DFW Industrial Market Records Increased Absorption and Leasing Activity Over the Quarter
EXECUTIVE SUMMARY
Q1 2026 in Review:
The Dallas-Fort Worth (DFW) industrial market experienced higher absorption and leasing activity, and vacancy decreased 30 basis points.
Deliveries totaled 6.0 million square feet this quarter, a 10.1% decrease from the previous quarter, but were up 123.4% from the previous year. Construction activity slightly rose 1.0% over the quarter to 34.3 million square feet.
Leasing activity increased 13.9% over the quarter and by 23.5% year-over-year. Quarterly net absorption increased moderately by 21.5% to 9.4 million square feet, primarily driven by warehouse/distribution properties, which recorded 9.5 million sq. ft. The manufacturing segment recorded positive absorption of 190,093 sq. ft., while Flex posted negative net absorption totaling 290,179 sq. ft.
Investment sales totaled $2.2 billion over the past year, with 978 properties sold at an average sales price of $131 per sq. ft. and an average cap rate of 6.3%.
Rental rates were up 0.1% for the quarter and 2.1% year-over-year to an average of $10.21 per square foot. The DFW industrial market has experienced extraordinary growth, signaling a steady foundation for future activity.
DFW ECONOMIC UPDATE
Employment in DFW grew at an annualized rate of 1.6% in December, after falling 1.1 percent in November, while Texas employment increased by 1.7%. The unemployment rate dropped 20 basis points to 4.0% from 4.2% in September. The jobless rate was 4.1% in Dallas and 4.0% in Fort Worth. The most significant gains were in information, trade, transportation and utilities, and education and health services. The largest losses were in professional and business services, leisure and hospitality, manufacturing, and construction.
MARKET OVERVIEW
Vacancy Rate Drops 30 Basis Points to 8.9% Over the Quarter
The overall vacancy rate in DFW’s industrial market dropped 30 basis points to 8.9% over the quarter and decreased 50 basis points from 9.4% recorded one year ago. For the different industrial property types, the total vacancy rates are 7.0% for Flex, 3.9% for Manufacturing, and 9.8% for Warehouse/Distribution space. DFW’s industrial market is currently categorized as having “neutral conditions”—with a vacancy rate between 8% and 10%—meaning neither landlords nor tenants have a significant upper hand in overall lease negotiations.
Quarterly Deliveries Down, Construction Up
Deliveries in the DFW industrial market decreased to 6.0 million sq. ft. from 6.7 million sq. ft., down 10.1% from the previous quarter, but were up 123.4% year-over-year. The under-construction pipeline rose marginally by 1.0% quarter-over-quarter and by 19% year-over-year. Over 50% of the current pipeline is in the northern submarkets. The North Ft Worth submarket leads with 27.8%.
Leasing up 13.9% from the Previous Quarter
Leasing activity has increased 13.9% over the past quarter and 23.5% over the year, as new construction entering the market has returned to historic norms. Recent notable lease transactions include RJW Logistics signing a lease for 512,000 sq. ft. at Platform 80/20, Stulz Air Technology Systems, Inc. signing a lease for 283,000 sq. ft. at 288/380 Logistics Park, and Nippon Express signing a lease for 253,000 sq. ft. at DFW Logistics Hub.
Quarterly Positive Net Absorption Increases 21.5%
Net absorption—move-ins minus move-outs—recorded 9.4 million sq. ft. in Q1 2026, up 21.5% quarterly and 27.4% annually. Warehouse/distribution properties accounted for most of the positive net absorption for the quarter, with 9.5 million sq. ft. recorded, while manufacturing recorded 190,093 sq. ft. Flex reported negative absorption of -290,179 sq. ft. in the first quarter. Notable recent move-ins include Lennox International taking 1.3 million sq. ft. at Intermodal Logistics Center, Stellar Energy Americas moving into 1.1 million sq. ft. at Alliance Westport 24, Hayes Company taking 818,000 sq. ft. at Innovation Ridge Logistics Park, and Canadian Solar taking 757,000 sq. ft. at 2800 Skyline Dr.
Investment Sales Trends
CoStar Capital Market Analytics reports that over the past 12 months, sales volume for the DFW market totaled $2.2 billion. This represents 978 properties sold with an average sales price of $131 per sq. ft. and an average cap rate of 6.3%. Notable recent sales transactions include Nuveen’s disposition of building 4 (792,394 sq. ft.) and two smaller buildings located in Freeport Crossing. The 100% occupied cold storage facility was purchased by AEW Capital Management. The price was undisclosed. Jackson-Shaw Company sold a 3-building portfolio in Chisolm 20, totaling 836,601 sq. ft., to Black Mountain Energy Storage for an undisclosed price. The project comprises three Class A reinforced concrete buildings constructed in 2023, situated on approximately 57.9 acres.
Asking Rents Increase to an All-Time High
The average monthly rental rate for the DFW industrial market was $10.21 per sq. ft., up 2.0% from $10.01 in Q4 2025 and up 8.4% year-over-year from $9.42 per sq. ft. The average monthly rate for flex space was $13.64 per sq. ft., while the rates for manufacturing and warehouse/distribution space were $7.12 and $9.60 per sq. ft., respectively.The Northwest Dallas Outlying and DFW Airport submarkets currently have the highest overall average rates at $15.64 and $12.52 per sq. ft., respectively.
Key Highlights:
Vacancy Rate: dropped 30 basis points to 8.9%, indicating neutral market conditions; Warehouse/Distribution vacancy still stands at 9.8%.
Construction Activity: Deliveries fell by 10.1% quarterly to 6.0 million sq. ft., but were up 123.4% annually; the construction pipeline increased 1.0% quarterly and 19% annually to 34.3 million sq. ft.
Leasing Demand: Leasing activity increased 13.9% quarter-over-quarter and by 23.5% year-over-year to 21.9 million sq. ft., with notable leases including RJW Logistics for 512,000 sq. ft. and Stulz Air Technology Systems, Inc. for 283,000 sq. ft.
Net Absorption: Recorded 9.4 million sq. ft., up 21.5% quarterly, driven by Warehouse/Distribution properties.
Investment Sales: Totaled $2.2 billion over the past year with an average price of $131 per square foot and a 6.3% cap rate.
Rental Rates: Averaged a record high of $10.21 per square foot, up 2.0% quarterly and 8.4% year-over-year, with Flex space at $13.64 per square foot, Manufacturing at $7.12 per square foot, and Warehouse/Distribution space at $9.60 per square foot.
