METHODOLOGY

Partners’ research and brokerage teams worked jointly to define premium properties within the following submarkets: Midtown, Buckhead, Central Perimeter, Northwest, and North Fulton.

The resulting analysis examines market dynamics within the selected premium buildings. To qualify as premium, buildings must satisfy the following location and physical quality benchmarks:

Location Quality

• Direct proximity to either transit or highways
• High Walk Score or amenity density
• Near retail | dining

Physical Quality

• Modern construction or has undergone substantial renovation
• Desirable exterior architecture
• Large, efficient floorplates
• Building level amenities like a fitness center, on-site food & beverage options, tenant lounges/meeting rooms/collaboration spaces, rooftop/outdoor terraces, or activated lobby spaces

Premium Product Thrives in Key Submarkets

Strong demand has continued within premium office product across Atlanta’s key submarkets, driven by employers’ focus on attracting and retaining top talent through workplace locations that offer rich lifestyle and convenience features. The bifurcation in demand toward the top end of the quality spectrum has spurred an acceleration in occupancy growth, resulting in significant vacancy compression and robust rental rate growth. As demand continues to concentrate in premium product amid a prolonged slowdown in new construction, availability constraints are poised to intensify across Atlanta’s most highly amenitized, well-located assets in the coming years, ultimately restoring conditions needed to support new development.

KEY TAKEAWAYS

• Net absorption in premium product has surged to nearly 2.2 million sq. ft. since 2021, reinforcing sustained leasing momentum in premium product.
• Absorption strength has placed downward pressure on vacancy in premium buildings, which maintain rates well below their respective submarkets.
• Driven by sustained occupier demand, premium asking rents have risen to
  new historic highs in most key submarkets.

Atlanta Overall Vacancy & Deliveries

As return-to-office mandates continued to proliferate amid historically low construction activity, office vacancy in premium product improved significantly last year. Premium office vacancy declined by 250 bps YOY in Q4 2025 to 19.8%, a four-year low and well under the metro-wide rate of 26.8% (+10 bps YOY). With 250,000 sq. ft. of space completed in Metro Atlanta in 2025 and only 332,000 sq. ft. of speculative office product slated to deliver through 2028, vacancy in premium buildings is expected to decline to under 15.0% in 2029.

SUBMARKET VACANCY

Vacancy compression has been most pronounced in suburban Atlanta, where a surge in occupancy and minimal new construction in recent years has reduced availability. Nowhere is this trend more pronounced than in North Fulton, where vacancy in premium buildings declined by 760 bps YOY in Q4 2025 to 9.7%, well below the 27.4% (-30 bps) rate in the broader submarket. Central Perimeter premier vacancy registered a 310-bps decline to 26.0%, while Northwest vacancy dipped 40 bps to 8.7%, less than half the submarket rate of 20.0%. In Buckhead, premier vacancy plunged 420 bps to 14.9%, also less than half the submarket average of 28.8%. Midtown followed suit, as a 100-bps YOY decline drove premier vacancy down to 24.1%.

Atlanta Net Absorption

Premium officce occupancy has rebounded sharply in the two years since declining in 2023 as tenants have increasingly prioritized strong amenity packages and flexible layouts. Net absorption in premium buildings totaled 986,853 sq. ft. in 2024 and remained strong at 706,226 sq. ft. in 2025. By comparison, Metro Atlanta recorded 371,221 sq. ft. of occupancy loss in 2024 and 62,676 sq. ft. of gains in 2025. Since 2021, premium occupancy growth has totaled nearly 2.2 million sq. ft., a sharp contrast to Metro Atlanta’s 5.9 million sq. ft. of negative net absorption in that time.

