DFW Industrial Market Recorded Less Absorption Over the Quarter, But Vacancy Remained Flat

EXECUTIVE SUMMARY

The Dallas-Fort Worth (DFW) industrial market remained relatively flat over the quarter, with vacancy unchanged at 9.2%. However, the availability rate decreased by 10 basis points.

Construction activity slightly decreased 1.2% over the quarter to 34.46 million square feet. Deliveries totaled 3.7 million square feet this quarter, a sharp decline of 46.1% quarterly and 52.4% annually. Leasing activity decreased by 6.4% over the quarter and by 13.7% year-over-year.

Quarterly net absorption totaled 4.3 million square feet, primarily driven by warehouse/distribution properties, which recorded 3.7 million sq. ft. The manufacturing segment recorded 1.9 million sq. ft. of positive absorption, while Flex posted 74,260 sq. ft.

Investment sales totaled $1.8 billion over the past year, with significant transactions including the sale of two buildings (C&E) in the 35 Eagle Distribution Park, totaling 1.5 million sq. ft., from Trammell Crow Company to Property Reserve Inc. for an undisclosed price.

Meanwhile, rental rates decreased 0.2% for the quarter and fell 1.8% year-over-year to an average of $9.70 per square foot.  The market’s shift toward normalization reflects a recalibration after years of extraordinary growth, signaling a steady foundation for future activity.

SUPPLY & DEMAND

KEY MARKET INDICATORS

MARKET OVERVIEW

DFW ECONOMIC UPDATE

Employment in DFW grew at an annualized rate of 2.5% in August, while Texas employment increased by 3.2%. Despite the growth, the unemployment rate rose to 4.1% from 3.7% in July. The jobless rate was 4.1% in Dallas and 4.0% in Fort Worth. The most significant gains were in education and health services, information, and government sectors. The largest losses were in construction, financial activities, and professional and business services.  

MARKET OVERVIEW

VACANCY RATE REMAINS STEADY AT 9.2%

The overall vacancy rate in DFW’s industrial market remained at 9.2% over the past quarter and decreased 3.2% from 9.5% recorded one year ago. For the different industrial property types, the total vacancy rates are 6.3% for Flex, 4.1% for Manufacturing, and 10.2% for Warehouse/Distribution space, respectively. 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. 

DELIVERIES AND CONSTRUCTION PIPELINE BOTH DOWN QUARTERLY

Deliveries in the DFW industrial market decreased significantly to 3.7 million sq. ft., down 46.1% from the previous quarter and down 52.4% year-over-year.  The under-construction pipeline dropped marginally by 1.2% quarterly but was up significantly by 141.1% year-over-year.

LEASING DOWN 6.4% FROM THE PREVIOUS QUARTER

Leasing activity has decreased over the past quarter by 5.4% and over the year by 13.7%, as the amount of new construction coming to the market has returned to historic norms. Recent notable lease transactions include Modine signing a lease for 683,600 sq. ft. at 2100 N Refuge Way in Wildlife Commerce Park 5 and Dropp Logistics signing a lease for 216,000 sq. ft. at Commerce 35W.

ALTHOUGH DEMAND COOLS IN Q3 2025, YEAR-TO-DATE ABSORPTION REACHES 18.6 MILLION SQ. FT.

Net absorption—move-ins minus move-outs—recorded 4.3 million sq. ft. in Q3 2025, pushing the year-to-date total net absorption to 18.6 million sq. ft. Warehouse/distribution properties accounted for most of the positive net absorption for the quarter, with 3.8 million sq. ft. recorded, while manufacturing recorded 1.9 million sq. ft. Although Flex reported positive absorption of 74,613 sq. ft. in the third quarter, the year-to-date total remains negative. Notable recent move-ins include Wistron Corporation taking 767,000 sq. ft. in Alliance Westport 14, O’Reilly Auto Parts moving into 563,000 sq. ft. in Westport 20, Hithium taking 348,000 sq. ft. in 20 East Trinity Pointe Building 2, and Binary taking 296,000 sq. ft. at Sunridge Industrial Park.

INVESTMENT SALES TRENDS

CoStar Capital Market Analytics reports that over the past 12 months, sales volume for the DFW market totaled $2.0 billion. This represents 928 properties that sold with an average sales price of $133 per sq. ft. and an average cap rate of 6.6%. Notable recent sales transactions include two buildings (C&E) at 35 Eagle Distribution Park, totaling 1.5 million sq. ft., sold by Trammell Crow Company to Property Reserve Inc. for an undisclosed price. Additionally, Miramar Capital sold the 1.1 million-square-foot Alliance Center North 1 to Tishman Opportunity Zone Fund II. The property is fully leased by LG Electronics.

RENTAL RATES DOWN MARGINALLY FROM PREVIOUS QUARTER

The average monthly rental rate for the DFW industrial market was $9.70 per sq. ft., marginally down 0.2% from $9.72 in Q2 2025 and down 1.8% year-over-year from $9.88 per sq. ft. The average monthly rate for flex space stood at $13.66 per sq. ft., while the rates for manufacturing space and warehouse/distribution space were $6.79 per sq. ft. and $9.06 per sq. ft., respectively.The Northwest Dallas Outlying and DFW Airport submarkets currently have the highest overall average rates at $17.87 per sq. ft. and $12.17 per sq. ft., respectively.

DFW stats: All flex, industrial properties over 10,000 sq. ft. for the entire metro area (as defined by the US census bureau), with the exception of Delta county which is a tiny county in the northeast fringe area.

For More Information, Contact:

Steve Triolet
SVP of Research and Market Forecasting
tel 214 223 4008
[email protected]