Austin Warehouse Market Report 2025: Your Guide to Texas Capital Industrial Space

Last Updated: January 2026

If you’re looking for warehouse space in Austin, you’re entering one of America’s most dynamic industrial markets – a region transformed by tech-driven growth, population explosion, and its strategic position as a distribution hub for Central Texas. While Austin has traditionally played second fiddle to Dallas and Houston in the industrial arena, the capital city has emerged as a logistics force in its own right.

Let me walk you through what’s really happening in this market, from Round Rock’s booming distribution corridors to Southeast Austin’s emerging industrial parks. Whether you’re a small business owner looking for warehouse space near I-35 or a broker helping clients navigate Central Texas’s evolving industrial landscape, here’s what you need to know.

Why Austin is Capturing Logistics Attention

The numbers tell part of the story, but here’s what they mean for you: Austin’s industrial market has matured rapidly, transforming from a tech-focused economy with limited warehouse infrastructure into a legitimate distribution hub. The metro added over 300,000 residents since 2020, and every one of them needs goods delivered—creating unprecedented demand for last-mile and regional distribution facilities.

But here’s the reality check: After years of explosive growth, the market is experiencing a healthy cooldown. Vacancy has risen from a tight 4.2% in 2022 to 8.2% today as new construction delivers. This is actually good news for tenants—you finally have options and negotiating power in a market that was previously impossible to break into.

The Submarkets That Matter Most

North Austin / Round Rock / Georgetown

This is Austin’s industrial engine. The I-35 corridor from Round Rock through Georgetown has attracted the lion’s share of new development, driven by proximity to major employers like Dell, Apple, and Samsung’s semiconductor facilities.

North Austin features the highest concentration of modern Class A warehouse product with average rates of $11-14/sq ft NNN. Strong e-commerce and tech distribution presence dominates. Samsung’s $17 billion semiconductor fab is driving significant supplier demand, and Dell’s Round Rock headquarters creates vendor ecosystem opportunities.

Southeast Austin / Del Valle

The area around Austin-Bergstrom International Airport has emerged as Austin’s fastest-growing industrial submarket. Excellent access to SH 130 (a toll road bypass of I-35) provides efficient north-south connectivity.

Southeast Austin offers newer construction with modern specs at average rates of $10-13/sq ft NNN. Growing Amazon and logistics presence validates the submarket. Tesla Gigafactory proximity creates supplier opportunities, and airport access supports time-sensitive distribution operations.

San Marcos / Kyle / Buda (Southern Corridor)

The I-35 South corridor offers relative value while maintaining connectivity to both Austin and San Antonio markets. This submarket has seen significant speculative development targeting cost-conscious tenants.

The southern corridor delivers the most competitive rates in Greater Austin at $8-11/sq ft NNN with a growing inventory of Class A product. Positioned between Austin and San Antonio distribution networks, Amazon’s fulfillment center presence validates the submarket. Workforce draws from both metros.

East Austin / Manor

Emerging submarket with significant development activity. Tesla’s Gigafactory has catalyzed industrial interest in eastern Travis County.

East Austin is transitioning from rural to industrial character with rates varying widely at $9-13/sq ft NNN. The Tesla supplier ecosystem is emerging with SH 130 access improving logistics viability. Watch for continued infrastructure investment in this corridor.

What Small Businesses Need to Know

Austin’s tech-centric reputation sometimes overshadows its growing logistics sector, but small businesses are finding genuine opportunities as the market matures and new supply creates tenant-friendly conditions.

Your advantages in this market: Austin’s population growth engine delivers 2.4 million metro residents growing 3%+ annually. The tech-savvy workforce means 48% of Austin adults hold bachelor’s degrees or higher. The business-friendly environment includes no state income tax and streamlined permitting. Central Texas positioning puts San Antonio, Dallas, and Houston all within 3 hours. New construction options mean modern spec buildings are available for the first time in years. Tenant leverage is improving as rising vacancy creates negotiating opportunities.

Watch out for: I-35 congestion is notorious—factor in realistic drive times. Rising vacancy at 8.2% and climbing as new supply delivers means timing your lease matters. Summer heat makes HVAC costs substantial, so ensure building systems are adequate. Labor competition from the tech sector competes aggressively for talent. Check FEMA maps carefully for flood zones, especially for Southeast locations. Toll road costs on SH 130 and 45 add up for frequent users.

