What to Expect For Dallas Office Market in 2026

In 2025, Dallas’ office market planted seeds. Industry experts intend to watch them grow this year.

The office market is finding its footing in the post-pandemic new normal, logging positive annual absorption of office space for the first time since 2019, according to JLL’s fourth quarter report. Last year wrapped up with 1.3 million square feet of positive absorption — a marked improvement from 2024 when the market saw its first quarter of positive absorption in the fourth quarter, but still ended the year with nearly 1.5 million square feet of negative absorption.

Normalizing conditions have two trends to thank. First, return to work mandates from major employers like AT&T, Toyota and JP Morgan gave the market a boost. Second, the development pipeline shrank, reaching its lowest level since 2012.

For better or for worse, part of the market’s new normal is its stubborn vacancy rate. The market may be settling in, but it’s still carrying around a lot of dead weight. At the end of the fourth quarter, Dallas-Fort Worth’s vacancy rate was 27.2 percent, a slight tick up from the same period of the year before when vacancy was 27.1 percent, according to JLL.

Office trades return

Dallas’ sales volume has bounced back, in another example of office market normalization. Buyers returned to the market in 2025, and the year was robust for office trades, which reached levels not seen since 2022.

In 2024, almost all of the market’s largest office trades were scattered around the Dallas-Fort Worth suburbs. The list included distress buys and office/industrial flex properties.

Last year, investors got excited about Y’all Street and opened their wallets for Uptown trophies. Cousins Properties kicked off the Uptown spree in July with its purchase of The Link at Uptown for $281 million, or a whopping $747 per square foot.

Crescent Real Estate topped that trade in September when it picked up Texas Capital Center, at 2000 McKinney Street. German investor Union Investment Real Estate sold the 457,000-square-foot property built in 2008 for an undisclosed price, but said in a release that the sale represented “a significant value increase.” The firm bought the building for $226 million, or $500 per square foot in 2016.

Experts predict 2026 will build on these wins: “Capital is back and ready to be deployed,” JLL wrote.

Elephant in the room

It’s not all sunshine and rainbows for the Dallas office market heading into the new year.

A blemish on the market, the sorry state of Downtown Dallas, is starting to look more like a wound. AT&T dropped a bomb on the struggling urban core when it announced last week that it plans to leave its 2 million-square-foot downtown office space for a new 54-acre campus in Plano.

AT&T’s chunk of the office market makes up almost 6 percent of the submarket’s total space, and its upcoming exit — which could happen as soon as 2028 — is sure to push the area’s elevated vacancy rate even higher. The central business district has a vacancy rate of about 33 percent, according to Partners Real Estate.

The submarket suffered another blow when Todd Interests’ Shawn Todd announced he’s handing back the keys to The National, the skyscraper he spent $460 million converting into a mixed-use project. Starwood Capital Group is foreclosing on the property after providing a $230 million refinancing in 2023.

The building at 1401 Elm Street is one of the largest office conversion projects in the country, a poster child for adaptive reuse as a method of breathing new life into crumbling downtown office districts. Todd secured $150 million in state and local incentives to complete the ambitious project, which opened in 2020.