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. Office-using employment in financial activities, information and professional services sectors increased 1.3% YOY and remained 20.3% above pre-pandemic levels. Population growth continued at an estimated pace of 112,800 residents over the last 12 months.
Surveys of Texas service sector firms by the Dallas Fed signaled expectations for continued growth in employment and capital expenditures over the next six months, indicating favorable conditions for the DFW office sector will likely continue.
Demand
Quarterly leasing activity rebounded 30.3% quarter-over-quarter (QOQ) to 4.4 million square feet (msf), the highest level since Q1 2019. Tenants have signed 11.6 msf of new commitments year-to-date (YTD), also the highest volume since 2019. Strong leasing velocity continued to be driven by financial activities (3.2 msf), professional and business services (1.3 msf) and information and technology (1.2 msf). Multi-floor deals exceeding 30,000 square feet (sf) accounted for 3.8 msf or 33.2% of new leasing activity in 2026.
Net absorption was positive for the seventh consecutive quarter at 156,935 sf. Class A continued to outperform at positive 234,054 sf while Class B and C were slightly negative. Submarkets with new construction achieved the strongest occupancy gains, namely Uptown/Turtle Creek (209,584 sf), Legacy/Frisco (179,490 sf), and South Fort Worth (71,709 sf). YTD net absorption totaled 1.4 msf at the end of the third quarter, the best pace since 2019.
Cushman & Wakefield expects momentum to continue in net absorption through year-end 2026. The DFW market entered the fourth quarter with 1.9 msf of net absorption teed up between known move-ins and move-outs, which could drive 2026 net absorption to 3.4 msf, the strongest performance since 2017.
Supply
Overall vacancy fell for the seventh consecutive quarter, declining 20 basis points (bps) QOQ and 150 bps YOY to 23.7%. Class A vacancy tightened 220 bps YOY to 25.3%, with Trophy properties declining 730 bps YOY to 19.2% and Tier I buildings declining 180 bps YOY to 21.3%. Vacant availability—a better measure of space truly competing for tenants—has fallen below 20.0% in both Trophy (13.9%) and Tier I (17.9%) buildings. Sublease availability declined to 5.3 msf, the lowest level since Q2 2020.
Construction activity rose slightly to 2.5 msf but remained historically low. Only 280,813 sf of new office inventory is expected to deliver in 2026, the lowest level since 2011. Two buildings totaling 338,685 sf began foundation work in the third quarter: Knox & McKinney (271,786 sf in Uptown/Turtle Creek) and Fields West Building L (66,899 sf in Legacy/Frisco). User purchases, demolitions and conversions totaled 3.7 msf YTD and reduced competitive office inventory to its lowest level since Q4 2019.
Pricing
Average overall asking rents reached $34.14 per square foot (psf), increasing 1.4% YOY. Class A continued to outperform the market, increasing 1.7% YOY to a new record of $39.94 psf. The appearance of soft rent growth was a statistical artifact caused by the greater scarcity of high-priced Trophy and Tier I space compared to the previous year.
Rent growth at the building level, which better captures changes in pricing that tenants in the market are facing, averaged 4.0% YOY in Q3 2026 compared to 2.3% YOY in Q3 2025. Overall rents increased 26.5% of properties by an average of 8.9% YOY and fell in just 6.0% of properties.
Landlord continued to offer tenant-friendly concessions to achieve higher face rents that bolster asset prices. As of the third quarter, a new lease typically offers one month of free rent and an improvement allowance of $5.00-$10.00 psf per year of term, depending on building quality, location, and the amount of competing vacancy. Although Cushman & Wakefield expects landlords to continue executing this strategy over the short term, concessions may begin to fade for tenants seeking top tier space in DFW’s premier locations as competing vacancy falls below 20.0%.
