Economy
Dallas/Fort Worth (DFW) employment grew 1.0% year-over-year (YOY) as of August—over three times the national rate of 0.3% YOY—while population growth continued at an estimated pace of 112,800 residents over the last 12 months.
Surveys of Texas manufacturing and service sector firms by the Dallas Fed signaled expectations for continued growth in employment and capital expenditures over the next six months. The Logistics Managers' Index, a survey of logistics and supply executives, registered at 70.2 in September, the second-highest reading in four years with expectations of continued growth over the next 12 months. Taken together, these indicators suggested expansionary conditions will continue for the DFW industrial market.
Demand
Leasing activity maintained its robust pace at 22.7 million square feet (msf) in the third quarter, nearly matching the previous quarterly record of 23.0 msf in Q2 2021. Year-to-date (YTD) leasing reached 63.0 msf, the strongest first nine months on record. In commitments over 50,000 square feet (sf), demand has been driven primarily by third-party logistics (25.2% of activity) and data center-related operators, suppliers and servicers (23.1% of activity). 30 “big box” users over 500,000 sf have leased 23.9 msf so far this year, accounting for 37.9% of newly leased space.
Record leasing velocity has also translated to strong occupancy gains. Quarterly net absorption increased 38.6% quarter-over-quarter (QOQ) to positive 13.9 msf, driving the YTD total to 28.6 msf. The periphery submarkets of Alliance (3.6 msf), Far North/I-35 (2.1 msf), and South Dallas (1.8 msf) led net absorption in the quarter, primarily due to activity by “big box” users.
Cushman & Wakefield Research expects momentum to continue in net absorption through year-end. The DFW market entered the fourth quarter with an additional 19.0 msf of net absorption teed up between known move-ins and move-outs, which may increase 2026 year-end absorption to 47.4 msf—a new all-time high surpassing the previous records of 41.0 msf in 2021 and 2022.
Supply
Strong leasing activity and net absorption allowed overall vacancy to decline 70 basis points (bps) QOQ and 150 bps YOY to 7.3%, the lowest level since Q3 2023. Strong absorption has cleared almost all overbuilt space: for the first time since Q2 2023, only four submarkets have vacancy rates above 10.0%.
Warehouse/Distribution vacancy fell 80 bps QOQ to 8.1%. Mid-size (150,000-499,999 sf) buildings remained the only segment with double-digit vacancy (10.1%) and accounted for 46.3% of vacant space. Vacant availability—a better measure of space competing for tenants—fell to 5.7% in Warehouse/Distribution buildings. Strong demand by “big box” users has depleted competing vacancy in larger buildings: just 5.1 msf or 1.9% of inventory was vacant and available for lease in buildings 500,000 sf and larger, the lowest level in over 15 years.
Quarterly deliveries totaled 7.3 msf, bringing YTD completions to 20.9 msf. Construction activity ticked up to 30.6 msf but remained at a modest level of 3.0% of inventory. Build-to-suite (BTS) activity inched down to 7.1 msf while speculative construction rebounded to 23.4 msf, the highest level since Q1 2024. Site work was underway on an additional 55 proposed buildings representing an additional 17.3 msf of new inventory that will likely come online in 2027/2028.
Cushman & Wakefield Research expects demand to continue outpacing supply: completions will total 33.1 msf or less in 2026, while known move-ins and move-outs could yield net absorption up to 47.4 msf over the same period and push vacancy down to approximately 6.6% by year-end 2026, or the lowest level since Q1 2023.
Pricing
Asking rents reached a new high of $9.76 net per square foot (psf), increasing 5.9% QOQ and 19.9% YOY. Warehouse/Distribution asking rents rose 5.8% QOQ and 20.1% YOY to $9.55 psf. Strong rent growth continued to be a statistical artifact of the shortage of large lower rent spaces available for lease compared to the prior year. Nevertheless, pricing power began returning for landlords in submarkets and building sizes where vacancy has tightened to mid-to-low single digits. Both asking and contractual rents have started to rise and concessions, while remaining tenant friendly in the short term, may begin to wane once rent increases are firmly established.
