Dallas-Fort Worth Office Recovery Driven by Class B Assets

Class B Surges Buck National Office Trends

Globe St reports that office absorption in Dallas-Fort Worth (DFW) showed a sharp reversal in Q2 2026, with net demand swinging back into positive territory after several tough quarters. According to a CBRE market report, the recovery is notable for being led by Class B assets—a departure from the national post-pandemic focus on trophy Class A buildings.

This dynamic sets DFW apart as many US markets remain anchored by ‘flight to quality’ demand and persistent weakness in older properties. Notably, in Q1 2026, DFW had experienced negative office absorption of -1.2M SF, underlining the pace and magnitude of the recent turnaround.

The Details

CBRE’s report highlights that Class B space accounted for the largest share of improvement, recording 626,000 SF of positive net absorption in Q2 2026. That’s a significant swing from the negative 359,000 SF posted a year prior. The Stemmons Freeway submarket led the region, with 224,000 SF of demand, trailed by Richardson at 167,000 SF.

Marketwide, overall vacancy dropped to 25% for the quarter—down 220 basis points year-over-year specifically for Class B properties. The market has gradually tightened since a vacancy peak of 26.9% in Q4 2024, per CBRE. Meanwhile, average asking rents in the market rose 1% to $34.79 PSF, with Class A rents reaching $39.46 PSF and Class B holding flat quarter-over-quarter.

Leasing Concentrated in Top-Tier Properties

Despite the absorption rebound led by Class B, leasing velocity in Q2 2026 was heavily concentrated in Class A product. Total leasing volume for the quarter reached 1.2M SF but dropped 32.6% from Q1. Critically, over 92% of new leases signed in the period were for Class A space, underscoring persistent bifurcation between asset classes.

Class B’s asking rents remain 1.5% below Q2 2023, highlighting landlords’ limited pricing power for older or less-amenitized space. Even as Class B sees more move-ins or expansions, tenants hunting premium product continue to set the pace on rents and transaction volume.

Why It Matters

DFW stands out as a rare example of a major market seeing a bottoming in demand for non-trophy offices, following several quarters of choppy absorption and record-high vacancies. That resilience has also helped attract more national real estate firms expanding their Texas presence, reinforcing the region’s appeal across multiple CRE sectors. The 220 basis point year-over-year vacancy drop for Class B assets points to renewed interest in affordable, flexible office product. Potentially, it reflects budget-sensitive tenants or those recalibrating post-pandemic footprints.

The submarket leaders, Stemmons Freeway and Richardson, suggest that outlying and highway-accessible corridors are capturing tenant moves from downtown or urban core towers. However, the ongoing concentration of new leasing in Class A buildings aligns with broader national trends, indicating that, while Class B is holding up, long-term rent growth and investor appetite remain tightly linked to high-end inventory. The 1% quarter-over-quarter increase in asking rents to $34.79 PSF signals that, at least for now, pricing is stable amid increased take-up of space.

Cushman & Wakefield, in a separate 2026 outlook, notes that Dallas-Fort Worth’s relatively young office stock and sustained demographic growth support its resilience. That said, the surge in new deliveries—a 182.5% jump in Q2 to 112,890 SF—adds potential headwinds if demand does not keep pace in the latter part of the year. Ongoing construction, now at 3M SF, remains below the recent high of 5.4M SF in Q4 2023, which could temporarily stave off further vacancy escalation if leasing momentum continues.

What’s Next

Market watchers will keep a close eye on supply and absorption in the second half of 2026. Construction pipelines have declined from their 2023 peak, and leasing activity continues to cluster in premium spaces. Whether the Q2 Class B absorption bounce proves durable—or just a blip fueled by pent-up demand—remains an open question.

With rent growth flattening for Class B and supply ticking up, landlords in lower-tier properties may need to offer incentives or upgrades to sustain momentum. Meanwhile, DFW’s office market remains an important bellwether for how budget-conscious tenants and investors are recalibrating in a post-pandemic environment.