PREMIUM SUBMARKET NET ABSORPTION

Occupancy levels have surged in the CBD, reflecting tenant preference for walkability and access to retail/dining. Buckhead led all submarkets with more than 300,000 sq. ft. of premium net absorption in both 2024 and 2025, while Midtown boasted 50,102 sq. ft. of occupancy gains in 2024 and 130,363 sq. ft. in 2025. Since 2021, Midtown premium buildings have documented nearly 1.5 million sq. ft. of net absorption, most among the five submarkets in this study. In the non-CBD, Central Perimeter tallied 271,361 sq. ft. of occupancy gains in 2024 and 182,112 sq. ft. in 2025, both highs among suburban submarkets. Northwest notched 191,210 sq. ft. of net absorption in 2024, though the pace of occupancy moderated to 14,919 sq. ft. in 2025. In North Fulton, premium net absorption remained consistent at just under 80,000 sq. ft. in both 2024 and 2025.

Total Leasing

While premium buildings accounted for 17.5% of Metro Atlanta’s total office inventory, they comprised 25.2% of total leasing activity in 2025, above the five-year average of 24.1%. Premium leasing activity in the CBD during 2025 was bolstered by three transactions exceeding 100,000 sq. ft., including Kilpatrick Townsend’s 148,112-sq.-ft.renewal at 1100 Peachtree, Greenberg Traurig LLP’s 110,374-sq.-ft. renewal at Terminus 200, and EY’s 102,195-sq.- ft. new lease at Spring Quarter. EY is relocating from 55 Allen Plaza, part of a wave of tenants migrating from Downtown to Midtown in favor of higher-quality office product.

Demand for premium buildings continued to grow across Atlanta’s CBD last year. In Midtown, premium product captured a metro-leading 60.3% share of the submarket’s total leasing activity in 2025, up sharply from 34.0% one year earlier. Buckhead premium space accounted for 56.2% of the submarket’s leasing in 2025—above the 52.1% share recorded in 2024. The Northwest submarket posted meaningful gains as premium product represented 27.2% of total leasing activity in 2025, up from 18.7% the prior year. However, premium leasing
activity softened in Central Perimeter and North Fulton, reflecting a shortage of mid to large block availabilities.

NEW OFFICE DELIVERIES AND OCCUPANCY

Midtown has been the epicenter of new construction in Metro Atlanta, accounting for 60.2%, or 5.7 million sq. ft., of all new office space built in the region since 2021. Nearly 62.0% of Midtown product built in that time is currently occupied – below the 81.2% occupancy rate across 3.8 million sq. ft. of new buildings built outside of Midtown since 2021. Nearly 33.0% of Midtown’s vacant new-construction space is clustered in West Midtown, where 713,903 sq. ft. of office product delivered since 2021 has yet to be absorbed—highlighting a clear divergence in performance within the submarket.

With limited new construction underway, high-quality space outside the urban core is becoming increasingly scarce.

Outlook

As available premium space tightens and the development pipeline remains historically constrained, vacancy within premium assets is expected to compress further in the coming years. This imbalance between demand and supply will place continued upward pressure on rents, reinforcing premium buildings’ pricing  power and widening the performance gap relative to non-premium assets. In an environment defined by muted development and evolving workplace expectations, premium office product is positioned to remain the clear beneficiary of Atlanta’s next phase of market growth.

Alex Kaplan
Senior Vice President of Research
alex.kaplan@partnersrealestate.com
tel 404 595 0500

The post The Power of Premium: Performance Trends Among Atlanta’s Premium Office Buildings appeared first on Partners Real Estate.

Market Edge: Texas Grocery Wars – Market Trends 2025–2027

The Accelerating Bifurcation The Texas grocery sector remains in flux following the December 2024 blockage of the $24.6 billion Kroger-Albertsons merger by federal and state regulators. This decision, upheld on antitrust grounds despite proposed divestitures to C&S Wholesale Grocers, has accelerated a “great decoupling” where legacy grocers like Kroger (operating as Kroger) and Albertsons (under banners like Tom Thumb and Randalls) face mounting pressures from regional powerhouses such as H-E-B and national discounters like Walmart and Costco. In 2025, this manifested in targeted closures of underperforming stores, efficiency drives, and a pivot toward specialty and ethnic grocers filling market voids.

Entering 2026, the landscape is bifurcating into “experience giants” (H-E-B, Costco, Central Market) dominating everyday shopping and “cultural specialists” (H Mart, India Bazaar, Enson Market) capturing niche demographics in high-growth areas. Population booms in major markets—Austin, Dallas-Fort Worth (DFW), Houston, and San Antonio—fuel this evolution, with grocery-anchored developments driving record retail occupancy (95.3% in DFW in 2025, projected to rise to 95.4% in 2026).

