Office markets in Texas’ major cities are showing different patterns of recovery since the pandemic, with Austin’s recent performance diverging from those of Houston and Dallas.
Austin experienced rapid growth during the pandemic as tech companies relocated from California and developers responded by building large office towers. However, the momentum slowed quickly when rising interest rates affected the market.
Data from JLL’s fourth-quarter office market report shows that Austin had positive office space absorption in 2021 and 2022, but saw a significant shift in 2023 with a loss of 1.5 million square feet in occupancy. Absorption turned positive again in 2024, only to drop to negative 3,600 square feet in 2025.
In contrast, Dallas and Houston have shown steady progress toward recovery after sharp declines during the pandemic. In 2021, Dallas posted an annual absorption of negative 1.5 million square feet and Houston over negative 4 million square feet. By 2025, Dallas reported its first positive annual absorption rate since 2019 at 1.3 million square feet, while Houston’s absorption was negative at 311,000 square feet.
All three cities continue to face high vacancy rates compared to pre-pandemic levels. Austin’s vacancy rate reached 26 percent at the end of 2025, up slightly from the previous year. Houston ended the year at a vacancy rate of 26.3 percent after peaking at 27 percent in 2024. Dallas recorded the highest vacancy rate among the three cities at year-end—27.2 percent—according to JLL.
The contraction of big tech office space in Austin began to stabilize in 2025. Google is moving into its leased space at Sail Tower on West Second Street after leaving it largely unoccupied for two years. The fourth quarter saw net positive absorption of office space in Austin at 23,700 square feet. Tech companies signed some of the largest leases: VMware renewed 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 a lease for 79,000 square feet at The Crossing at Lakeline.
According to JLL, tech firms account for almost one-third of tenants for projects that are pre-leased and under development or planned in Austin.
JLL’s report states: “Austin has been burned by tech in the last five years, but it stands to benefit from the rise of AI in 2026.”
Austin currently has nearly 1.7 million square feet of office space planned or under construction—slightly more than Dallas’ pipeline and more than double that of Houston’s current development activity.
Landlords in Austin also command higher asking rents for Class A properties compared to their counterparts in other Texas cities. As of late-2025 data from JLL’s report, average asking rent per square foot for these properties was $60.89 in Austin versus $42.35 in Dallas and $37.36 in Houston.
