Industrial Conversions Becoming Popular Solution For DFW's Obsolete Office Issue

Conversions remain a popular possibility for Dallas-Fort Worth's obsolete office supply. But instead of a change to multifamily, like in other parts of the country, it’s a switch to a different sector that has the most momentum in North Texas.

Office-to-industrial conversions have emerged as the leading contender in DFW’s battle to overcome its abundance of outdated office space. The pricing difference between office and industrial assets historically prevented this type of conversion project from moving forward, but the delta has narrowed and that dynamic has changed. 

While these conversions haven’t become the final solution to the metro’s oversupply that some experts predicted a few years ago, they have grown in frequency and are expected to become even more commonplace in the years ahead. 

The biggest reasons for that growth in popularity are their ability to target infill locations throughout the metro and the ease with which they can be done. 

"The office buildings we’re looking at have no ability to be converted to warehouses,” said Jim Traynor, partner and managing director of Foundry Commercial's development and investments platform in Dallas. “So it makes more sense to just demolish them and build back.”

Office-to-industrial conversions have become a trend at infill sites across the metro as companies look for additional distribution and logistics sites to serve the region’s growing population. And with the Dallas-Fort Worth International Airport and similar areas topping the charts as the most in-demand submarkets for industrial development, developers have had to get creative to meet that demand. Conversions have emerged as a viable option as DFW’s office market is focused on the newest trophy space available, leaving Class-C properties increasingly empty.

Foundry has a dozen office-to-industrial conversions in the pipeline across the country, with more than half of those in DFW. Those projects range in size from less than 10 acres to more than 50 acres, though Traynor said they’re trending toward the smaller because of the popularity of infill sites that aren’t very large.

The company acquired a 287K SF office building on 24 acres near the DFW airport in late 2023 that it razed to make way for a 337K SF industrial development. Foundry also tore down two obsolete office buildings on 22 acres in an almost fully built-out Plano in 2024 to build a speculative distribution facility.

"We've been living in this period of time where to get new construction capitalized, it had to be infill, unless it was build-to-suit,” said Colby Everett, the managing director for industrial at Aspen Oak Capital Partners. “So most of the developers pivoted to that strategy."

Industrial Vs. Office 

As a key player in the national logistics scene, DFW had the strongest industrial market in the U.S. last year, according to JLL’s fourth-quarter report. The region recorded close to 25M SF of net absorption in 2025, marking the seventh straight year DFW surpassed 20M SF in the metric. No other market in the U.S. has matched that achievement.

DFW's industrial vacancy rate dropped 30 basis points in the fourth quarter to 8.7%, according to the latest data from CBRE. As the region's gateway to the world, the DFW airport is the area's premier destination for industrial space, but it’s becoming increasingly difficult to find land there for new projects. 

The emergence of Y'all Street has turned DFW into a national financial hub and driven up demand for trophy office space. But Class-C office space is a very different picture. 

“Office, as everybody knows, has kind of become very bifurcated,” Everett said. “You've got the new construction, Class-A trophy product that is setting record rents, and then you've got some of the more commodity office where the knife is still falling.”

Asking rents for DFW's more than 9M SF of Class-C office inventory were just under $18 per SF during the fourth quarter. That's less than half of the average rents Class-A properties demand, data from Cushman & Wakefield’s latest office market report showed.

When those buildings sit empty, Cushman & Wakefield Senior Research Manager Andrew Matheny said it makes sense to tear them down for redevelopment. And the surface parking attached to many such buildings usually provides enough space to build a warehouse. 

Properties around the airport are the hottest commodities in the metro for industrial tenants as they offer speed-to-market advantages that justify the higher rents developers can charge. Average rents at the airport ended 2025 at $10.26 per SF, one of the highest industrial asking prices in the metro, according to Cushman & Wakefield's fourth-quarter industrial report.

Foundry isn't the only developer looking for obsolete office space that can be repurposed for industrial use near the DFW airport. Trammell Crow Co. and joint venture partner PGIM broke ground on a three-building industrial park near the airport late last year that will replace a pair of empty office buildings and two parking garages in Lewisville. 

With so much of the area around the airport already developed, infill opportunities have become even more popular in neighboring cities 

“In Los Colinas, you've got those big suburban call centers and back offices that have been empty since the pandemic,” Matheny said. “Those are starting to come down, and they'll be built for industrial just because there's no land left at DFW airport to build industrial.”

On the other side of the metro, a northern suburb has also become a popular destination for office-to-industrial conversions.

After years of focusing on retail and residential growth, McKinney has embraced industrial development and emerged as the hottest industrial market in the metro. The submarket has one of the smallest industrial footprints in the region yet demands average rents even higher than those at the DFW airport, according to Cushman & Wakefield's report.

With McKinney’s growth and the DFW airport’s continued industrial dominance, Everett said those are among the best locations in the metro for office-to-industrial conversions.

"It's a math equation, and those are the submarkets where you can get the highest rents,” Everett said. “That's where you can pencil new development and get to a yield on cost that works."

While projects are moving forward in other areas of the metro, Traynor said developers will have to dig a little deeper as the office market is beginning to feel “picked over.” Most of the easiest conversion projects have already been claimed, and many of the rest have rezoning or tenant complications to deal with.

But most of the metro’s municipalities recognize that their obsolete office buildings are turning into blights that aren’t generating jobs or meaningful tax value. Foundry has even received economic incentives from cities such as Plano and Farmers Branch to make the conversion projects feasible.

Cities want redevelopment because it helps these infill locations attract high-class industrial tenants that benefit the tax rolls and the population.  

“Big picture, infill development, whether it's office-to-industrial conversions or otherwise, is here to stay,” Everett said. “Fundamentally, population centers need functional industrial facilities nearby to serve rooftops and businesses.”