Food prices rose moderately in 2025, with grocery (food-at-home) inflation at 2.4% year-over-year through December, and all food at 3.1%. Forecasts for 2026 show continued pressure but some moderation in groceries:

This ongoing elevation in costs—particularly for everyday staples—continues to push value-conscious consumers toward private labels, discounters, and experiential/ethnic formats that offer perceived better value or cultural appeal. Closures continue, but rapid backfilling by fitness centers, medical facilities, and emerging grocers like Enson Market highlights adaptive reuse trends. By 2027, expect further consolidation among mid-market players, with specialty surges reshaping urban and suburban retail.

The Blocked Merger: Lingering Impacts and Strategic Pivots The FTC’s successful challenge to the Kroger-Albertsons merger, citing insufficient competition safeguards, ended a period of stasis and forced both companies into independent survival modes. Kroger and Albertsons argued the deal was essential to counter Walmart (22% market share) and Costco, but regulators deemed the 579-store divestiture inadequate due to C&S’s limited retail expertise.

• Fallout and Litigation: Albertsons terminated the agreement on December 11, 2024, leading to ongoing lawsuits. In 2025, both pivoted to cost-cutting: Albertsons targeted $1.5 billion in savings over three years, while Kroger merged its Dallas and Houston divisions into a single “Texas Division” in July 2025 to reduce overhead.
• Technology Shifts: Kroger closed several automated fulfillment centers in 2025, retreating from high-tech models to prioritize in-store profitability.
• Market-Wide Effects: The failed merger exposed vulnerabilities in overlapping markets, accelerating closures where H-E-B’s “Marketplace” flagships dominate within 5-mile radii. This “H-E-B Effect” is pronounced in suburban DFW and Houston, where private-label strength and experiential shopping erode legacy shares.

Closures: The Legacy Retreat Accelerates Post-merger blockage, 2025 saw a wave of closures as legacy grocers optimized portfolios amid competitive pressures from H-E-B, Walmart, and Sprouts. Kroger announced 60 national closures in June 2025, extending into 2026, with Texas locations including Dickinson (closed June 2025) and McKinney (1707 W. University Drive). Albertsons’ banners, Tom Thumb and Randalls, continued shrinking, focusing on underperforming sites in high-competition zones.

The table below tracks confirmed closures in major Texas markets from 2024–2026, based on WARN notices, lease expirations, and performance reviews:

• Patterns: Closures cluster in suburban areas with recent H-E-B openings, such as Plano and Allen in DFW. In Houston, Randalls’ footprint dropped from 51 stores in 2005 to 17 by 2020, with further reductions expected in 2026. San Antonio sees minimal legacy closures due to H-E-B’s dominance, while Austin’s competitive mix pressures Randalls.
• At-Risk Stores for 2026: From the blocked divestiture list, vulnerable sites include Tom Thumb in Frisco (5550 FM 423), McKinney (6800 W. Virginia Pkwy), and Randalls in Houston (14610 Memorial Dr) and Galveston (2931 Central City Blvd). Monitor H-E-B expansions for triggers.

Openings and Expansions: The Growth Offensive Grocery development surges in 2025–2026, with H-E-B leading amid Texas’ population growth (projected to hit 32.5 million by 2030). DFW emerges as the nation’s top retail construction market with 7.6 million sq. ft. in the pipeline, driven by grocers. In 2025, 18 new stores opened statewide after seven in 2024; 34 more are slated for 2026–2027.
Key openings by market:

