Texas Commercial Real Estate Update - May 2025

Texas Commercial Real Estate Market Update – May 2025

As of mid-May 2025, Texas's major metropolitan areas are experiencing varied dynamics across commercial real estate sectors. Here's an overview of current trends in key markets:

Dallas–Fort Worth (DFW)

• Investment Activity: DFW's commercial real estate market demonstrated resilience in Q1 2025, with capital deployment reaching $92.5 billion across major asset classes, marking a 17% year-over-year increase. MDRE Group+1Facebook+1

• Office Sector: Leasing activity surged, with 3.5 million square feet leased in early 2025, up by 1.3 million square feet from the previous 12 months. Globest

• Industrial Market: The Metroplex closed $415 million in industrial sales through the first two months of 2025, with average sale prices at $112 per square foot, leading the Southern region. CRE Daily

  
  

Houston

• Office Market: Suburban submarkets like Katy Freeway and West Loop saw robust vacancy contractions in 2024, with Katy-Grand Parkway West entering 2025 with a 7.6% vacancy rate following a 440-basis-point contraction. Marcus & Millichap

• Investment Outlook: Houston's real estate market in 2025 offers a combination of strong fundamentals, competitive pricing, and growing investor interest, despite national headwinds such as high mortgage rates and inflationary pressure. The Luxury Playbook

  
  

Austin

• Office Market: Austin's office vacancy rate stands at 17%, among the highest in the U.S., with expectations of further increases due to speculative developments. Despite this, asking rents have risen by 1.8% annually. Tower-Commercial

• Future Projections: Looking beyond 2025, Austin’s commercial real estate market is expected to stabilize as the excess office and industrial supply is absorbed. Austin & San Antonio Real Estate

  
  

San Antonio

• Industrial Sector: San Antonio's industrial market posted -168,153 square feet of negative net absorption in Q1 2025, contrasting with the 816,416 square feet posted in the previous quarter. New construction deliveries of over 2.5 million square feet pushed the vacancy rate from 8.6% to 9.9%. Partners Real Estate

• Retail Development: The city is experiencing a retail surge, with new shopping centers like Potranco-Reid Ranch South Retail and The Rim Shopping Center adding significant retail space and attracting major tenants. MySA

  
  

Conclusion

Texas's commercial real estate markets are navigating a complex landscape in 2025, with each major metro area exhibiting unique trends across sectors. While DFW and Houston show strong investment and leasing activities, Austin faces challenges in its office market, and San Antonio experiences shifts in industrial and retail sectors. Stakeholders should monitor these evolving dynamics to make informed decisions in the state's diverse commercial real estate environment.