The Growth Story

How Austin Became a Distribution Hub

Austin’s industrial transformation accelerated dramatically post-2020, driven by several converging factors. This isn’t market weakness—it’s market maturation. Austin is transitioning from an undersupplied market where tenants took whatever they could get, to a balanced market where quality and value actually matter.

The Tesla Effect

Tesla’s $1.1 billion Gigafactory in Southeast Austin has fundamentally altered the industrial landscape. The facility employs 20,000+ workers and generates massive supplier and logistics demand. It elevated Del Valle from afterthought to priority submarket and attracts adjacent manufacturing and assembly operations.

For small businesses, the Tesla ecosystem creates opportunities—but also competition for space and labor.

Real Numbers from Real Deals

Recent Notable Transactions

Amazon signed an 855,000 sq ft fulfillment center in San Marcos, validating the southern corridor as a distribution destination. Samsung has secured multiple supplier facilities in North Austin and Round Rock as the semiconductor supply chain creates industrial demand. Home Depot committed to a 500,000 sq ft distribution center in Kyle—a major retailer commitment to the Austin market.

Rate Ranges by Submarket

Operating Cost Considerations

Property taxes run 2.0-2.5% of assessed value—higher than many Texas metros. Triple net expenses typically range from $3.50-4.50/sq ft annually. Electric rates are relatively affordable with competitive natural gas pricing.

Regional Context: Austin vs. San Antonio

Many Central Texas businesses face a strategic choice: pay Austin rates or look 75 miles south to San Antonio.

For pure distribution operations, San Antonio often wins on cost. For proximity to Austin’s tech ecosystem and affluent consumer base, paying the premium makes sense.

Looking Ahead: What’s Coming in 2025-2026

The Good

Population growth continues with Austin adding 50,000+ residents annually. Tech investment is sustained as Samsung, Apple, and Tesla all expand. The I-35 expansion project represents ongoing infrastructure improvement. Tenant-friendly conditions provide the best negotiating leverage in years. A diverse economy beyond tech—including healthcare, government, and education—provides stability. Central position within the Texas Triangle provides access to 85% of state population.

The Challenges

The new supply pipeline has 4+ million sq ft under construction. Vacancy is likely to peak and could reach 9-10% before stabilizing. Austin’s cost of living creates affordability concerns impacting workforce availability. Roads, utilities, and housing are struggling to keep pace with infrastructure strain. The interest rate environment affects development and investment decisions. State versus local policy tensions create ongoing political uncertainty.

Making Your Move: Practical Next Steps

If You’re a Small Business Owner

Take advantage of current conditions—tenant leverage is at a multi-year high. Consider the southern corridor as San Marcos and Kyle offer 20-30% savings. Explore sublease opportunities since tech companies right-sizing create options. Negotiate aggressively for free rent and TI allowances now available. Lock in longer terms as current rates are likely near cycle bottom. Factor total costs since Texas property taxes are significant—understand NNN obligations. Plan for I-35 delays and build realistic logistics timelines.

If You’re a Broker

Lead with the tenant leverage narrative—the market has shifted dramatically. Segment by need since tech suppliers versus pure distribution have different priorities. Quantify the San Antonio alternative as clients will ask about cost savings. Highlight new construction and modern specs now available. Emphasize timing as the current window represents the best opportunity in years. Understand the tech ecosystem since Samsung, Tesla, and Apple supplier needs drive demand.

The Bottom Line

Austin has graduated from tech darling to legitimate industrial market, and the timing couldn’t be better for tenants. After years of undersupply that made finding warehouse space nearly impossible, the market has delivered new product and created genuine options.

Vacancy at 8.2% represents opportunity, not weakness. The fundamentals haven’t changed—Austin continues to add population faster than almost any major U.S. metro, the tech sector keeps expanding, and Central Texas positioning provides strategic distribution advantages. What’s changed is that supply has finally caught up, giving tenants negotiating power they haven’t had since before the pandemic.

For businesses that need Austin’s tech ecosystem, educated workforce, and growing consumer base, now is the time to lock in favorable terms. For those with flexibility, compare San Antonio’s lower costs carefully. Either way, Central Texas offers compelling logistics value that larger Texas markets sometimes can’t match.

Austin’s industrial market has arrived. The question is whether you’ll take advantage of current conditions before the next growth cycle tightens things up again.