Dallas-Fort Worth Office Market Finds Balance Between Quality and Value
A shift is underway in Dallas-Fort Worth, where lower-tier office properties are playing a bigger role in market improvement.
In partnership with
Good morning. The DFW office market is showing gradual improvement, with vacancy declining and demand returning after several volatile quarters. While Class A assets continue to dominate leasing activity, Class B properties are emerging as an important part of the recovery.
🎙️ This Week on No Cap: Josh Zegen, Co-Founder of Madison Realty Capital, shares how the firm built a $20B private credit platform, navigated market cycles, and is approaching today’s biggest real estate lending opportunities. (Thanks to our sponsor, Lennar Investor Marketplace)
Listen & subscribe: Apple Podcasts | Spotify | YouTube
IN PARTNERSHIP WITH GREYSTEEL
Capital isn't gone. It's just more selective.
Greysteel tracks active sellers, buyers, borrowers, and lenders across hundreds of thousands of capital allocators in real time. Better targeting creates stronger competition and that drives superior pricing.
Find out where the capital is for your asset.
*This is a paid advertisement. Please see the full disclosure at the bottom of the newsletter.
Market Snapshot
|
||
|
||
|
||
|
||
|
||
|
Value Returns
Dallas-Fort Worth Office Market Finds Momentum in Class B Recovery
Dallas-Fort Worth’s office market is showing signs of recovery, with Class B properties unexpectedly becoming a key driver of improving demand.
By the numbers: According to CBRE, office net absorption reached 939,000 square feet in Q2 2026, reversing a 1.2 million-square-foot decline in Q1. Class B properties led the turnaround, moving from 359,000 square feet of negative absorption in Q2 2025 to 626,000 square feet of positive absorption this year.
Class B gains momentum: Unlike the broader U.S. trend favoring premium office buildings, DFW’s recovery has been supported by lower-tier assets. The Stemmons Freeway submarket led with 224,000 square feet of absorption, followed by Richardson with 167,000 square feet. Overall vacancy declined to 25%, while Class B vacancy improved 220 basis points year over year.
Leasing still favors quality: Total leasing activity fell 32.6% quarter over quarter to 1.2 million square feet, but demand remains concentrated in top-tier buildings. More than 92% of signed leases involved Class A space, reinforcing tenant preference for newer, amenity-rich properties.
Rents show a clear divide: Average asking rents increased 1% to $34.79 per square foot. Class A rents rose to $39.46 per square foot, while Class B rents remained flat and are still below 2023 levels, reflecting continued pricing pressure on older assets.
Supply remains manageable: New deliveries increased to 112,890 square feet in Q2, while total construction reached 3 million square feet. The pipeline remains below recent highs, helping limit additional vacancy pressure.
➥ THE TAKEAWAY
A broader recovery takes shape: Dallas-Fort Worth’s office rebound is proving different from other markets. While premium buildings continue attracting tenants, improving Class B performance signals that well-positioned, value-focused assets may benefit as companies balance quality with cost.
Around Texas
➥ Samsung is cutting hundreds of U.S. consumer electronics jobs and moving its U.S. headquarters to Texas as it shifts resources toward AI and its fast-growing semiconductor business.
➥ Liberty Hill tapped Griffin Swinerton to transform its downtown into a more walkable, business-friendly destination while preserving its historic character by 2028.
➥ Houston's retail market maintained 95.2% occupancy as strong demand quickly backfills most vacancies, even as a few large, high-profile spaces remain challenging to lease.
➥ Wildhaven Reserve will bring a 740-acre luxury resort and residential community near Denton, blending low-density homes with outdoor recreation, hospitality and a Western lifestyle.
➥ Therme Dallas updated plans for its $800M wellness resort with a pedestrian skybridge as the project moves closer to a planned 2027 groundbreaking.
➥ Construction began on the first office building at Frisco’s $3B The Mix development as the mixed-use project continues adding retail, apartments and public spaces.
Follow the Money
| MULTIFAMILYPRINCETON Core Spaces and Harrison Street refinanced the 408-unit Oxenfree Princeton build-to-rent community, replacing its construction loan with new financing from GID. |
| MIXED-USEFRIENDSWOOD Tannos Development secured $28M in construction financing to complete The Albritton, a mixed-use project in Friendswood featuring apartments, retail and office space by 2028. |
| INDUSTRIALDALLAS DFW commercial real estate activity remained strong with industrial, retail and multifamily acquisitions, new development starts and major financing deals highlighting continued investor demand. |
| INDUSTRIALTERRELL Amazon plans to build a $98M, 1.2M SF distribution center in Terrell, expanding its Texas logistics network as Dallas continues to lead the nation in industrial development. |
| OFFICEAUSTIN Renesas Electronics nearly tripled its Austin office footprint with a 95,000 SF lease, reflecting rising demand from the region’s growing AI and semiconductor industry. |
| INDUSTRIALSEGUIN Lovett Industrial and NewQuest will develop the 2M SF Seguin Exchange Commerce Park, expanding a 544-acre mixed-use project with industrial and manufacturing space. |
📈 CHART OF THE WEEK
-
📬 Newsletters: Stay ahead of the market with our national CRE Daily newsletter — or get hyper-local insights from CRE Daily New York.
-
🎙️Podcast: No Cap by CRE Daily delivers an unfiltered look at the biggest trends—and the money game behind them.
-
🗓️ CRE Events Calendar: The largest searchable calendar of commercial real estate events—filter by city or sector.
-
📊 Market Reports: A centralized hub for brokerage research and market intelligence, all in one place.
-
📈 Fear & Greed Index: A fully interactive sentiment tracker on the pulse of CRE built in partnership with John Burns Research & Consulting.
You currently have 0 referrals, only 1 away from receiving Multifamily Stress Test Model.
What did you think of today's newsletter? |
