Garland & NE Dallas Texas Industrial Market Update

Mid-Year 2026

Between February and mid-year 2026, the NE Dallas/Garland industrial market spent the first four months largely treading water before inflecting sharply in the second quarter. Sales volume held near $195-196 million into April, then fell to $113.9 million by July as transaction count declined for a third straight period. Leasing told the opposite story: vacancy sat flat at 6.8% through April before dropping 1.7 points to 5.1% by mid-year, powered largely by a single outsized lease that backfilled the submarket’s largest known move-out.

This report summarizes capital markets performance, leasing fundamentals, pricing dynamics, and strategic implications for owners, investors, and tenants operating in this built-out, infill Dallas-Fort Worth submarket, drawing on CoStar submarket and capital markets reports dated February 11, April 12, and July 22, 2026.

Executive Summary: A Market That Turned in the Second Quarter

Key signals from the period:

Asset value rose modestly from $8.2 billion in February to $8.3 billion at mid-year.
12-month sales volume held at $194.4 million in February and $196 million in April before falling to $113.9 million by July, a decline of roughly $80-82 million concentrated almost entirely in the second quarter, as transactions fell from 133 to 123 to 112 over the same stretch.
The market cap rate held at 6.3% through April before ticking up to 6.4% by mid-year, alongside average transaction cap rates that have held steady at 6.8%.
Vacancy was unchanged at 6.8% from February to April, then dropped sharply to 5.1% by July as trailing 12-month net absorption swung from roughly 200,000 SF to 1.4 million SF.
Blended asking rent climbed steadily throughout the period, from $9.73/SF in February to $9.94/SF at mid-year, even as year-over-year rent growth decelerated from 3.8% to 2.4%.
Institutional and national capital remained the dominant buyer pool throughout, though the specific players shifted: ATCAP Partners’ roughly $71.5 million small-bay acquisition from Investcorp anchored activity early in the year before aging out of the trailing 12-month window, replaced by BKM Capital Partners’ and Stockbridge Capital Group’s trades as the most prominent deals carrying into mid-year.

The net effect is a submarket where capital markets activity is cooling from an unusually active 2025, while leasing fundamentals are tightening fast, a combination that favors owners of leased assets over sellers chasing 2025-era pricing.

Capital Markets Performance Metrics (February 2026 to Mid-Year 2026)

Key changes over the period:

Total Asset Value: $8.2B → $8.3B (+$100M)
12-Month Sales Volume: $194.4M → $196M (April) → $113.9M (July), a 41% decline from the February baseline
Transactions (12 mo): 133 → 123 → 112 (fewer deals in every period)
Market Cap Rate: 6.3% → 6.3% → 6.4% (10 bps expansion, concentrated in the second quarter)
Average Transaction Sale Price/SF: $124 → $124 → $127
Market Sale Price/SF: $132 → $133 → $134
Percent Leased at Sale: 92.3% → 92.7% → 93.8%

Average dollar volume per transaction fell from roughly $1.46 million in February to about $1.02 million by mid-year, even as average transacted square footage per deal rose slightly (38,000 SF to 40,700 SF). That combination points to the decline in dollar volume coming from fewer large institutional trades rather than a pullback in small owner-user activity, which continued at a steady pace throughout the period.

Cap Rate Dynamics and Pricing Power

The move from 6.3% to 6.4% is a modest expansion, but it reverses a full year of stability at 6.3% recorded in both the February and April reports.
Average transaction cap rates have held firm at 6.8% since at least April, indicating the pricing tension sits at the margin of what deals get done, not in the deals that are closing.
Sale price per square foot continued to climb steadily across all three periods ($132 → $133 → $134), even as cap rates edged higher, a combination consistent with rents and replacement costs outrunning yield compression.
Sale price versus asking price differential held flat at -0.3% across all three periods, indicating pricing discipline has been consistent rather than a recent development.
Percent leased at sale climbed steadily from 92.3% to 93.8%, suggesting buyers increasingly favor stabilized, leased assets over value-add or vacant product as the year progressed.

