Contact Us

From Data Centers To Office, DFW CRE Notches Across-The-Board Wins In Q4

Dallas-Fort Worth’s commercial real estate market ended 2021 on a high note, breaking records across several asset classes.


Though the Metroplex, like other major markets, has suffered pandemic shocks, DFW continues to attract new business due to its competitive job market, robust talent pipeline, business-friendly reputation and relatively low cost of living. More than 70 companies moved their headquarters to Texas in 2021, according to a recent interview with Adriana Cruz, the executive director of the Economic Development and Tourism division of the Office of the Governor. 

Local CRE experts predict the region will carry on gaining momentum in 2022 as economic tailwinds push demand beyond supply. Here is a look at fourth-quarter performance for DFW’s office, industrial and data center sectors.


The emergence of the omicron variant and continued uncertainty around the future of the workplace didn't stall increasing office demand in Q4. According to CBRE's latest report, the market absorbed about 791K SF, a 1.4M SF increase since Q3 2021.

“We are headed in the right direction,” said Tishay Davis, field research analyst for CBRE. “Activity is picking back up, and our net absorption is finally going in the right direction.”

Vacancy grew in the fourth quarter by 20 basis points to 25.3%. That is significantly lower than the 50-to-60-basis-point increases seen earlier in 2021 and can largely be explained by an influx of unleased speculative projects coming online, Davis said.

Speculative projects comprised 100% of deliveries in the fourth quarter and added more than 1M SF of office to the market, a quarterly increase of more than 165%, per the report.

Rental rates climbed as the construction pipeline grew more robust, said Lauren Vasquez, field research manager for CBRE DFW. Average asking rates grew from $26.85 per SF to $27.37 per SF in Q4, per the report.

“Base rates for new construction are driving competitiveness,” she said, noting that there are 4.4M SF in the works. “A lot of big new leases are stemming from new construction, so that is proving to be a variable for existing office space as well. We have not seen a falloff in asking rates like we would have expected at the onset of the pandemic.”

The surge in omicron infections may prevent some companies from returning to the office; however, small and medium-sized businesses, which are more nimble than their larger counterparts, will likely move forward as planned, Davis and Vasquez said. 

“The market may fluctuate a bit just due to some hesitancy, but I don’t think there will be any major changes,” Davis said. “The economy is doing fairly well considering the circumstances.”


Data Centers

Record activity at the Metroplex’s data centers in 2021 left the market undersupplied headed into 2022, according to a year-end report from Cushman & Wakefield’s DFW office.

“[The market] saw absolute record absorption for the year and for a single quarter,” said Ali Greenwood, Cushman & Wakefield’s executive director of tenant representation for data centers. “We as individuals are continuing to demand and consume so much more technology and data … than we ever did before.”

The market absorbed 89 megawatts of space at the end of 2021, up from 40 MW a year earlier. There are about 55.56 MW of turnkey power available now and 26.5 MW of power under construction, per the report.

Several large data center facilities opened in DFW over the last couple of years, but as leasing activity accelerated due to surging demand, a market once considered oversupplied is now straining for space, Greenwood said.

“We built a lot of big campuses for data centers,” she said. “Then, all of the sudden, we have this lights-out year … so now we are stuck in a little bit of a supply-constrained market from an actual footprint and capacity perspective.”

Several large data center deals are expected to close in the coming months, Greenwood said. This should help alleviate some of the pinch, though supply chain shortages are preventing developers from quickly delivering more space.

“It’s a tough time to be bringing supply online and playing catch-up because of the constraints we are seeing across the general industry as a result of the pandemic,” she said.

Pent-up demand is expected to drive rental rates for data center sites to new heights after stabilizing in 2021, Greenwood said. Land prices are also expected to climb as data center users compete with industrial counterparts for available space, she added.

“We are going to be a little strained through this year, and we will see price increases as a result of that,” Greenwood said. 

Looking ahead to 2023, Greenwood said DFW’s reputation as a Top 5 data center market will help alleviate supply constraints. Some of the pressure should be relieved when QTS opens its new Irving campus at the end of Q1, she added.

“All of these big operators will continue to invest in this market by buying new land sites and building new campuses,” Greenwood said.



Demand for industrial space in DFW more than doubled in 2021, according to a recent report from Transwestern. Twelve-month net absorption landed at 41.7M SF in Q4, up from the 20.6M SF absorbed a year prior. 

“2021 broke a lot of records for the industrial market, and it goes into 2022 with strong momentum to help continue that performance,” said Andrew Matheny, Transwestern DFW’s research manager and author of the report.

The Metroplex ended Q4 with an all-time-low vacancy rate of 5.3%, per the report. Landlords are responding by accelerating rent growth into the double digits. The average industrial triple-net rent landed at $5.49 per SF in Q4, an increase of 10.5% year-over-year and 14.2% compared to pre-pandemic levels.

Rental rates for flex space also set a new record at $10.50, up 2.7% year-over-year. Matheny said this is due to the scarcity of this type of product. According to the report, flex vacancy declined to 5.3%, the lowest rate since 1995.

“We are just not building that much flex property anymore, so there is a very limited supply for a growing base of tenants demanding space,” he said. 

Over the next 12 months, new development in the pipeline is expected to add close to 39M SF to the market. Speculative product, which accounts for 95% of space under construction, continues to be the most popular as developers respond to the immediate needs of tenants, Matheny said. 

Close to 6M SF of spec were delivered in Q4, and projects are delivering with 35% of space pre-leased, per the report

“Users who might have built their own facilities are instead choosing spec space because it's available and there’s a lot less planning and time that sometimes goes into those spaces compared to building your own,” Matheny said.