Downtown vacancy rates surged after the pandemic and still remain elevated, a sign that Austin's once red-hot office market is settling into a new normal.

Why it matters: The pandemic reshaped how we work. Now, hybrid schedules are the new norm for many Austinites, leaving large chunks of downtown office space unused.

By the numbers: Overall vacancy in Austin's downtown office market hit a new high of 22.3% in the third quarter of 2025, per the latest data available by the Downtown Austin Alliance.

What they're saying: Austin's downtown isn't failing — it's normalizing after years of outsized growth, Downtown Austin Alliance Senior VP Jenell Moffett tells Axios.

• "Yes, we're in an uncomfortable space, but we're in transition," Moffett says. "There's billions of dollars of infrastructure that are being invested into the city and a lot of it centers in downtown."

The big picture: Austin's empty office spaces mirror national trends, despite a return-to-office push by many employers last year.

• 20.4% of office space in the country's top 50 metros is empty, per Moody's latest tally.

Zoom in: "The era of tech giants dominating entire buildings is fading, opening opportunities for a wider range of businesses to access downtown's prime location," per Downtown Austin Alliance's 2025 annual report.

Yes, but: Google moved into the 35-story Sail Tower at West Second and Nueces streets in late 2025, after the building sat vacant for three years.

Between the lines: Real estate brokerage firm Franklin Street said in a November report the increase in Austin vacancies has also been driven by a sharp decline in venture capital investment.

Reality check: The vacancies mean that tenants can secure office space at a highly discounted price in a sought-after area.

• "Tenants have never had more leverage driven by the sudden increase in supply and demand compression," Alex Taghi, senior director of leasing for Franklin Street, said in a statement.

What's next: Downtown leaders are exploring incentives to attract tenants.

• The alliance is beginning conversations around "affordable business" incentives, which could mean flexible leases, tax incentives, office activation programs and support for startups, incubators and small firms downtown, Moffett says.

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We checked in with Brandon Hodge, owner of toy store Monkey See, Monkey Do and Big Top, a candy shop on South Congress Avenue, about the state of retail in Austin.

Why it matters: In a city that has long promoted local buying, homegrown retailers have to navigate a landscape of higher rents and luxe chain stores, geopolitical issues like tariffs and ongoing competition from online sellers.

Background: Hodge, president of the South Congress Merchants Association, last year moved his toy store from South Congress to the corner of Menchaca Road and South Lamar Boulevard.

• Earlier this month he expanded Big Top to Hyde Park, by Duval and 43rd streets.

This conversation has been edited for clarity.

What's an unexpected key factor facing retailers in 2026?

"Tariffs. A lot of my toy inventory comes out of China. We've had to raise prices but it has cut into our profit margin because we can't mark up as much as the tariffs, so we're leaving money on the table."

Why does parking matter to South Congress businesses?

"If there's local abandonment, then we're left with tourism. And now that the Convention Center is gone and SXSW got neutered, out-of-town and tourism dollars have been hindered as well."

Read the rest of our convo

It took the typical Austin household over eight years to save for a median home down payment in 2025, compared to around seven years nationwide, according to a Realtor.com analysis.

Why it matters: Coming up with a down payment is one of the biggest barriers to homeownership, especially as incomes struggle to keep pace with housing costs.

The big picture: Although the average U.S. timeline has shortened from 12 years in 2022, it's roughly double the pre-pandemic norm, per the analysis by the Austin-based real estate site.

Still-high home prices and "intensified competition have pushed typical down payments higher, at the same time that inflation and rising household expenses have reduced savings rates," said Realtor.com chief economist Danielle Hale in a news release.

• The typical down payment amount in the Austin metro area was $43,216 between January and November 2025.
• In 2025, the metro's median household income was $103,432, per the analysis.

Zoom in: Austin home values have been on the decline.

• But the share of first-time buyers has fallen to a record low as inventory and affordability issues persist, according to the National Association of Realtors.

How Austin compares to San Antonio

Gen Zers are navigating today's tough job market with side gigs, per a national poll — and those in Austin appear to be no exception, despite the state's sunnier jobs picture.

Why it matters: Younger people "want to work [and] find success, but many of them just feel disillusioned with the opportunities to get there through the traditional career ladder," Glassdoor chief economist Daniel Zhao tells Axios.

By the numbers: Over half of Gen Z (57%) now have a side gig, compared to 21% of those who are baby boomers or older, according to The Harris Poll, which dubbed them "America's first true 'side hustle' generation."

What we're hearing: "It definitely makes me feel more financially secure," says Katie Arce, who works full time in e-commerce and picks up shifts at a vintage clothing store in Austin.

• "I've always been passionate about vintage clothing," the 24-year-old tells Axios.

Between the lines: Most people are picking up side hustles for extra cash as economic uncertainty grows, Zhao says.

💭 Sami's thought bubble: In Austin, several friends have picked up side gigs as group fitness instructors — not just for the money, but for personal growth, social connection and perks like discounted classes.

How Gen Z is feeling about their finances

Name this baby-faced person, key to Austin's continuing business boom, and you could win a shoutout in an upcoming edition of our newsletter.

• Hint: This photo was shot in 1988.

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