The Austin real estate market is in a period of adjustment. After an unprecedented surge during the pandemic years, activity has slowed and the landscape is shifting. Mike Martine, Vice President of Martine Properties, a family-owned real estate company that has served Austin since 1979, has witnessed these changes firsthand.
“The market noticeably slowed after the pandemic. Business was booming during COVID. I was as busy as I’ve ever been. Once the pandemic subsided, activity definitely decreased,” he explains.
With over two decades of experience navigating Austin’s property market, Martine provides a clear-eyed view of the current dynamics. His insights highlight the challenges facing owners today while pointing to new opportunities for investors who understand the evolving terrain.
The most dramatic shift in Austin’s commercial real estate has been the surge in office vacancies, particularly affecting the Class B and Class C properties that form the core of Martine’s portfolio.
“We’ve seen office vacancies go way up,” Martine notes, attributing this to both oversupply from speculative building and the persistent impact of remote work. Despite substantial rent reductions, filling these spaces remains difficult.
Martine shares a striking example that illustrates the scale of this transformation: “One of my tech tenants had over 90 people pre-COVID. Now only six come into the office.” The company maintains its lease and continues paying rent, but the vast majority of employees work remotely, with no mandate to return.
There are glimmers of hope, however. “I’m finally seeing Google taking occupancy of their fully-leased building. Facebook is following the same pattern, they’re starting to occupy their leased building,” Martine observes. This gradual return of major tech companies could help revitalize downtown Austin.
The multifamily sector faces similar challenges, with developers having misjudged market demand. “We built numerous new units, but we don’t have the population growth to support them,” Martine explains. “They just built way, way too many units too fast.”
The excess supply is particularly evident in the luxury segment, forcing property owners to implement aggressive leasing strategies. “They are certainly lowering rents and offering concessions like free rent periods,” Martine says.
This market correction creates opportunities for renters seeking high-end accommodations at more affordable rates and potentially for investors looking to acquire quality properties at reduced prices.
Not all sectors are struggling. “Office warehouse remains quite popular,” Martine notes, highlighting a resilient segment of the market.
Small, single-tenant industrial properties have become particularly attractive to certain investors. “One of my clients specifically seeks these properties. He has me acquiring small single-tenant deals,” Martine shares. The appeal lies in their “typically steady cash flow” and consistent occupancy rates. “I can maintain full occupancy in these properties,” he adds, offering a stark contrast to the challenges facing office and multifamily sectors.
While property values have declined significantly from pandemic peaks, Martine observes an interesting divergence in how owners are responding. “We’re not seeing many fire sales. Property owners generally prefer to hold their assets,” he explains.
This contrasts with rental strategies, where owners have been more willing to make adjustments. “We’ve definitely seen people lowering rental rates. Sales prices represent a different situation entirely. Many owners say, ‘We’ll simply hold the property for now rather than sell.'”
This patient approach suggests confidence in Austin’s long-term fundamentals, despite current challenges.
Amid the market adjustment, Martine highlights a significant development opportunity on South Congress Avenue, where his company has secured a valuable zoning change allowing construction up to approximately 500 feet.
The prime site, currently occupied by a Firestone and a small office building, sits “right on the edge of downtown” and “adjacent to Town Lake,” positioning it perfectly for future development.
While developer interest has temporarily waned in the current climate, Martine remains confident in the location’s potential. “Multiple new, large buildings will eventually be constructed,” he predicts. “I expect significant development activity there within the next five years or so.”
This property exemplifies the long-term opportunities that still exist in Austin’s market, particularly for well-positioned sites in prime locations.
Throughout these market fluctuations, Martine Properties maintains its competitive edge through personalized service. “We’re a small company. You can call me or Tom Martine directly, and we’ll answer personally,” Mike Martine emphasizes.
This hands-on approach has helped the family-owned business navigate various market cycles since 1979, providing commercial property management, multifamily management, commercial leasing, and sales services throughout Central Texas.
Austin’s real estate market is clearly in transition, with significant challenges in office and high-end multifamily sectors balanced against resilience in industrial properties and long-term development opportunities.
For investors, the current environment requires patience and strategic thinking, but Austin’s fundamental strengths suggest the market will eventually stabilize. As Mike Martine’s insights reveal, those with local expertise and a long-term perspective are best positioned to navigate this complex landscape and identify emerging opportunities in one of America’s most dynamic cities.
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