Austin Retail Market Experiences Increased Activity in Q2 2025
EXECUTIVE SUMMARY
Q2 in Review
The Austin retail market showed signs of increased activity in Q2 2025, with net absorption sharply up 157.3% over the quarter, but down 26% year-over-year. New construction deliveries increased by 25% over the quarter and by 69.3% annually. Leasing activity increased by 10.2% in Q2 to 685,687 sq. ft. Some of the tenants that signed leases in Q2 2025 include Balloon Museum, Crunch Fitness, and Burlington. Meanwhile, the construction pipeline grew 31.6% quarterly and 141.6% year-over-year, signaling renewed opportunities for expanding retail tenants after quarters of constrained supply. Notable completions in Q2 2025 included Lowe’s 16 2301 Interstate 35 in Georgetown, Home Depot at 11713 Pillion Place in the Far Northeast submarket, and Hooky Entertainment in the Townwest Commons in the Georgetown submarket.
Investment sales remained active, with a cumulative 12-month volume of $73.3 million and an average transaction price of $257 per square foot. Key sales included the 43,800-square-foot Shops at Ladera Bend in the Northwest submarket and The Hub at Research and 45 in the Cedar Park submarket. Rents increased marginally by 0.2% for the quarter, remaining relatively flat at $26.26 per square foot, with the CBD commanding the highest rates. With a tight vacancy rate and limited supply, rents are expected to remain steady, positioning Austin’s retail market for continued growth in 2025.
MARKET OVERVIEW
Austin Economic Update
Austin’s unemployment rate was 3.5% in May, below the state and national rates of 4.1% and 4.2%, respectively. In May, the local labor force decreased at an annualized rate of 0.4%, while the state’s labor force increased 1.9% and the nation’s fell 4.3%. Austin employment increased at an annualized rate of 2.7% in May, surpassing the 2.4% growth rate in April. In the three months ending in May, employment increased 1.9%
The most significant gains were in leisure and hospitality (2,150 jobs) and trade, transportation and utilities (1,800 jobs). Sectors that declined include professional and business services (-770 jobs) and information (-700 jobs). Austin’s year-to-date employment in May grew 1.5%, slower than for Texas, which had 2.5% growth, but faster than the nation’s gains of 0.9%.
Average hourly earnings rose to $36.29, reflecting a year-over-year increase of 5.8%. At the same time, apartment rents in Austin fell 2.7. As of May 2025, the median sales price for the Austin metro was $449,900, down 1.6% year-over-year. The median sales price is highest in the city of Austin itself, at $595,000, and lowest in Caldwell County, at $317,990.
Demand Increases Significantly
Net absorption, which is the difference between move-ins and move-outs, is at 280,674 sq. ft., up 157.3% from the previous quarter, pushing the year-to-date total net absorption to 389,771 sq. ft. Notable Q2 2025 move-ins, dominated by Big Box concepts, include fitness concepts, including Crunch Fitness moving into 43,700 sq. ft. in Scofield Crossing in the North/Domain submarket, Los Campeones Gym moving into 30,000 sq. ft. in Mays Crossing in Round Rock, and Gold’s Gym moving into 28,000 sq. ft. in The B Spot on Burnet. Other tenants moving into Big Box space include Dillard’s (175,000 sq. ft.), Costco (152,000 sq. ft.), and H-E-B (94,600 sq. ft.).
Construction Pipeline Continues to Increase
In Q2 2025, the under-construction pipeline increased by 141.6% over the past year to 3.3 million sq. ft. This is positive for the market, as the limited supply over recent quarters has limited growth opportunities for retail tenants looking to expand. Notable retail completions in the second quarter include a 120,000 sq. ft. Lowe’s on Interstate 35 in Georgetown, a new 110,000 sq. ft. Home Depot on Pillion Place in Manor, the 54,400 sq. ft. Hooky Entertainment in the Townwest Commons in Georgetown, and the 15,120 sq. ft. Centro Plaza in Round Rock.
Leasing Activity Up
Leasing activity increased 10.2% over the quarter, recording 685,687 sq. ft. in Q2 2025. Notable deals signed in the second quarter include Ballon Museum signing an agreement for 94,600 sq. ft. at 2930 W Anderson Ln., Crunch Fitness signing two deals, one for 44,400 sq. ft in the South submarket and one for 43,700 sq. ft. in the North/Domain submarket, and House of Gainz signing a 31,700 sq. ft. lease in Cedar Park.
Investment Sales Trends
CoStar Capital Market Analytics reports a cumulative 12-month sales volume of $73.3 million for Q2 2025. Over the past year, 155 properties were sold, with an average transaction price of $257 per square foot and an average capitalization rate of 6.4%. Notable second quarter transactions include 111,400 sq. ft. of Kyle Crossing with tenants such as Academy Sports, and Hobby Lobby. Also, the 43,800 square-foot Shops at Ladera Bend in the Northwest submarket traded hands, as did The Hub at Research and 45 in the Cedar Park submarket.
Rates Marginally Up for the Quarter, Down Year Over Year
Austin’s average asking rent currently stands at $26.26 per sq. ft.—up 0.2% over the past quarter but down by 2.7% annually. The CBD submarket had the highest average rate at $36.39 per sq. ft., while the North Domain submarket had the lowest average rate at $20.92 per sq. ft. With near-record-low vacancy rates and a limited retail pipeline, rates are expected to remain near record highs.
Steve Triolet
SVP of Research and Market Forecasting
tel 214 223 4008
[email protected]
