Rising Rates, Split Market: How Higher Interest Rates Are Reshaping The Texas Medical Office Market
Why this matters
Office continues to trade in two distinct markets: trophy assets in walkable submarkets that are leasing at or near record rents, and commodity Class B and C buildings where the basis is still resetting. Underwriting on the latter has moved toward replacement-cost-minus, with credit underwriting now leaning on tenant covenant and remaining lease term rather than mark-to-market expectations. Austin is working through a multi-year supply digestion in both multifamily and office. Land values east of I-35 continue to hold despite slower entitlement activity. For LP-positioned capital, the read-through is that the bifurcation is now a structural feature of the sector, not a cycle to wait out.
Editorial analysis · Real Estate Trail Editorial
On the RET wire
- The 13th Austin story tracked on the wire in November 2026. All Austin coverage →
- Disclosed office deal value tracked in November 2026: $6.2B across 33 reported transactions. All Office coverage →
Computed from Real Estate Trail’s own tracked coverage
By Ryan McCullough, partner, managing director, Austin, Partners Real Estate Dating back to mid-August, the 10-year Treasury yield rose about 65 basis points to 5.29 percent in early October before slipping back below…
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