• DFW: H-E-B’s aggressive push includes Euless (opening May 2026, 126,196 sq. ft. at Cheek-Sparger Rd and Rio Grande Blvd), Forney (early 2026), Mid-Cities (2026), Murphy (2026), and potential Dallas city limits (Hillcrest & LBJ, late 2026). Trader Joe’s expands in Bee Cave and Leander; Sprouts opens in The Woodlands (Aug 2025).
• Austin: Aldi opens in Cedar Park (850 N. Bell Blvd, Feb 2026, 23,606 sq. ft.). H-E-B plans Manor (late 2025), Georgetown (late 2025), San Marcos (2026), and East Austin (late 2027).
• Houston: H-E-B’s Jordan Ranch in Katy (Oct 2025, 133,000 sq. ft.) marks its 97th regional store; more in Forney and Mid-Cities (2026). Trader Joe’s in Kingwood (Sep 2025).
• San Antonio: H-E-B opened at 15489 Culebra Rd (Jan 7, 2026, 126,196 sq. ft.); additional sites in Alamo Ranch and tourism-driven areas.

H-E-B’s North Texas expansion enters its most aggressive phase, targeting suburban corridors like US-380.

The Specialty Surge: Cultural Anchors and Ethnic Grocers As mid-market grocers retreat, specialty players fill voids, becoming anchors for mixed-use developments. This “K-Wave” and “Millennial Pivot” targets growing Asian-American and South Asian demographics in tech corridors.

• H Mart: Dallas flagship (Oct 2025, 142,000 sq. ft. on Harry Hines Blvd) transforms Koreatown; Austin second location (late 2025); Haltom City (2026).
• India Bazaar: Allen flagship at The Avenue (SH 121 & Alma, 2026), focusing on organic, health-conscious staples for Collin County tech workers.
• Enson Market: Asian-focused chain enters Texas with Allen (900 W. McDermott Dr, coming soon, backfilling closed Tom Thumb); additional Houston (5708 S. Gessner Rd) and Austin (12815 N Interstate 35) sites planned. Enson specializes in fresh produce, specialty meats, seafood, and amenities like boba tea.
• Market Trends: Ethnic grocers drive experiential retail, with 72% of shoppers citing value in private labels. In 2026, expect more “recession-proof” anchors like H Mart in DFW mixed-use projects.

Second-Generation Reuse: From Groceries to Social Hubs Vacant legacy spaces (20,000–50,000 sq. ft.) are repurposed rapidly:

• Med-Tail and Fitness: Former sites convert to clinics or gyms (e.g., Crunch Fitness in Rowlett, EoS in Dallas, late 2025).
• Pickleball Effect: Indoor facilities like The Picklr (Arlington, Aug 2025) compete for anchors.
• Market Impact: High demand ensures low vacancies (DFW at 5.1%, Austin at 3.4%, Houston at 5.5%, San Antonio at 4.1%).

Looking Ahead
A New Tiered Ecosystem By 2027, Texas’ grocery wars will solidify a tiered system: experience giants for mass appeal, cultural specialists for niches, and shrinking mid-market legacies. DFW leads in growth, followed by Austin’s tech-fueled surge, Houston’s consolidation, and San Antonio’s H-E-B stronghold. Retail owners should monitor WARN notices, lease expirations, and H-E-B expansions. For consumers, this means more options but sustained pressure from food costs (with groceries moderating to +1.7% in 2026 forecasts); for retailers, innovation in value, personalization, and omnichannel is key to survival.

Steve Triolet
Senior Vice President of Research and Market Forecasting
steve.triolet@partnersrealestate.com
tel 214 223 4008

The post Texas Grocery Wars appeared first on Partners Real Estate.

Houston Retail Market Remains Balanced with Low Vacancy and Active Leasing

EXECUTIVE SUMMARY

The Houston retail market remained balanced in Q4 2025, with a healthy vacancy rate of 5.5%. This stability is attributed to the balance between supply and demand, as net absorption for the quarter came in at 568,960 square feet, and the addition of 520,117 square feet of new construction was added to inventory. Leasing activity remained brisk, with only a 5.3% decline over the quarter. The construction pipeline increased 33%, with 3.3 million square feet under construction. Meanwhile, the average asking rental rate continued to increase, up 2.0% quarterly to $20.89 per square foot.

Houston Economic Update

Houston’s unemployment rate increased from 4.5% in July to 4.8% in September, and increased from 4.4% one year ago. Houston’s labor market recorded employment growth of 0.9% year-over-year (ending September 2025), adding 30.700 jobs, a decrease compared to the annual 66,700 jobs gained in September a year ago.