Institutional Transaction Activity

The composition of the buyer pool has shifted since February even as institutional and national capital has remained dominant throughout.

ATCAP Partners’ roughly $71.5 million acquisition of eight small-bay buildings from Investcorp across Northgate II, Northgate 4, and Northgate Business Park 4 (closed June 2025) anchored institutional deal flow in both the February and April reports. Those transactions have since aged out of the trailing 12-month window, a reminder of how quickly last year’s headline deals can roll off a rolling comparison.
BKM Capital Partners’ $51.1 million acquisition of five buildings at Market Distribution Center from TA Realty and Stockbridge Capital Group’s $24 million ($194/SF) purchase of 1718-1726 N 1st St from CanTex Capital, both closed in August 2025, have persisted across all three reports and now stand as the submarket’s most prominent transactions.
Westcore’s four-building, roughly $27.1 million acquisition from Link Logistics Real Estate in Northgate II (October 2025) has likewise remained a constant throughout the period.

Blackstone’s $53 million purchase of Gateway East Business Park, the submarket’s largest single sale, has been referenced in CoStar’s summary commentary across all three reporting periods. The property’s tenant profile has since turned over: Fossil’s lease, which the April report flagged as set to expire, has been replaced by Maverick Power’s new 517,500 SF commitment, discussed further below.

Leasing Market Fundamentals: A Flat First Third, Then a Sharp Inflection

Key leasing metrics across the three reporting periods:

Vacancy: 6.8% (Feb) → 6.8% (Apr) → 5.1% (Jul)
Availability: 9.9% → 9.0% → 7.7%
Trailing 12-Month Net Absorption: ~214,000 SF → ~197,000 SF → 1.4 million SF
Trailing 12-Month Deliveries: 1.8 million SF → 1.8 million SF → 490,000 SF
Under Construction: 1.98 million SF → 1.51 million SF → 1.88 million SF

Vacancy held flat for the first four months of the year even as At Home’s 555,000 SF distribution center exit and Interceramic’s 262,000 SF departure from Gateway East Distribution Center weighed on availability, both moveouts flagged as a source of pressure in the February and April reports. That pressure was fully reversed by mid-year: Fossil’s anticipated departure from its 517,000 SF building at Gateway East Business Park, flagged in April as an upcoming source of available space, instead converted directly into Maverick Power’s lease of that same building. The resulting absorption swing, combined with the effective disappearance of the submarket’s remaining large-block sublease space, pulled vacancy down 1.7 points in a single quarter. Deliveries, meanwhile, have fallen sharply as the large 2025 completions roll out of the trailing 12-month window, and CoStar’s forecast has vacancy holding in a narrow 5.5%-6.1% band through 2030 rather than continuing to fall at the pace seen between April and July.

Development Pipeline and Supply Dynamics: Under construction totaled 1.98 million SF in February and 1.51 million SF in April before rising again to 1.88 million SF by mid-year as the mix shifted toward specialized industrial and data-center-anchored product; net, the pipeline is little changed over the period even though its composition has moved. Miller 635 Logistics Center, the 587,000 SF three-building speculative project in Garland proper, was already underway in February, with its buildings breaking ground in February and April 2026, and remains the pipeline’s anchor project; deliveries are now expected before year-end, pulled forward from the January 2027 completion estimate carried in the February and April reports. East Wood Logistics (248,850 SF, Stonelake Capital Partners) has been under construction since December 2025 across all three reports. NTT Data’s data center buildout, the completed 36-megawatt TX4 facility and the TX3 campus building now underway, has been a consistent feature of the pipeline narrative throughout the period.

Market Rents by Product Type: Logistics rents climbed steadily from $8.80/SF in February to $8.91/SF in April to $9.05/SF at mid-year, even as vacancy in the segment fell from 8.5% to 8.2% to 5.5% and availability tightened from 12.2% to 9.2%. Specialized Industrial rents held roughly flat ($11.06 → $11.02 → $11.27/SF) while vacancy ticked up slightly (2.7% → 3.2% → 3.5%); availability has stayed pinned at exactly 4.4% in every period measured. Flex rents drifted slightly lower ($12.44 → $12.38 → $12.35/SF) as vacancy rose modestly (4.1% → 4.4% → 4.8%). Specialized Industrial remains the tightest segment by far at 3.5% vacancy and 4.4% availability, even though it is the only segment where vacancy has moved in the wrong direction across all three reports.

