Dallas-Fort Worth Commercial Real Estate Market Report: September 2025 Analysis & Outlook
New Report Reveals Stabilizing Fundamentals & Evolving Dynamics Going Into Q4 2025
As we pass the midpoint of 2025, the Dallas-Fort Worth commercial real estate sector is emerging from a rocky start and entering a period of renewed confidence. While volatility and lingering economic uncertainties remain, optimism is rising for the second half of the year as investors and developers respond to shifts in market conditions. The resurgence isn’t limited to the high-profile growth in data centers; alternative sectors such as cold storage, senior and student housing, wellness real estate, and office-to-residential conversions are all attracting considerable investment, driven in part by newly adjusted pricing.
After several years of pricing mismatches and stalled negotiations, transactional activity has begun to accelerate. According to Coldwell Banker Commercial’s 2025 Midyear Outlook Report, buyers and sellers are finally bridging the valuation gap, resulting in significant market momentum. The latest figures from MSCI Real Assets show U.S. commercial property transactions hitting $100.6 billion in the first quarter—a 14% increase from the previous year.
Notably, individual asset sales jumped 24% year-over-year, with retail, industrial, and multifamily properties leading the way, even as central business district offices continue to face headwinds. In response to tight traditional lending conditions, there’s a marked increase in the use of alternative financing such as seller financing, while sales activity now outpaces leasing in many markets as agile owner-users and 1031 investors move quickly to seize opportunities.
Underscoring this upturn, the LightBox CRE Activity Index surged to 113.9 in June, its highest level since May 2022, signaling a robust midyear rebound for the industry. The 8% monthly gain—following a brief dip in May—reflects growing market traction, with property listings up for the sixth consecutive month—rising 2% from May and 31% higher than a year ago. This burgeoning momentum is supported by a growing pool of sellers, clearer price expectations, and increased liquidity supplied by debt funds and CMBS lenders, which are stepping in alongside banks to support fresh deal flow.
Collectively, these trends point to a more dynamic, competitive, and opportunistic landscape for DFW commercial real estate as we move into the latter half of 2025.
The recently enacted tax-and-spending bill, signed into law by President Trump, revises the Opportunity Zones program, allowing state governors to designate new zones by mid-2026 and updating eligibility criteria to target communities with higher poverty or lower median incomes, while introducing special incentives for rural investments, such as a 30% basis step-up at year five; and the “substantial improvement” standard for tangible assets is provided with a lower standard; specifically, a 50% basis increase. The new zones will be effective on Jan. 1, 2027.
Under H. R. 1, census tracts need to meet at least one of the below descriptions to be eligible for Opportunity Zone investments:
To determine the current status of census tracts in your community, see this map from the Department of Housing and Urban Development or this list from the Internal Revenue Service. These designations are in place until the end of 2026.
As states prepare for the new designation window, business owners, landowners, investors, and local governments are advised to begin strategic planning. Business owners should evaluate plans for development or expansion in potential Opportunity Zones, while landowners may benefit from revisiting redevelopment options or considering new partnerships.
Investors are encouraged to monitor changes and organize Qualified Opportunity Funds, especially targeting rural areas with enhanced incentives. Local governments and communities can strengthen their prospects by identifying eligible census tracts, coordinating advocacy efforts, and positioning themselves early, as heightened eligibility requirements are expected to intensify competition for Opportunity Zone status.
According to the Dallas Business Journal, the new Texas A&M campus in downtown Fort Worth is set to transform the area with plans for five new buildings, including a Law and Education Building—opening in 2026—and a Research and Innovation Building that will feature both academic programs and partnerships with major industry players. This significant investment has attracted additional interest from private companies such as Hillwood, which recently acquired a nearby city block. The campus development aligns with a broader wave of growth in southeast downtown Fort Worth, including new luxury residential projects and convention center renovations.
With rising land and construction costs throughout Dallas-Fort Worth, developers are increasingly targeting the far northern edges of the region, where acreage remains more attainable compared to established markets like Frisco and Plano. This shift is fueled by the area’s high-performing schools and convenient access to expanding highways—factors spurring many to invest before property values escalate further. DFW Land Holdings LLC recently acquired 90 acres on the outskirts for upcoming housing projects, while Serenity Equity LLC continues to ramp up its presence, now owning over 1,400 acres throughout North Texas cities such as Celina, Gunter, Sherman, Howe, and Van Alstyne. Their latest purchase, 82 acres near the rapidly developing semiconductor hubs in Sherman, highlights the ongoing rush to secure land in anticipation of future growth and rising demand.