Job growth was uneven across sectors. Education and Health Services employment was a standout, growing at an annualized rate of 3.3% from September 2024 to September 2025 (15,100 jobs). Additional sectors showing resilience include Mining and Logging, which expanded at a 2.9% annualized rate (2,300 jobs), and the Leisure and Hospitality sector, which increased at a 2.5% annualized rate (9,000 jobs). Sectors that experienced job losses include Information, down 2.7% (700 jobs); Professional and Business Services, down 2.4% (13,700 jobs); and Manufacturing, down 0.8% (1,900 jobs).

SUPPLY & DEMAND

KEY MARKET INDICATORS

MARKET OVERVIEW

Vacancy Remains Low at 5.5%

The total average vacancy rate fell 10 basis points over the quarter to 5.6%, but was up 20 basis points year over year. Over recent quarters, supply and demand have been in lockstep, with most of the net absorption going into new deliveries. The total availability rate dropped from 6.1% to 6.0% on a quarterly basis but increased by 30 basis points from Q4 2024. If supply and demand continue to mirror each other, vacancy will remain tight in the near term.

Positive Demand Decreases, but In Step with Deliveries

Net absorption, which is the difference between move-ins and move-outs, decreased from the previous quarter, recording 568,960 sq. ft., pushing the year-end total net absorption to 1.8 million sq. ft. Although absorption declined, it was offset by new deliveries, helping keep vacancy low. Notable Q4 2025 move-ins include EOS Fitness moving into 50,000 sq. ft. at 9025 Highway 6 South in the Sugar Land submarket, Havertys Furniture moving into 42,000 sq. ft. in Valley Ranch Town Center in New Caney, and AR’s Entertainment Hub moving into 40,000 sq. ft. in Spring Park Village.

Leasing Activity Down, but Still Healthy

Although leasing activity declined 5.3% during Q4 2025, 1.7 million sq. ft is still a healthy quarterly total for the tight Houston market, which helped push the year-end leasing total to over 8.0 million sq. ft. Recently signed leases included DICK’s Sporting Goods’ 60,000 sq. ft. lease at The Grand at Aliana shopping center, TakeOff Adventure Park’s 60,000 sq. ft. lease at Fairmont Parkway shopping center, Floor and Décor Outlets’ 56,000 sq. ft. lease at Meyer Park shopping center, and Charlie’s Collectible Show’s 44,000 sq. ft. lease at Legacy Pointe.

Deliveries Decreased, While the Construction Pipeline Increased

Construction deliveries were down 25.8% for the quarter, adding 520,117 sq. ft. Deliveries were down 35.7% for the year. The construction pipeline stands at 3.3 million sq. ft., up 33% quarter-over-quarter but down 1.5% year-over-year. Much of the construction is in the Northwest and Southwest submarkets, near recently developed residential subdivisions.

Investment Sales Trends 

According to CoStar Capital Market Analytics, the cumulative 12-month sales volume at the end of the fourth quarter in the Houston retail market was $841 million. With 910 deals completed, the average transaction price currently stands at $268 per sq. ft., and the average capitalization rate is 7.1%.  Notable sale transactions in Q4 2025 include the 190,510 sq. ft. Baybrook Village (part of a portfolio), purchased by Fidelis Realty Partners from O’Connor Capital Partners for an undisclosed amount. Also, Unilev Capital Corporation’s 419,731 sq. ft. West Road Plaza is currently under contract, and the price is undisclosed.

Rental Rates Continue Upward Climb

Balanced demand and activity have kept Houston’s retail vacancy low, which, in turn, has kept the average asking rent on an upward trend toward record highs. The average NNN rental rate marginally rose 2.0% over the quarter from $20.49 per sq. ft. to $20.89 per sq. ft. in Q4 2025. Year-over-year, the metro’s average asking rent increased 1.4% from $20.61 per sq. ft. At the submarket level, the Inner Loop submarket continues to have the highest average rate at $30.44 per sq. ft. In contrast, the Southeast submarket had the lowest average rate at $17.51 per sq. ft.

