The overall vacancy rate rose to 16.1%, the highest level in nine years, according to the report released Thursday. That's an increase from 14.7% at the end of the second quarter, Vacancy rates rose in each submarket except the southeast market. Vacant sublease space accounted for 2.1 million sf of the total 4.5 million sf awaiting tenants. That's up from 1.9 million sf in the second quarter. The direct vacancy rate citywide is 8.5%.

The market fell so fast that building owners had a hard time catching up to it, Charles Heimsath, of Capitol Research, tells GlobeSt.com. "It was just hard for your mind to grasp that it took 10 years to go from 75% occupancy to 95% occupancy," he says, "and six months to go from 95 to 85%. If you're in the market, it's hard to get your mind around that concept."

Now, the Austin market, he says, "has moved from the denial phase" to what he calls the "let's-make-a-deal phase." "For the first six months of the years, we just didn't have any activity to speak of because the difference between the ask price and bid price was so large," Heimsath says. "That seems to be narrowing now and we're getting some leasing activity."