Redevelopment is set to begin on the 740,000-square-foot Inwood Design Center near Dallas’ Design District, according to an announcement from M2G Ventures LLC. The project will update the center’s façades, storefronts, parking, and landscaping, and will introduce curated branding along with interactive art installations to enhance walkability and create a vibrant atmosphere. This initiative reflects growing developer interest in the Design District, fueled by its proximity to downtown and a large supply of industrial properties primed for transformation.
In the first quarter of the year, vacancy rates fell by 50 bps as new construction slowed, and tenant demand picked up. In fact, according to CoStar, Dallas-Fort Worth reported the second highest quarter for gross absorption in history – over 22 million Square Feet. New construction starts so far in 2025 are the lowest in a decade. For properties in infill markets, rents continue to increase, especially for small bay properties. Annual rent growth in DFW is 3.6%. Here’s the latest breakdown of the numbers (Source: CoStar).
Dallas-Fort Worth is experiencing a significant resurgence in retail construction, with development activity reaching levels not seen in nearly a decade. The region currently has about 7.3 million square feet of retail space under construction, marking one of the largest pipelines since 2017. By the end of 2025, completions are expected to reach 5.9 million square feet, and strong momentum is set to continue into the following year, with an additional 5.6 million square feet anticipated to be delivered, according to CoStar. DFW still leads the nation in tenant demand as well, at 1.4 SF of net absorption over the last 12 months. The region has experienced 24.3% rent growth just over the past five years. Here’s the latest breakdown of the numbers (Source: CoStar).
A recent report from commercial real estate firm JLL shows that demand for large office spaces in the Dallas-Fort Worth area has surged, reaching 7.6 million square feet currently being sought—more than twice last year’s figure. The area also saw positive net absorption of 154,481 square feet in the second quarter, indicating more office space was leased than vacated. This increased activity is driven primarily by financial services and legal companies, many of which are targeting premium office locations such as Uptown Dallas. Here’s the latest breakdown of the numbers (Source: CoStar).
Constructions starts have fallen significantly, setting the stage for the multifamily market in DFW to rebalance. New units completed fell 33% from 2024 to 2025, and inventory growth fell 4.9% from 2024, should fall by 3.1% for 2025 and to 1.8% in 2026. With many new properties still in the lease up phase, vacancy is still hovering around 12% right now in the metroplex. Rent growth is expected to pick back up positively in 2026 as the market regains equilibrium. Here’s the latest breakdown of the numbers (Source: CoStar).
As we move into the second half of 2025, the Dallas-Fort Worth commercial real estate market demonstrates remarkable resilience and adaptability. After weathering a challenging start to the year, the market is now characterized by accelerating transaction volumes, narrowing valuation gaps, and diversifying investment strategies across multiple sectors. The data paints a picture of strategic evolution rather than mere recovery. With the LightBox CRE Activity Index reaching its highest level in three years and property listings up 31% year-over-year, investor confidence is clearly strengthening. This renewed momentum is particularly evident in the industrial sector, which posted historic absorption numbers in Q1, and the retail sector, which is experiencing construction activity at levels not seen in nearly a decade.
While challenges persist—notably in the multifamily sector with its 12% vacancy rate and the office market still working through its 17.9% vacancy—bright spots are emerging even in these areas. Office demand for large spaces has more than doubled compared to last year, and multifamily construction starts have decreased significantly, setting the stage for market rebalancing by 2026.
The region’s development landscape continues to evolve with transformative projects like the Texas A&M downtown Fort Worth campus driving ancillary investment, while developers increasingly look to the northern edges of the metroplex for more attainable land opportunities. Meanwhile, the revised Opportunity Zones program promises to create new targeted investment corridors throughout the region.
For investors and stakeholders, the remainder of 2025 presents a market in transition—one where pricing recalibration, alternative financing solutions, and creative repurposing strategies are creating unique opportunities across all property types. As traditional lending remains constrained, the rise of debt funds and CMBS lenders is providing much-needed liquidity to fuel continued transaction growth.
The DFW commercial real estate market’s trajectory suggests not just recovery but reinvention—a marketplace that has emerged from recent disruptions with greater agility, innovation, and long-term resilience. Those positioned to recognize and act on these evolving dynamics will find substantial opportunities in what promises to be an increasingly competitive and dynamic second half of the year.
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