McKinney Texas Industrial Market Update

Q3 2026

In the third quarter of 2026, the McKinney industrial market saw a sharp rise in sales activity and an improved vacancy reading, while rent growth cooled and the construction pipeline grew. Twelve-month sales volume jumped 83%, vacancy fell from 8.9% to 7.2%, and asking rent growth slowed from 2.3% to 1.3%.

This report summarizes capital markets performance, leasing fundamentals, pricing dynamics, and strategic implications for owners, tenants, and investors in this North Dallas submarket. Data is current as of October 1, 2026, and is compared with the July 2026 mid-year report.

Executive Summary: Capital Leans In, Rents Cool

Between mid-year 2026 and Q3 2026, Allen/McKinney combined stronger capital flow and a lower vacancy rate with slower rent growth and a larger supply pipeline.

Key signals from the period included:

Asset value rose from $4.3B to $4.4B, a $100 million increase
Twelve-month sales volume climbed from $61.6M to $113M (+83%), well above the submarket’s five-year average of $62.7M with three major assets changing hands
Vacancy fell from 8.9% to 7.2% (170 basis points), now below both the 8.1% historical average and the 7.7% Dallas-Fort Worth rate
Asking rent growth slowed from 2.3% to 1.3% year over year, and the blended asking rent eased from $14.10 to $14.02 per square foot
Square footage under construction grew from 2.04M to 2.43M SF, with only 17% preleased
The market cap rate edged up 10 basis points to 6.6%, while average sale price fell from $190 to $169 per square foot on a smaller-asset mix

Allen/McKinney is a market where capital is leaning in and vacancy is tightening, while rent growth is cooling and speculative supply keeps arriving. Small-bay and owner-user space remains the scarce commodity.

Explore McKinney Texas Business and Industrial Market Guide

Capital Markets Performance Metrics (Mid-Year 2026 to Q3 2026)

Key changes over the period:

Total Asset Value: $4.3B → $4.4B (+$100M)
12-Month Sales Volume: $61.6M → $113M (+83%)
Transactions (12 mo): 27 → 30 (properties sold held at 25)
Market Cap Rate: 6.5% → 6.6% (10 bps expansion)
Average Sale Price/SF: $190 → $169 (-$21)
Market Floor Price/SF: $157 → $155 (-$2)

Dollar volume rose sharply while transacted square footage fell from 1.8M to 1.4M SF, and average deal size dropped from roughly 65,200 SF to 46,700 SF. That pattern points to one very large owner-user purchase, the Core5 Logistics Center, lifting the total, with the rest of the market trading in smaller, more moderately priced assets. The 12-month sales volume now sits well above the five-year average of $62.7M.

Cap Rate Dynamics and Pricing Power

The market cap rate moved from 6.5% to 6.6%, the second consecutive 10 basis point increase after January’s 6.4%. Buyers are asking for slightly higher returns, but the move is gradual rather than a repricing.
Average sale pricing fell from $190 to $169 per square foot and the market floor eased from $157 to $155. CoStar notes that newer, large-format logistics buildings price at the upper end of the range, while smaller and older product trades at more moderate levels, and this period’s smaller average asset size explains most of the decline.
Market sale price growth slowed from 4.3% to 2.6% year over year.
Sales closed on average 0.1% above asking price over the trailing 12 months, compared with roughly 5.5% below asking at mid-year. The range remains wide, with the weakest sale closing 12.0% below asking, so negotiating room still depends on the asset.
Properties were 88.6% leased at sale on average, versus 90.1% at mid-year, and buyers continue to favor leased assets.

Leasing Market Fundamentals: Vacancy Tightens, Availability Climbs

Headline leasing metrics improved between mid-year and Q3, although the quarter itself was soft and availability moved the other way.

Key leasing metrics:

Vacancy: 8.9% → 7.2% (historical average 8.1%, forecast average 7.8%)
Availability: 13.8% → 14.8% (+100 bps)
Trailing 12-month net absorption: 1.0M SF → 1.6M SF (historical average 628,000 SF)
Trailing 12-month deliveries: 1.8M SF → 1.9M SF (historical average 710,000 SF)
Current-quarter net absorption: +729,861 SF → (178,694) SF, with no deliveries in the quarter
Inventory: 25.7M SF → 26.0M SF

Twelve-month absorption of 1.6M SF is more than two and a half times the historical average, and it nearly matched 1.9M SF of deliveries. That is why vacancy now reads below the 7.7% Dallas-Fort Worth rate. The most recent quarter, however, posted negative net absorption of 178,694 SF, and availability rose even as vacancy fell, so the improvement should be read with some caution. Leverage is closer to balanced than it was at mid-year, with landlords holding firmer positions on small and specialized space and tenants keeping negotiating room on large, second-generation blocks.

Local demand signals remain constructive. Simpson Strong-Tie began work in September on an expansion of its McKinney branch at 2151 South Airport Drive, covering warehousing, production, test lab, and tooling functions. The McKinney Economic Development Corporation also announced three new Innovation Fund relocations and expects to open the McKinney Innovation Exchange in District 121 this quarter.