Rent Growth Drivers: Year-over-year asking rent growth has decelerated in every period measured, from 3.8% in February to 3.5% in April to 2.4% at mid-year, even as the blended asking rent itself has continued to climb in dollar terms. The deceleration is consistent with the submarket’s own forecast, which has rent growth troughing near-term before reaccelerating toward 4-5% annual gains by 2028-2030. The persistent rent-growth headwind remains the age of the submarket’s inventory: the same spread cited in the February and April reports still holds at mid-year, Logistics Pointe’s 1970s-vintage Building B is priced at $4.50/SF NNN against $10.15/SF NNN for the similarly sized, newly built 2815 E Centerville Rd, a gap that has not narrowed across any of the three reporting periods.

Small-Bay and Owner-User Space: Specialized Industrial availability has held at exactly 4.4% in February, April, and July, the most stable reading of any metric in this report, underscoring just how structurally tight small-bay space is in this submarket regardless of what else is moving. The construction pipeline continues to skew toward large-format bulk logistics and data center product in every period reviewed; none of the three reports show a multi-building small-bay project of the kind that would meaningfully add supply for owner-users. Owners and tenants targeting sub-10,000 SF space should expect this dynamic to persist.

Strategic Market Positioning

For Owners and Owner-Occupants: Specialized Industrial availability has been locked at 4.4% for three straight reporting periods dating back to February, a level of stability that tells you how little slack exists in the product type most owner-users need. Sale pricing discipline has also been remarkably consistent: sale-to-asking spreads have held at -0.3% in every report since February, and percent-leased-at-sale has climbed from 92.3% to 93.8%, both signs that well-positioned, leased assets are trading on the seller’s terms. If you’re looking to buy for your own operation, expect the same thin inventory that has persisted all year, and don’t rule out a build-to-suit.
For Tenants: The vacancy relief that showed up by mid-year came almost entirely from one large lease backfilling one large move-out, not from a broad loosening of conditions, so smaller tenants should not expect the same easing. Options under 10,000 SF remain as constrained today as they were in February, and older buildings still carry the same steep rent discount versus new construction that CoStar has flagged in every report this year. Tenants requiring scale should move early given how quickly large blocks have been absorbed since April.
For Institutional Buyers: Cap rates moved from 6.3% to 6.4% only in the most recent period, while dollar sales volume has fallen 41% since February on fewer transactions in every period. This reads as a market where the marginal buyer is paying up for a shrinking number of quality, leased opportunities, evidenced by percent-leased-at-sale climbing to 93.8%, rather than one undergoing broad repricing.

Market Outlook and Investment Thesis

Capital Markets Outlook: With cap rates ticking modestly higher and dollar volume down sharply since February on fewer transactions each period, expect continued deal flow but at a slower pace than 2025’s record year, concentrated in leased logistics and small-bay assets as legacy owners such as TA Realty and CanTex Capital continue exiting positions.
Leasing Outlook: Vacancy’s sharp second-quarter drop was driven substantially by a single large lease, not a broad-based tightening, and CoStar’s own forecast calls for vacancy to settle into a 5.5%-6.1% band through 2030 rather than continuing to fall at the pace seen between April and July. Rent growth should reaccelerate only gradually as the current construction wave, concentrated in large-format bulk and data center product, delivers.

Brent Pennington, CCIM, ALC

Advisor, Senior Vice President

Metroport Commercial Group, eXp Commercial

1720 Bray Central Drive, McKinney, TX 75069

Phone: 817-999-8266

Email: brent@metroportcommercial.com

Data Source: CoStar Group, NE Dallas/Garland Industrial Submarket and Capital Markets Reports, February, April, and July 2026.