For More Information, Contact:

Steve Triolet
SVP of Research and Market Forecasting
tel 214 223 4008
steve.triolet@partnersrealestate.com

The post Houston Retail | Q4 2025 | Quarterly Market Report appeared first on Partners Real Estate.

Industrial Outdoor Storage (IOS) — low‑coverage industrial sites used for storing, staging, and moving equipment, vehicles, materials, and containers — in high-demand, becoming one of the strongest‑performing industrial real‑estate sectors in Houston, Dallas–Fort Worth, Austin, and San Antonio, driven by limited supply, high barriers to entry, and persistent demand from logistics, construction, equipment rental, landscaping, truck and trailer, and other fleet‑based operators.

Despite their lack of large building improvements, typically ranging from 2 to 10 acres, IOS properties are overshadowed by larger warehouse and distribution centers, yet institutional capital has increasingly targeted IOS properties due to limited available IOS inventory, strong tenant demand, and the ability to achieve meaningful mark-to-market rental growth. Over the past 24 months, more than a dozen institutional joint ventures have been formed specifically for IOS aggregation strategy, representing billions of dollars in committed capital. As zoning constraints and municipal restrictions continue to limit new IOS development, institutional ownership has accelerated, driving portfolio aggregation strategies, rising land values, and long-term conviction in the IOS asset class.

This report explores IOS trends, recent transactions, key players, and opportunities for investors across Texas, with a focus on Central Texas (Austin and San Antonio) as critical hubs for portfolio aggregation.

Market Drivers

• Logistics and E-commerce Boom:
  • E-commerce growth (e.g., Amazon’s Texas expansions) and logistics demand fuel IOS needs for last-mile delivery and equipment storage. Houston’s port, DFW’s inland port status, and Central Texas’s I-35 corridor make these markets IOS epicenters.
• Manufacturing & Construction Growth:
  • Texas’s manufacturing expansion, supported by a robust and expanding labor pool and major players like Tesla and its suppliers in Austin, Samsung, Toyota in San Antonio, and Texas Instruments $40 billion semiconductor manufacturing plant and Global W silicon factory in North Dallas significantly boosts IOS demand for raw materials storage and trucking logistics, independent of tariff-driven onshoring trends.
• Population Growth:
  • Population growth across Texas’s major metros propels IOS demand, as tenants in general contracting, utility construction, and equipment rental sectors pursue opportunities tied to expanding rooftops and labor pools.
• Shorter Lease Terms: 
  • IOS properties feature 2-5-year leases, shorter than the 7-10 years for traditional warehouses, enabling 10-15% rent bumps upon renewal, a key investor draw.
• Lower Upkeep Costs:
  • With minimal building coverage (<20%) and a single-tenant structure, IOS sites require 20-30% less maintenance than traditional industrial properties, resulting in lower management & operating expenses.
• Tariff Impacts:
  • Rising tariffs on construction materials drive tenant stockpiling, boosting IOS demand in logistics hubs like Houston, DFW, and Central Texas.
• Legislative Support:
  • Texas’s One Big Beautiful Bill (OBBB) provides tax incentives for industrial development, enhancing IOS appeal in opportunity zones.

DFW Industrial Outdoor Storage (IOS) Market Overview 

The Dallas–Fort Worth metroplex is one of the most active IOS markets in the country, driven by its central U.S. location, extensive highway and rail infrastructure, and diverse industrial user base. Demand is led by logistics, construction, infrastructure, fleet, and energy-related users, while new supply remains limited due to restrictive zoning, municipal resistance to outside storage, and rising land costs. As a result, vacancy for functional IOS sites remains extremely tight, rental rates continue to trend upward, and institutional capital has aggressively expanded its presence through both single-asset and portfolio acquisitions. These dynamics position DFW as a core IOS market with strong long-term fundamentals and sustained investor interest.

