Office-Using Job Growth Becomes Key to Austin’s Office Recovery

With return-to-office patterns stabilizing, employment expansion could determine how quickly Austin absorbs its large inventory of vacant office space

AUSTIN, Texas — Austin’s office market is gradually gaining ground, but its continued recovery increasingly depends on companies adding employees rather than workers simply spending more days at their desks, according to a June 30, 2026, analysis by Israel Linares of CoStar Analytics.

With many employers having settled into hybrid work arrangements, hiring in industries that traditionally rely on office space has become an important driver of demand.

According to CoStar, citing Bureau of Labor Statistics data, Austin-area companies in office-using sectors such as professional and business services and financial activities added approximately 4,700 jobs between April 2025 and March 2026.

Those employment gains have coincided with improving office occupancy. CoStar reported approximately 2.5 million square feet of positive absorption—the net change in occupied space—from the second quarter of 2025 through the first quarter of 2026.

Professional services added about 4,100 positions, while financial activities gained approximately 2,700 jobs during the period. Those increases were partially offset by weakness in the technology sector, which lost about 2,100 jobs, according to CoStar.

Hiring Growth Slower Than Austin’s Historic Pace

While Austin continues to attract business expansions and corporate relocations, employment growth has moderated considerably from the rapid pace that helped transform the city into one of the country's leading technology and business centers.

CoStar reported that office-using employment in Austin grew at an average annual rate exceeding 5% over the past decade. Over the most recent year analyzed, that rate was closer to 1%.

Even slower employment growth, however, is helping reduce the large amount of vacant office space accumulated across the Austin metropolitan area.

Among four- and five-star office properties completed in 2020 or later, vacancy stood at approximately 35%, compared with 38% a year earlier, according to CoStar. Those newer properties recorded roughly 1.2 million square feet of absorption.

Demand has been particularly concentrated in buildings offering high-quality amenities and desirable locations.

One example came in April 2026, when Texas Capital Bank signed a 27,012-square-foot lease at 415 Colorado, a five-star mixed-use tower completed in 2025 in downtown Austin, according to CoStar.

Older premium buildings have also recorded improvement. CoStar found that four- and five-star properties constructed before 2020 had a vacancy rate of approximately 22.5%, down from 26.5% a year earlier. About 900,000 square feet of absorption contributed to the decline.

Despite the progress, CoStar noted that Austin's vacancy levels remain historically high, meaning the market still faces a lengthy path toward more typical conditions.

Major Property Moves Influence Vacancy

Some of the improvement in Austin's older high-end office inventory reflects major individual transactions.

CoStar pointed to the early-2026 sale of Highpoint, a roughly 1.1 million-square-foot office campus in Northwest Austin, as an important factor behind the decline in vacancy among older four- and five-star properties.

SB Energy acquired the campus, which reportedly is expected to be used as a research-and-development facility focused on semiconductor chip design and testing.

Other companies have contributed to the market's occupancy gains through relocations and expansions.

Fintech company Togetherwork, which relocated its headquarters from Atlanta, took a 20,000-square-foot sublease at 1221 South Congress, according to CoStar.

Startup WebAI has also expanded following recent fundraising. The company increased its presence at 515 Congress in downtown Austin to approximately 40,000 square feet.

These transactions illustrate how corporate relocations and growing companies can gradually fill space left vacant as businesses adjusted their real estate footprints following the pandemic.

Austin Remains a Leading Market for Absorption

Austin continues to benefit from factors that have attracted employers to Central Texas for years, including its workforce and comparatively favorable business costs.

Those advantages could help the region compete for future company expansions and relocations—an increasingly important consideration if employment growth is to drive additional office demand.

CoStar reported that Austin remains among the strongest major U.S. office markets for absorption. When medical and owner-occupied properties are included, Austin ranks fourth among the nation's 50 largest office markets.

The figures suggest that Austin's office recovery is moving in a positive direction, even as significant challenges remain.

With hybrid work now more established across many businesses, simply bringing existing employees back to their desks may provide less upside for office demand than it once did. Continued hiring, particularly in professional services, financial activities, technology and other office-intensive industries, could therefore become one of the most important factors determining how quickly Austin works through its remaining vacant space.

Source: Israel Linares, “Office-using job growth is key to Austin, Texas’ office recovery: With returns to office stabilizing, headcount growth remains crucial to office demand,” CoStar Analytics, June 30, 2026. Employment figures cited in the original CoStar analysis are attributed to the U.S. Bureau of Labor Statistics.