Mid Year 2026

Between January 2026 and mid-year 2026, the McKinney and Allen industrial markets held its footing rather than continuing to accelerate. Asset value kept climbing, sale pricing stayed firm, and leasing activity swung back into strongly positive territory after a soft stretch, even as cap rates ticked modestly higher and rent growth cooled.

This report 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 Finding Its Balance

Between January 2026 and mid-year 2026, the McKinney and Allen industrial markets shifted from a period of rapid re-pricing to one of consolidation.

Key signals from the period included:

• Asset value rose from $4.1B to $4.3B, a $200 million increase that kept pace with prior quarters
• Trailing 12-month absorption swung from roughly 413,000 SF to approximately 1.02 million SF, outpacing new deliveries for the first time in several quarters
• The market cap rate edged up 10 basis points to 6.5%, giving back a portion of January’s compression
• Average transaction pricing held flat at $190 per square foot, with the market floor price also unchanged at $157 per square foot
• Institutional and REIT capital remained active, led by EastGroup Properties’ acquisition of the McKinney Airport Trade Center portfolio

Capital continues to concentrate in leased, Class A logistics assets, even as fewer and larger transactions define the market’s current pace.

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

Key changes over the period:

• Total Asset Value: $4.1B → $4.3B (+$200M)
• 12-Month Sales Volume: $60.6M → $61.6M (+1.6%)
• Transactions (12 mo): 32 → 27 (fewer, larger deals)
• Market Cap Rate: 6.4% → 6.5% (10 bps expansion)
• Average Sale Price/SF: $190 → $190 (flat)
• Market Floor Price/SF: $157 → $157 (flat)

Buyers held pricing steady even as cap rates gave back some of January’s compression, suggesting the market found its equilibrium rather than continuing to re-rate. Average deal size rose to roughly 65,200 square feet, up from the approximately 52,000 square foot average reported in January, as fewer but larger transactions closed.

Cap Rate Dynamics and Pricing Power

• The move from 6.4% to 6.5% is a modest 10 basis point expansion that gives back part of the compression seen earlier in the year, signaling buyers are pricing in a slightly higher return requirement rather than chasing every deal.
• Average transaction pricing held at $190 per square foot, matching January’s level, while the market-wide floor price also held flat at $157 per square foot, indicating pricing has stabilized after the sharp move seen in late 2025.
• The average sale closed roughly 5.5% below asking price across the trailing 12 months, suggesting buyers are negotiating harder even as headline pricing holds at least for deals where sale price was reported.

Institutional Transaction Activity

Several transactions closed or advanced during the period that reinforce McKinney and Allen’s institutional standing:

• EastGroup Properties, Inc., a publicly traded industrial REIT, closed on the three-building McKinney Airport Trade Center portfolio (1901, 1911, and 1921 FM 546) from Greystar Real Estate Partners for a combined $60.6 million, roughly $190 per square foot, with all three buildings fully leased at closing.
• CBRE’s U.S. Value 9 fund acquired Transwestern’s fully leased, three-building portfolio in McKinney National Business Park, anchored by tenants including Maverick Power.
• Dalfen Industrial and Goldman Sachs closed their approximately $685 million, 38-property national portfolio sale to Starwood Capital Group, with Wells Fargo providing $457 million in acquisition financing; three McKinney assets were included in the deal.

These transactions confirm that institutional and REIT capital continues to treat McKinney and Allen as a core North Dallas holding, even as overall deal count slows.

Leasing Market Fundamentals: Absorption Snaps Back, Vacancy Still Elevated

Leasing conditions improved materially between January and mid-year, even as vacancy remained above prior-year levels.

Key leasing metrics:

• Vacancy: ~8.6% → 8.9%
• Availability: 13.5% → 13.8%
• Trailing 12-month absorption: 413,000 SF → ~1.02M SF
• 12-Month Deliveries: 981,000 SF → 1.8M SF

Absorption accelerated faster than deliveries, indicating tenants are catching up with the wave of speculative supply that pressured the market in late 2025 and early 2026. Even so, vacancy and availability both ticked slightly higher, consistent with a market still working through recently delivered space rather than one that has fully tightened. Leverage remains close to neutral, with landlords regaining some pricing power on the best space while tenants still have room to negotiate on second-generation product.

