capital will. If you’re not actively investing in spec demising or amenity upgrades, the vacancy is structural.
• Owners considering disposition: the buyer pool is shallow. Owner-users and private capital at sub-$200/SF basis are the realistic buyer set. Institutional capital is on the sidelines through 2026.
• Large-block tenants (50,000+ SF): the negotiation window in CBD trophy and Domain Class A is narrowing as sublease inventory compresses. The 2.4M SF of tech demand pipeline ahead of you will close out the best available blocks within 12–18 months.
• Small-to-mid tenants (under 25,000 SF): outer-submarket sublease at 15–25% below direct is the play. There is no scenario where Northeast or East landlords push rates in 2026.

Full data tables, submarket detail, and source-level reconciliation are in the PDF. Reach out if you’d like a custom cut for a specific submarket or asset class.