What is the average office cap rate in Austin in 2026?

CoStar Capital Market Analytics reported an average capitalization rate of about 6.5% for Austin office sales over the trailing twelve months as of Q1 2026, on an average price of $152 per square foot across 68 properties. That average masks a wide spread: most Q2 2026 sales were owner-user deals — like Austin Community College's ~560,000 SF Burleson Road purchase at about $233/SF — where no cap rate was disclosed, while stabilized, well-leased buildings and vacant Class B product price very differently.

Is Austin office vacancy improving in 2026?

Yes, slowly. Overall vacancy fell to 22.7% in Q2 2026, down 60 basis points from Q1 and 180 basis points year-over-year, helped by two straight quarters of positive net absorption and a construction pipeline that has collapsed to about 154,000 SF — down 88% year-over-year. But the market is far from balanced: Class A vacancy is 25.7%, the Northeast submarket sits at 41.9%, and availability is still above 24%.

Who is buying office buildings in Austin right now?

Mostly owner-users, not yield-driven investors. In Q2 2026, roughly 1.5 million SF traded across eighteen Austin transactions, with buyer demand split between local and national capital and owner-users playing an outsized role — Austin Community College bought a ~560,000 SF campus for $130.5M (~$233/SF) and Great Hills Baptist Church paid $14M ($196.50/SF) for the HighFlex Technology Center. Institutional owners facing rising vacancy have been the sellers.

Market insight · August 31, 2026 · Steven Owen

Austin office cap rates and market outlook (Q2 2026)

Austin office properties traded at an average cap rate of about 6.5% over the trailing year (CoStar Capital Market Analytics, Q1 2026), on an average price of $152 per square foot across 68 sales. But the headline number hides the real story: in Q2 2026, roughly 1.5 million SF traded across eighteen deals and owner-users — not yield-driven investors — cleared most of them, at prices like ~$233/SF (Austin Community College's 560,000 SF Burleson Road campus) and $196.50/SF (HighFlex Technology Center). Vacancy improved to 22.7% but remains historically elevated, full-service asking rents average $44.69/SF, and the construction pipeline has collapsed 88% year-over-year. It is a tenant's market and a user-buyer's market.

Where Austin office cap rates are clearing

The cleanest dated figure comes from CoStar Capital Market Analytics via Partners Real Estate's Q1 2026 Austin office report: a cumulative 12-month sales volume of $230 million, 68 properties sold, an average price of $152 per square foot, and an average capitalization rate of 6.5%. That average deserves two caveats. First, volume is thin relative to Austin's 83 million SF of inventory, so a handful of deals move the average. Second, the buyer pool has shifted: Partners' Q2 2026 report notes that no cap rates were disclosed on the quarter's largest trades because they weren't cap-rate deals at all — they were owner-users buying buildings to occupy, often from institutions selling into rising vacancy.

Nationally, CBRE's H1 2026 Cap Rate Survey found headline cap rates broadly steady across property types, but with office as the outlier: the spread between cap-rate estimates for lower-quality office widened materially even as other asset types narrowed. That bifurcation is exactly what Austin is living — well-leased buildings with term and quality price in one market; vacant or rolling Class B product prices in another, when it prices at all.

The numbers, dated and sourced

Austin office market snapshot, 2026 Q2 (Partners Real Estate quarterly reports, CoStar data, July–August 2026)
Metric	Value	Context
Avg cap rate (trailing 12 mo)	~6.5%	CoStar, Q1 2026; 68 sales, $230M volume, avg $152/SF
Q2 2026 sales	~1.5M SF / 18 deals	ACC Burleson Rd ~560k SF at $130.5M (~$233/SF); HighFlex $196.50/SF
Overall vacancy	22.7%	Down 60 bps QoQ, 180 bps YoY; Class A 25.7%, Class B 19.6%
Submarket spread	12.5%–41.9%	Cedar Park/Georgetown/Round Rock tightest; Northeast highest
Sublease vacant	~1.8M SF	44% below the 3.2M SF peak
Asking rent (full service)	$44.69/SF	-0.7% QoQ, +1.9% YoY; Class A $50.62, Class B $36.73 gross-equivalent
Q2 net absorption	+651,422 SF	Second straight positive quarter; Class B drove it (+752k SF)
Under construction	~154,397 SF	Down 88% YoY across 5 properties — the pipeline has effectively stopped

Submarket dispersion is extreme. The Northeast submarket carries 41.9% vacancy while Cedar Park/Georgetown/Round Rock sits at 12.5% — two office buildings in the same metro living in completely different markets. Colliers' Q2 2026 Austin report (which uses a different inventory basis) tells the same directional story: vacancy improving to 20.6% on its basis, rents at $44.79/SF overall, and a $197/SF Northwest sale.

What's driving it: demand is healing, supply already stopped

Austin added 14,900 jobs (+1.1%) in the year through May 2026 — the strongest relative growth among the Texas majors — and office-using employment grew 1.0% to 428,400, the fastest office-using growth of the five big Texas metros. Absorption has followed: two consecutive positive quarters, led by Class B move-ins like NXP Semiconductors taking 121,000 SF in the Northwest. Meanwhile new supply is done — 151,190 SF delivered in Q2 and only ~154,000 SF remains under construction, down from millions of square feet in the pipeline two years ago. With demand growing and supply frozen, the vacancy math finally works in owners' favor — but from a 22.7% starting point, the workout takes years, not quarters.

What this means for you

Owner-user buyers: this is your window. Institutions are selling functional buildings at $150–$235/SF — often below replacement cost — and you're competing against few yield buyers. If occupancy cost matters more to you than cap rate, run the own-vs-lease math now.
Investors: underwrite the roll, not the average. A 6.5% average cap rate on thin volume is a starting point, not a price. Well-leased Class B in tight submarkets (Cedar Park/Georgetown/Round Rock at 12.5% vacancy) is a different asset than a Northeast tower at 41.9%.
Sellers: the most active bid is a user, not a fund. Marketing a partially vacant building? The vacancy institutional buyers penalize is exactly what an owner-user pays for. Position accordingly.
Tenants: 22.7% vacancy and 24%+ availability mean leverage — but it's shrinking at the quality end, where Class A absorption and a dead pipeline are tightening the best blocks first.

How SCORE reads the office market

Steven Owen underwrites office the way an engineer with an NYU Stern finance MBA would — cap rate math where cap rates exist, own-vs-lease and replacement-cost math where they don't. SCORE tracks Austin-area commercial parcels in a proprietary database and markets to a 1,700+ developer and investor network, with closed corridor transactions from US-290 frontage to IH-35 commercial sites. These figures get refreshed quarterly — the Q3 update will publish in the fall.

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Figures are directional and dated as noted: Partners Real Estate Austin Office Q2 2026 quarterly report (CoStar data, published August 18, 2026), Partners Real Estate Austin Office Q1 2026 quarterly report (CoStar Capital Market Analytics, published April 2026), Colliers Austin Office Market Report Q2 2026 (published July 2026), and CBRE's U.S. Cap Rate Survey H1 2026. Markets move; this is general information, not investment, tax, or legal advice. Related: Austin cap rates by property type · industrial cap rates · multifamily cap rates · Austin Market.