Development Pipeline and Supply Dynamics

• Under Construction: 1.68M SF → ~2.04M SF

Notable pipeline projects:

• CyrusOne Phase 2 (~976,000 SF), targeting completion by mid-2026
• Core5 Business Park Buildings D and E delivered in March 2026 (159,735 SF and 492,368 SF), fully occupied by Lite-On, Inc., pushing the park’s footprint past its earlier phases
• 2010 N McDonald St (226,856 SF, Hopewell Development) and the Old Mill Rd buildings (Old Mill Partners LLC, roughly 443,000 SF combined) lead the next wave of new starts

Developers continue to phase new starts carefully. Build-to-suit and pre-leased projects from groups like CapRock Partners and VanTrust Real Estate outweigh purely speculative starts in the current pipeline.

Market Rents by Product Type

Asking rents vary significantly by building type, which matters most for smaller owners and tenants pricing out space:

• Logistics: $11.44/SF, 12.3% vacancy, 17.7% availability
• Specialized Industrial: $19.53/SF, 1.0% vacancy, 1.0% availability
• Flex: $18.73/SF, 6.1% vacancy, 16.6% availability
• Submarket blended average: $14.10/SF, 8.9% vacancy, 13.8% availability

Specialized industrial space, the smaller-bay product less than 10k sf most relevant to owner-users, is by far the tightest segment in the submarket at just 1.0% vacancy and 1.0% availability, even though it commands the highest asking rent of the three segments. Flex space in the 1200 sf to 2000 sf carries more breathing room on paper, but a meaningful share of that availability sits in a handful of project some of which are in developing ETJ.

Rent Growth Drivers

• Asking Rent Growth (YoY): 4.4% → 2.3%

Why rent growth cooled:

• Elevated vacancy of spaces in the 25k sf plus from the wave of speculative bulk logistics deliveries over the past 12 months
• Softer near-term leasing velocity even as absorption improved
• Rents still carry a premium over the broader Dallas-Fort Worth market given the relative newness and profile of the stock

Small-Bay and Owner-User Space: Still Hard to Find

For businesses looking to buy or lease sub-10,000 SF space, McKinney and Allen remain a tight market. Specialized industrial product, the segment that best fits smaller owner-users, has essentially no vacancy or availability (1.0% each), and most of the submarket’s construction pipeline continues to favor large-format bulk logistics buildings well above 100,000 SF rather than small-bay product. Flex space, at only about 2.9 million square feet, or roughly 11% of total submarket inventory, is the closest fit for smaller footprints but is not growing quickly.  Outside of some potential development in Mellissa owners and tenants targeting smaller spaces should expect a limited pool of options and should be prepared to move quickly or consider build-to-suit.

Strategic Market Positioning

• For Owners and Owner-Occupants: Pricing has stabilized rather than continuing to climb, and buyers are negotiating harder, with the average sale closing roughly 5.5% below asking. If you own a smaller specialized industrial or flex building, you’re sitting on a scarce asset: that segment carries essentially no vacancy in this submarket, which supports both sale pricing and renewal leverage. If you’re looking to buy for your own operation, expect very limited inventory under 10,000 SF and be prepared to move fast or consider a build-to-suit.
• For Tenants: Absorption outpaced deliveries for the first time in several quarters, but that improvement is concentrated in large bulk logistics space, not the smaller bays most relevant to small businesses. Specialized industrial space is essentially fully leased across the submarket, so tenants needing a small footprint should start their search early, widen their geographic radius, or evaluate flex space and build-to-suit alternatives rather than waiting for standard small-bay product to hit the market.
• For Institutional Buyers: Cap rates gave back a modest 10 basis points of compression, and the market floor price held flat at $157 per square foot, meaning quality bulk logistics assets still command a premium without runaway pricing. REITs and institutional funds remain the dominant buyer pool for large assets, evidenced by EastGroup’s continued accumulation in the submarket.

Market Outlook and Investment Thesis

• Capital Markets Outlook: With pricing stabilized and cap rates only modestly higher, Allen/McKinney should continue to attract institutional and REIT capital through late 2026, particularly for leased, functional assets. A slower deal pace, driven by fewer but larger transactions, is likely to persist as buyers remain selective.
• Leasing Outlook: Absorption’s sharp rebound is an encouraging signal, but with roughly 2.0 million square feet still under construction, vacancy is likely to stay in the high single digits into 2027 before the construction pipeline meaningfully narrows. Tenants should expect landlords to hold the line on rents for premium space while remaining flexible on concessions for second-generation product.

Prepared by Brent Pennington, CCIM

Advisor, Senior Vice President

Metroport Commercial Group, eXp Commercial

1720 Bray Central Drive, Ste 100, McKinney, TX 75069

Phone: 817-999-8266

Email: brent@metroportcommercial.com

Website: www.metroportcre.com

Data Sources: CoStar Group, Allen/McKinney Industrial Submarket and Capital Markets Reports, July 2026.