The Austin medical office market closed Q4 2025 in a period of recalibration following several years of out sized growth. Vacancy increased to 10.8%, driven by -67,047 SF of net absorption as tenant expansion slowed and recently delivered space came online. Despite softer occupancy, fundamentals remain supported by 1.48% year-over-year rent growth, pushing average asking rents to $38.13/SF, underscoring landlords’ pricing power in well-located assets. Supply additions remain manageable, with 59,312 SF delivered and 33,643 SF under construction, limiting long-term oversupply risk. Investment activity remained steady with 28 sales, average pricing of $513/SF, and 6.0% cap rates, signaling continued investor confidence amid near-term leasing headwinds.

 

Key Findings

• Market Vacancy and Demand: Vacancy rose slightly to 10.8% from 10.0% in Q3, reflecting a temporary softening as absorption slows. While leasing activity slowed, fundamentals remain supported by Austin’s growing population and strong healthcare demand.
• Rent Trends and Pricing: Asking rents continued a steady upward trajectory, reaching $38.13/SF. Growth has been modest but consistent over the past year, showing that landlords are maintaining pricing power even amid higher vacancy.
• Development and Investment Activity: Construction under way fell sharply to 33,643 SF, signaling a pause in new supply. Investment activity remained active and diversified, with private buyers, REITs, users, and institutional investors all participating.

 

Austin Demographics

Source: CoStar Group, Inc.

Unemployment Rate: 3.5%

Households: 1,086,848

Current Population: 2,608,331

Median Household Income: $106,059

 

Austin Medical Office Rents

Asking rents in the Austin medical office market continued a steady upward trajectory in Q4 2025, reaching $38.13/SF, up 1.48% year over year. Rent growth has remained consistent despite rising vacancy, reflecting the sector’s resilience and sustained demand for well-located, high-quality medical space. Since early 2022, average asking rents have increased more than 6%, supported by elevated replacement costs, limited long-term supply risk, and Austin’s strong demographic fundamentals. While near-term leasing softness may temper further acceleration, with concessions more common than headline rent cuts in competitive submarkets.

 

Market Asking Rent Per SF

Source: CoStar Group, Inc.

 

Austin Medical Office Vacancy

Vacancy in the Austin medical office market continued to trend upward in Q4 2025, reaching 10.8%, the highest level of the past four years. The increase in vacancy is reflecting slower tenant expansion and the cumulative impact of recent deliveries. The most notable acceleration occurred throughout 2025, with vacancy rising from 9.14% in Q1 to 10.80% by Q4. While current levels signal a softer leasing environment, vacancy remains below historically distressed thresholds, suggesting the market is undergoing a period of normalization rather than structural oversupply.

 

Vacancy Rate

Source: CoStar Group, Inc.

 

Austin Medical Office Construction

Construction activity in the Austin medical office market continued to decelerate in Q4 2025, signaling a clear pullback from prior peak development levels. New construction starts totaled just 16,347 SF, well below quarterly averages seen in 2022–2024, reflecting more cautious developer sentiment amid rising vacancy. As a result, space under construction declined sharply to 33,643 SF, down nearly 90% from mid-2022 highs. This contraction marks a turning point in the supply cycle and should help ease future vacancy pressure as the market absorbs recently delivered space.

 

SF Under Construction

Source: CoStar Group, Inc.

 

Austin Medical Office Sales

The Austin medical office market recorded 29 transactions in Q4 2025, up from 23 in Q3 but down from earlier quarters. 2025 had a total of 117 transactions compared to 150 in 2024, reflecting a modest slowdown in investor activity amid rising vacancy. Pricing remained strong, with an average of $513/SF and cap rates around 6.0%, underscoring continued confidence in stabilized, high-quality medical office assets. Notable Q4 sales included 5200-B Davis Ln ($16.52M, $606/SF), 1513 E New Hope Dr ($3.25M, $410/SF), and 4701 West Gate Blvd ($1.83M, $385/SF), illustrating a wide pricing range influenced by property age, size, and location. Premium pricing continues to favor newer or well-located properties with stable tenants, while smaller or older assets trade at a discount. Private investors remain the largest group, but REITs, users, private equity, and institutional buyers are all participating, keeping demand broad-based.

 

By the Numbers

Q4 2025 | Source: CoStar Group, Inc.

# of Sales: 28

Cap Rate: 6.0%

Price Per SF: $513

Vacancy Rate: 10.8%

Rent Growth: 1.48%

Asking Rent Per SF: $38.13

SF Under Construction: 33.6K

Delivered: 59.3K SF

Absorbed: (67K) SF