Development Pipeline and Supply Dynamics

Under Construction: 2.04M SF → 2.43M SF (+19%)
Logistics: 1.64M SF → 2.22M SF
Flex: 361,804 SF → 213,353 SF
Specialized Industrial: 38,941 SF → 0 SF

Only 17% of the space under construction has been reported as preleased. Groundbreakings have slowed sharply: apart from McKinney Northport, only the 227,000 SF McKinney 5 Logistics building has broken ground in 2026. That gives existing large blocks more time to lease before the next major supply wave. New parks under construction along SH 121 near S Hardin Blvd have begun leasing with minimum suites of 75,000 to 100,000 SF, and other new developments offer spaces starting at 15,600 to 30,000 SF.

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 → $11.53/SF; vacancy 12.3% → 9.7%; availability 17.7% → 20.2%
Specialized Industrial: $19.53 → $19.25/SF; vacancy 1.0% → 2.1%; availability 1.0% → 2.1%
Flex: $18.73 → $18.86/SF; vacancy 6.1% → 3.6%; availability 16.6% → 6.6%
Submarket blended average: $14.10 → $14.02/SF; vacancy 8.9% → 7.2%; availability 13.8% → 14.8%

Specialized Industrial remains the tightest segment by far at 2.1% vacancy and 2.1% availability, although both measures roughly doubled from mid-year as new small-bay product came online and the segment recorded 44,983 SF of negative net absorption. Logistics is the loosest segment, with one in five square feet available.

Rent Growth Drivers

Asking Rent Growth (YoY): 2.3% → 1.3% (historical average 3.7%, forecast average 3.4%, down from 4.0% at mid-year)

Why rent growth cooled:

Logistics availability of 20.2% and a pipeline that is only 17% preleased limit landlord pricing power on large blocks
Vacancy is still 0.6 percentage points above its level a year ago, even after the recent improvement
Rents still carry a premium over the broader metro average because of the newness and location of the stock

CoStar expects near-term rent growth to stay flat and track the broader Dallas-Fort Worth norm, with recovery more visible in 2027. The strongest upside is in specialized space tied to advanced manufacturing and other high-value-add users. A slowdown in data center growth is a notable risk, while continued build-to-suit activity and Collin County labor and population growth support long-term demand.

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

For businesses looking to buy or lease space under 8,000 SF, Allen/McKinney remains a tight market. Specialized industrial product, the segment that best fits smaller owner-users, is 2.1% vacant and 2.1% available across 6.2M SF, roughly 24% of inventory. Flex space, at 2.9M SF or about 11% of inventory, is the closest substitute for smaller footprints. Most of the new construction continues to favor large-format bulk buildings.

The one real counterexample in the data is Pelican Park at McKinney, whose multi-tenant buildings of 41,933 to 122,493 SF began leasing small-bay space with a minimum suite of 4,954 SF. Several new flex developments also offer suites of roughly 2,000 to 4,000 SF. Earlier this year, County Road 278 Business Park (10 buildings of 6,000 to 7,500 SF) and 7532 County Road 202 (10 buildings of 4,120 to 9,920 SF) delivered small-bay product in April and March 2026, which helps explain why specialized vacancy moved off the 1.0% floor. Outside those projects, inventory under 8,000 SF remains very tight. When searching south of Highway 380, most of the available inventory is east of Highway 5. When searching north of 380, most of it sits between Highway 5 and US 75.

Strategic Market Positioning

For Owners and Owner-Occupants: If you own a small-bay or specialized building, you hold a scarce asset. Specialized space is still only 2.1% vacant, which supports both sale value and renewal leverage, but vacancy has doubled since mid-year, so price against current comparables rather than last year’s rents. Sales averaged 0.1% above asking over the trailing 12 months, which tells you well-positioned, leased assets are clearing at or near ask. If you want to buy for your own operation, expect very limited inventory under 10,000 SF, move quickly when a fit appears, and consider build-to-suit or a smaller flex footprint. Owner-user investment is continuing locally, as Simpson Strong-Tie’s expansion and the Lite-On purchase both show.
For Tenants: Tenants needing 75,000 SF or more have meaningful leverage, with logistics availability at 20.2% and a speculative pipeline that is only 17% preleased. Push for concessions, flexible terms, and tenant improvement dollars on second-generation space. Tenants under 10,000 SF face a very different market. Start the search early, widen the geographic radius, and look at Pelican Park and the new flex projects with suites from 2,000 to 4,000 SF before waiting on standard small-bay product that may not come.
For Institutional Buyers: The cap rate has moved up 10 basis points to 6.6% and the market floor is $155 per square foot, so pricing discipline is returning without a sharp repricing. REITs and funds remain active in the submarket, mostly through leased portfolios, and the buyer pool continues to concentrate on newer, fully leased logistics product.

Market Outlook and Investment Thesis

Capital Markets Outlook: Sales volume is well above the five-year average, but one large owner-user purchase drove much of the increase, so a return toward a more normal pace is likely unless another institutional portfolio trades. Expect cap rates to drift gradually higher and buyers to stay selective, with leased, functional assets continuing to draw the strongest bids.
Leasing Outlook: CoStar forecasts vacancy averaging 7.8% and rent growth averaging 3.4%. With 2.4M SF under construction and only 17% preleased, new supply will keep a lid on large-block rents, but the slowdown in new groundbreakings gives existing space time to lease. Expect flat near-term rent growth, a more visible recovery in 2027, and continued scarcity in small-bay and specialized space.

Prepared by Brent Pennington, CCIM, ALC

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, October 2026; McKinney EDC.