Dallas Chapter October Meeting!
Office
- The recovery remains uneven. Companies continue to favor newer, well-located buildings, while older properties face challenges from smaller tenant footprints and obsolescence.
- Move-in-ready space is attracting more leasing activity, particularly among smaller tenants.
- Premium locations are commanding higher rents. The presentation highlighted asking rents of $100 per square foot, triple net, at 23Springs and $68 per square foot, triple net, at Sherry Lane Place.
- Office supply is changing. Demolitions exceeded new deliveries for the first time since 2011, based on the buildings included in CoStar’s analysis. At the same time, more office properties are being listed for sale.
- Business expansions and return-to-office policies support demand, but weak office-using employment and smaller footprints remain risks.
- Texas continues to attract headquarters relocations, and DFW’s financial services presence is growing.
Industrial
- Leasing reached record levels. DFW recorded approximately 51 million square feet leased in the first half of 2026 and more than 107 million square feet over the preceding four quarters. Demand came from both data center-related users and traditional logistics tenants.
- Tenants are favoring newer buildings. The presentation showed positive net absorption of approximately 1.6 million square feet in small-bay properties built in 2010 or later, compared with negative absorption of approximately 1.7 million square feet in older properties.
- Large industrial spaces are outperforming. Leasing is concentrated in larger blocks, including properties near intermodal facilities, and asking rents for the largest spaces have accelerated.
- Smaller industrial properties face a different outlook. Small- and mid-sized buildings have not seen the same rent growth as large assets. Their performance may depend partly on housing and manufacturing activity.
- Construction financing remains a concern. Developers reported that higher borrowing costs can make speculative projects difficult to underwrite without pre-leasing.
- CoStar’s year-end 2027 vacancy forecasts were 8.3% for logistics, 4.4% for specialized industrial, and 7.4% for flex space.
Retail
- Retail fundamentals remain balanced. Limited availability continues to support the market, and absorption was above the prior year for much of 2026.
- Availability varies by location. Older parts of the market have more available space, while new construction is concentrated in other areas.
- Rents have risen, though pricing may be approaching a ceiling in some locations. Examples in the presentation included new and pre-leased space offered in the mid-$40s per square foot, triple net.
- Even under CoStar’s downside scenario, retail vacancy was projected to remain below historical averages.
Multifamily
- DFW leads major U.S. markets in multifamily absorption, reflecting strong demand for apartments.
- Supply and demand are gradually moving toward balance as deliveries decline, although supply remains elevated in some suburban and exurban areas.
- Rent growth remains subdued. Asking rents were largely flat during 2026, with CoStar projecting a gradual recovery in effective rent growth.
- Renting remains considerably less expensive than buying under the home-payment assumptions used in the presentation. That affordability gap may continue to support rental demand.
Capital Markets
- Sales turnover has risen modestly, led by industrial and office properties.
- The presentation also highlighted elevated 10-year Treasury yields, an important consideration for financing and investment decisions.
CoStar’s forecasts reflect its October 2026 outlook and may change as market conditions evolve.
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