Q2 2025 Dallas-Fort Worth Retail Market Report
Market Overview
Increased new deliveries and tenant demand are important indicators of the market’s performance for the rest of the year.
Dallas-Fort Worth continues to earn its spot as one of the nation’s leaders by total net absorption, despite a recent surge in tenant move-outs. Store closures by major companies like JOANN, Party City, and Big Lots have applied some pressure to the market, piling up faster than the market can reabsorb. Regardless, DFW has retained its top spot as leader of tenant demand, with 1.8 million SF of positive net absorption. This influx of absorption owes to the area’s leading construction pipeline, giving retailers the space necessary for entry and expansion into the market without having a significant affect on vacancies. With a large amount of new groundbreakings being placed on hold until most of the new space is preleased, this further protects the area from vacancy increases, which has recently experienced an uptick.
Vacancy Rate (%)
Rents | Vacancy | Construction
Dallas-Fort Worth remains one of the top cities in the country in terms of total net absorption.
Despite the market’s influx of absorption in the last 12 months, headwinds have taken annual tenant demand below the norm. The increase in move-outs is the main driver of this shift. Over the last year, there has been a 30% increase in move-outs in the area, shedding over 12.5 million SF of space while absorbing about 15.2 million SF in the same timeframe.
Demand has remained strong for smaller lease spaces, with approximately two-thirds of transactions involving units of 5,000 SF or less. This segment continues to attract interest, particularly in well-located single-tenant properties. Chains like Dutch Bros. and Salad and Go have been expanding steadily, contributing to the momentum. In addition, established national brands such as Einstein Brothers, Wingstop, and Starbucks are actively leasing within this size range across the metroplex. Starbucks, in particular, is concentrating its efforts on fast-growing suburban communities like Sachse and Prosper.
Although construction activity remains more measured compared to previous development cycles, Dallas-Fort Worth still leads the nation in new construction volume. Developers are currently building 7.2 million square feet, representing about 1.5% of the market’s total inventory. Construction starts remained steady throughout last year and into the first half of 2025, with an average of 1.9 million square feet of new projects commencing each quarter. The bulk of the current pipeline is made up of large-format developments for tenants like Costco, along with retail centers located in the outermost submarkets— areas where lower land costs and sustained population growth have historically driven new construction.
By the Numbers
- Sales Volume: $142M
- Rent Growth: 4.7%
- Vacancy Rate: 4.8%
- Cap Rate: 6.7%
- Market Asking Rent Per SF: $24.90
- SF Under Construction: 7.2M
- SF Delivered: 1.2M
- SF Absorbed: 828K | Q2 2025 | Source: CoStar Group
Sales
The buyer landscape has increasingly tilted toward private investors, as institutional investors and REITs have scaled back their acquisition activity. Currently, private buyers account for over 60% of transactions, a notable increase from the roughly 45% share seen during the five years leading up to the pandemic. Private investors have shown a strong preference for single-tenant net lease properties, with recent acquisitions including several Salad & Go locations. These purchases align with the brand’s ongoing expansion across the Dallas-Fort Worth metro, particularly into rapidly growing suburban areas.
Over the past year, cap rates for single-tenant net lease assets have risen by approximately 100 basis points, with most deals now trading in the mid-to-high 6% range. Robust investor interest in the region is underpinned by solid population growth, which continues to support local buying power. Looking ahead, the combination of limited new construction and historically low vacancy should help the retail market remain resilient, even in the face of potential shifts in demand.
Dallas-Fort Worth Retail Sales Volume & Market Cap Rate
Source: CoStar Group, Inc.