Private Capital Eyes DFW Office Sector Momentum Fueled By Y’all Street Growth
Dallas-Fort Worth's growing financial services sector continues to drive momentum in the region's office market and private capital has started to take notice.
As Y'all Street solidifies in Dallas ahead of next year's planned launch of the Texas Stock Exchange, the financial services sector has been responsible for around half of the top 10 office leases in the metro over the past two quarters. Lenders have become more willing to participate in the market as DFW develops into a major financial hub. This has also attracted private equity.
Private capital recognized an opportunity to play in the office space without having to compete with huge institutional investors like JPMorgan Chase, Crescent Real Estate Managing Director Ben Molk said.
“Private capital has been able to save the bottom from falling out on a lot of these assets,” Molk said during Bisnow's State of DFW Office event on Thursday, which took place at Two Addison Circle in Addison.
The metro had 11.4M SF leased during the first three quarters of 2025, putting it nearly 14% over the market’s five-year average. Class-A assets drove that growth, accounting for 70% of the 4M SF total leased in Q3 and responsible for 1.9M SF of positive net absorption so far this year, according to the latest DFW office market snapshot from Avison Young.
Despite the inroads that the private capital world has made in the office sector, Capital Commercial Investments President Doug Agarwal said some high-net-worth families aren’t as keen on the prospect.
Due to the prevailing narrative about the death of offices and buildings going to foreclosure, he said it’s been a challenge to educate those families on the potential upsides of the sector.
“There is a tremendous opportunity, but the general public doesn’t see it,” Agarwal said.
His company has recently been buying buildings that are about a decade old for $60 to $80 per SF. Agarwal said he expects those will trade for $240 to $300 per SF in 24 months.
“We bought 10 buildings last year for 26% of what the last guy paid,” Agarwal said.
Elevated construction costs have made it too expensive to build new office product in DFW, so private capital has positioned itself to take advantage of Y’all Street demand, driving rents up, Ranger Tax Consulting partner Alex Pace said.
New construction in the metro reached its lowest level since 2012 in the third quarter, according to Avison Young’s report. A little over 2M SF is under construction, with nearly 70% of it already preleased.
“Only in very specific areas like Uptown and Preston Center are you getting rents that are going to justify new construction," Molk said.
In addition to TXSE, the existing securities exchanges have also moved to the region. The NYSE announced in February that it would reincorporate its Chicago branch in Dallas, and Nasdaq said the next month that it was planning a regional headquarters in the city that would serve the entire Southeast.
DFW has also received major commitments from financial services companies such as Goldman Sachs, Wells Fargo, Scotiabank and PennyMac Financial Services.
That influx of financial services has also helped decentralize the metro's business district, according to Gensler Studio Director Joshua Metzger. As those companies work to understand the lifestyle experiences their team members will get in the central business district versus the northern suburbs, they’re opting for multiple offices in the metro.
These companies often have a client-facing hub in Downtown Dallas and a more suburban location farther north. However, the continued expansion of DFW could turn those suburban locations into client-facing hubs of their own, Metzger said.
“So where Downtown Dallas was a hub previously, Plano and Frisco are going to become hubs, and then farther north will become satellite offices,” Metzger said.
Institutional investors are also watching the sector closely, especially as major users solidify their return-to-office plans. As office buildings return to being sound investments, Molk said institutional investors will again come calling soon.
Pace compared the state of DFW’s office market to the Dallas Mavericks. Things haven’t been going well, but just like the region’s office sector got an influx of financial services tenants, the Mavs got Cooper Flagg with the No. 1 draft pick this year.
“The Mavs are … on the way up and office is too,” Pace said.
