The Texas retail market continues to serve as a top location for resilience and growth in 2026. Driven by robust inward migration and a diverse corporate sector, the state’s major metros are successfully navigating the headwinds of high interest rates and national tenant shifts. While Austin maintains its status as the occupancy leader and Houston enters a strategic recovery, Dallas-Fort Worth stands out for its development pipeline. With construction levels reaching decade-highs and a clear shift toward experiential, grocery-anchored suburban hubs, the Texas retail landscape is evolving.

 

By the Numbers | Q4 2025

CoStar Group, Inc.

Dallas-Fort Worth

• Sales Volume: $84.1M
• Price Per SF: $276
• Cap Rate: 6.7%
• Vacancy Rate: 4.9%
• Rent Growth: 3.4%
• Asking Rent Per SF: $224.98
• Under Construction: 7.8M SF
• Delivered: 595K SF
• Absorbed: 791K SF

 

Austin

• Sales Volume: $62.6M
• Price Per SF: $340
• Cap Rate: 6.3%
• Vacancy Rate: 3.1%
• Rent Growth: 2.6%
• Asking Rent Per SF: $31.64
• Under Construction: 2.8M SF
• Delivered: 545K SF
• Absorbed: 383K SF

 

Houston

• Sales Volume: $368M
• Price Per SF: $248
• Cap Rate: 7.3%
• Vacancy Rate: 5.3%
• Rent Growth: 2.1%
• Asking Rent Per SF: $24.59
• Under Construction: 3.4M SF
• Delivered: 537K SF
• Absorbed: 556K SF

 

Dallas Leads Nation in Retail Growth

Across Dallas-Fort Worth, retail fundamentals continue to show strong resilience and balanced performance. The metro has maintained positive tenant demand for 20 consecutive quarters, despite navigating headwinds from national tenant bankruptcies. Dallas-Fort Worth is currently a national leader in retail construction, with nearly twice the new supply as Houston. While vacancy rates are projected to reach 5% in the first half of 2026 due to new deliveries, demand remains robust across the metro.

 

North DFW Surge in Demand

Investor and developer interest has increasingly focused on the high-growth northern areas of the metro. Denton and Collin Counties account for roughly 65% of all current construction projects. Submarkets like Allen, McKinney, Frisco, and Prosper are primary targets for capital, due to rapid population growth and high household incomes. Specifically, Northern Collin County has seen the time to lease fall to historic lows of approximately five months, driven by a lack of new developments in established trade areas.

 

The market’s expansion follows opportunities in outlying areas, where major grocery-anchored developments aid further strip mall and traditional shopping center construction. In areas like Collin County, the premium on land has pushed starting rents around $40 to $45 per square foot.

 

Metro Reaches Record-Breaking Construction Levels

DFW is experiencing an ongoing supply wave, reaching 7 million square feet underway at the end of 2025. This is one of the highest development rates recorded for the metro in 10 years. In 2025, the market completed 18% of all net retail deliveries in the country. Despite this surge, supply-side risk is limited as approximately 80% of the retail space currently under construction is already pre-leased.

 

Mixed-use projects are also driving significant activity. In Collin County, major developments like The Farm in Allen and Fields West in Frisco are creating new retail and residential hubs that feature experiential retailers and unique luxury offerings.

 

Austin Achieves Robust Retail Activity

Across the Austin metro, retail fundamentals are strong, backed by high occupancy, disciplined new development, and constant population growth. According to Matthews™ First Vice President and Director Andrew Ivankovich, the strong transaction velocity seen at the end of 2025 will continue through 2026. “The market experienced such a frenzy from 2019 to 2022 that it made it challenging for deals to pencil in the few years that followed,” he said. “Sellers’ expectations did not change and high interest rates prevented buyers from acting. Today, both sides have improved and we expect it to be reflected in the year-end velocity report.”

Shift to the Suburbs

Ivankovich added that retail capital has begun to exit Austin’s CBD and is entering suburban markets. In particular, Hays County and Georgetown accounted for an increased amount of the metro’s deals. Private buyers are attracted to Hays County, with the submarket noting a total $21 million in sales for 2025. Meanwhile, Georgetown recorded a rise in deals for newly-built properties and noted a total $51.5 million for its 2025 sales volume. Both submarkets will be crucial to track moving forward given their constant population growth, as well as Round Rock and Cedar Park.

 

In 2025, Austin’s retail under construction level saw a 38% year-over-year increase, reaching 2.1 million square feet. The metro’s suburbs accounted for more than 96%
of all completions last year. Manor is one suburb that stands out from the pack as its inventory grew by 50% throughout the year. The majority of its growth is attributed to the addition of Manor Crossing, a 425,000-square-foot shopping center that was almost fully pre-leased by its completion date.

 

This year, Cedar Park is the next Austin suburb to note an influx of deliveries. The suburb accounts for 33% of ongoing construction, with Cedar View as the largest development. The new project is a mixed-use site that will feature a hotel, a Scheels sporting goods store, and NFM as its anchor.

 

Houston is Set to Recover from 2025 Performance

Throughout 2025, Houston’s fundamental activity dropped to historic lows. Its total absorption level for 2025 was 2 million square feet, a decrease from the 2024 absorption rate of 2.5 million square feet. Despite this trend, Houston’s sales volume jumped from 2024 and totaled $1 billion by year-end 2025. Josh Longoria, Senior Associate at Matthews™, expects this activity to continue as the federal funds rate slows down. “As we head into the second month of the year, the federal funds rate has been stable and it seems like there will be no more rate cuts until the new Fed chair is elected,” Longoria said. “I think this will lead to more stability in the market and buyers having more clear expectations of where rates will be, and therefore I think transaction velocity will pick back up.”

 

Tenants Thriving Across Houston

7 Brew and Crunch Fitness are currently two of the largest players in the metro. Crunch Fitness is absorbing sites left by big-box retailers, while 7 Brew is taking up pad sites around 500 to 700 square feet.

 

Texas is a major market for Crunch Fitness, with a strong presence in the Houston submarkets of Kirkwood, League City, and Humble. Crunch Fitness is a preferred tenant for landlords with vacancies over 35,000 square feet. In 2025, the tenant reached 3 million gym memberships. Specifically in Houston, their locations boast fully booked exercise classes, which signals its robust consumer demand. Crunch Fitness’ growing visitations display its positive activity and add to its strong tenant potential.

 

7 Brew is one of the fastest-growing coffee chains across the country, doubling its national footprint by the end of 2025. In Houston, its expansion is prominent in outer submarkets, with its most recent and upcoming locations in Conroe, Tomball, Spring, Livingston, and Cleveland. With more openings planned across the metro, 7 Brew will maintain its top performance levels as its format allows for easy store placement and a shorter timeframe for opening than a traditional buildout.

 

Top Trends to Watch

Moving ahead, Longoria advises landlords to pay attention to their tenants and their sales trends. “I have heard from multiple landlords that the restaurants and beverage concepts are doing as well as they have previously,” he said. “High-end restaurants are not getting as much traffic, which is helping the lower-priced options.”

 

Longoria added that he expects construction activity to pick back up as it has been slow throughout the past few years. “Development is going to come back into full effect as the
cost breakdown to build new construction did not make sense and the spread was too thin,” Longoria stated. Specifically, Longoria said that new developments are likely to grow in the 610 Loop. One of the largest additions inside the 610 Loop is Midway’s East River project. The facility is located on the former KBR industrial site east of Downtown, and will add more than 1 million square feet to the area.