Capital markets activity accelerated sharply between October 2025 and January 2026, signaling renewed institutional confidence in the Allen–McKinney industrial corridor. Sales volume more than doubled, pricing strengthened, and cap rates compressed modestly all while underwriting discipline remained intact.
The Allen–McKinney Industrial Capital Market Report January 2026 summarizes capital markets’ performance, leasing fundamentals, pricing dynamics, and strategic implications for owners, investors, and tenants operating in one of North Texas’s most resilient industrial submarkets.
Executive Summary: A Market That Re-Liquefied
Between October 2025 and January 2026, the Allen–McKinney industrial market transitioned from thin but functional to broader and more liquid
Key signals of market acceleration included:
- 115% increase in 12-month sales volume
- Rising average deal size, despite fewer total transactions
- Cap rate compression indicating competition, not weakness
- Meaningful gains in price per square foot
Most importantly, capital flowed selectively toward functional, leased, institutional-grade assets, reinforcing a clear quality divide within the market.
Allen–McKinney Industrial Capital Markets Performance Metrics (October 2025 → January 2026)
Key changes over the three-month period:
- Total Asset Value: $3.9B → $4.1B (+$200M)
- 12-Month Sales Volume: $28.2M → $60.6M (+115%)
- Transactions (12 mo): 44 → 32 (fewer, larger deals)
- Market Cap Rate: 6.5% → 6.4% (10 bps compression)
- Average Sale Price / SF: $144 → $190 (+32%)
- Market Floor Price / SF: $153 → $157
Liquidity reopened as bid–ask spreads narrowed. Buyers regained pricing conviction while sellers accepted the post-2023 rate environment. The decline in transaction count was a result of a shift toward larger, higher-quality acquisitions, with average deal sizes approaching 52,000 SF.
Cap Rate Dynamics and Pricing Power
- The modest compression from 6.5% to 6.4% reflects capital competition. Buyers are underwriting income durability rather than chasing yield, signaling confidence in long-term cash flow stability.
- Average pricing surged from $144/SF to $190/SF as institutional-grade assets traded at premiums. Fully leased, functional properties with clean leases commanded aggressive pricing.
- The market price floor moved modestly from $153/SF to $157/SF, confirming a move to asset quality.
Institutional Transaction Activity
Several high-profile transactions underscore deep institutional interest in the Allen–McKinney corridor:
- CBRE, Transwestern, and U.S. Value 9 Fund acquired fully leased buildings in McKinney National Business Park, highlighting institutional preference for phased business park environments.
- EastGroup Properties (NYSE: EGP) acquired McKinney Logistics Center at approximately $133/SF, establishing a credible REIT basis benchmark.
- A Dalfen / Goldman Sachs portfolio sale to Starwood Capital (~$685M, with Wells Fargo debt) confirmed that large-scale institutional capital remains deployable where risk-adjusted returns are appropriate.
These transactions reinforce the corridor’s institutional legitimacy and long-term portfolio suitability.
Leasing Market Fundamentals: Short-Term Softness, Structural Health
Leasing conditions shifted between October and January as new supply delivered faster than near-term absorption.
Key leasing metrics:
- Vacancy: ~6.3% → ~8.6%
- Availability: 11.8% → 13.5%
- Trailing 12-month absorption: 544,000 SF → 413,000 SF
- Current quarter absorption: +33,695 SF → −94,360 SF
This softness reflects delivery timing, not demand erosion. The market shifted from landlord-leaning toward a more neutral negotiating environment, improving leverage for quality tenants.
Development Pipeline and Supply Dynamics
- 12-Month Deliveries: 485,000 SF → 981,000 SF
- Under Construction: 2.05M SF → 1.68M SF
- Notable Pipeline Projects:
- CyrusOne Phase 2 (≈976,000 SF)
- Core5 Business Park Buildings D & E (650,000+ SF)
Developers are responding rationally, phasing new construction more carefully and prioritizing pre-leasing. Well-located Core5 assets reportedly reached full occupancy which is reinforcing confidence in selective future development.
Rent Growth and Tenant Demand Profile
Despite higher vacancy, asking rent growth accelerated from 3.5% to 4.4% year-over-year.
Why Rents Are Still Rising
- High concentration of newer Class A product
- Strong demand from aerospace, defense, power, and advanced manufacturing
- Limited functional obsolescence in competitive inventory
Major Occupier Activity
- Modular Power Systems: ~304,000 SF near McKinney National Airport
- Maverick Power: ~166,000 SF in the same corridor
- RTX: Over 1.6M SF locally, including a 478,000 SF expansion completed in 2024
Demand remains strongest for modern facilities with power capacity, airport proximity, and expansion flexibility.
Strategic Market Positioning
- For Owners and Owner-Occupants
The pricing ceiling is materially higher than in October. Buyers are paying premiums for functional layouts, clean leases, credit tenants, and IOS capability with excess land. Execution quality now drives value outcomes.
- For Institutional Buyers
Cap rates are holding despite broader volatility. Competition remains strong for stabilized assets with institutional characteristics. The $157/SF market average confirms that quality dominates pricing.
- For Tenants
Increased availability improves tenant opportunities. Tenants considering expansion or relocation should evaluate opportunities before the next absorption cycle tightens conditions.
Capital Market Outlook and Investment Thesis
- Capital Markets Outlook
The Allen–McKinney corridor has emerged from the 2023–2024 disruption with institutional credibility intact. Price discovery has occurred, and capital is redeploying toward durable income streams rather than distressed positioning.
- Leasing Outlook
Vacancy pressure is expected through mid-2026 as deliveries complete. However, declining construction pipelines point to tightening conditions in 2027–2028. Tenant improvement packages and concessions may becoming more negotiable, while prime Class A assets retain pricing power.
Prepared by Brent Pennington, CCIM
1720 Bray Central Drive, Ste 100
McKinney, TX 75069
817-999-8266
Data Sources: CoStar Group – Allen–McKinney Industrial Submarket 2025