2025 Transaction Highlights – Ambient Capital Partners and La Salle acquired a multi-tenant truck terminal with 74,533 square feet on 23.20 acres. MEI Rigging, a leader in industrial storage, leased a 17,232 square-foot maintenance facility on 10.71 acres in GSW. CanTex Capital, a Dallas-based real estate investment firm sold a 224,060 square foot manufacturing facility on 24.92 acres in Dallas to Stonemont, in addition to its first DFW IOS portfolio to Stockbridge in Q2 2025, featuring eight (8) IOS sites, totaling 240,313 square feet on 44.1 acres.

Key Players:

CanTex Capital (Dallas-based, active in DFW), Blackstone & Transport Properties, J.P. Morgan & Jadian, TPG Angelo Gordon & Triten ($1.0 billion), J.P. Morgan& Zenith ($700 million), and Barings & Brennan Investment Group ($150 million).

Challenges and Opportunities

• Challenges: Zoning restrictions in urban Austin and San Antonio limit IOS development, particularly along the I-35 corridor. Land scarcity in Houston and DFW raises acquisition costs, while tariff-driven material price hikes increase tenant expenses, though shorter leases reduce landlord risk.
• Opportunities: IOS offers 12-15% cap rates (vs. 8-10% for traditional industrial) due to low upkeep and high yields, attracting investors. The influx of billions in equity funds from large sponsors for IOS acquisitions signals a shift toward institutionalization, with significant portfolio consolidations anticipated nationwide. OBBB supports IOS in opportunity zones, notably in Houston’s Tomball, San Antonio’s South Side, and Austin’s East Side.

Outlook

IOS will remain a Texas CRE bright spot, driven by logistics infrastructure, e-commerce, manufacturing, and population growth. Investors like Apricus, Alterra, Base Industrial, and Quilvest/Axis will continue aggregating portfolios, leveraging shorter lease terms and low maintenance costs for strong returns. The institutionalization of IOS, fueled by substantial equity fund investments, will likely drive significant portfolio consolidations across Texas and the U.S. in the coming years. Partners Real Estate, as a significant player in the IOS sector with recent involvements like the 8034 NE Loop 410 sale, Alterra’s San Antonio acquisition, and the listing of the 17.11-acre Speedway Park site in Von Ormy, is well-positioned to guide clients through IOS acquisitions and leasing in this resilient asset class.

Steve Triolet
Senior Vice President of Research and Market Forecasting
steve.triolet@partnersrealestate.com
tel 214 223 4008

The post Industrial Outdoor Storage (IOS), Texas’ Next Logistics Frontier appeared first on Partners Real Estate.

San Antonio’s Retail Market Remains Tight

EXECUTIVE SUMMARY

San Antonio’s retail market remains tight, with positive fundamentals, including lower vacancy and increased absorption. Vacancy inched down 10 basis points, and positive net absorption increased 384% over the quarter to 396,004 sq. ft., pushing the year-end total to 760,804 sq. ft. Leasing activity for Q4 2025 totaled 570,666 sq. ft., a 9.8% quarterly decrease and a 3.1% annual decrease, but still a fair amount for the market.

Deliveries and construction activity slowed over the quarter, with deliveries down 45.2% and the under-construction pipeline decreased 20% to 1.2 million sq. ft. Average rental rates rose 1.1% quarter-over-quarter and 0.6% year-over-year, settling at $19.38 per sq. ft. (NNN), well above the historic average. Investment activity increased, with 486 properties sold over the past year, averaging $195 per sq. ft. and a cap rate of 7.0%. Low vacancy reinforces the landlord-favorable dynamics in the market. San Antonio’s retail market remains healthy and is poised for sustained growth and continued investor interest.

SUPPLY & DEMAND

KEY MARKET INDICATORS

MARKET OVERVIEW

San Antonio Economic Update

According to the U.S. Bureau of Labor Statistics, the San Antonio unemployment rate increased from 4.1% in August 2025 to 4.2% in September 2025. The unemployment rate in Texas jumped from 4.1% to 4.4% over the same period. San Antonio added 24,200 jobs between September 2024 and September 2025, a 1.8% change. Sectors with the largest annual gains included Education and Health Services at 6.2%, the Trade, Transportation, and Utilities sector at 2.5%, and the Total Private sector at 2.2%. The sector with the highest job losses over the year was the Information sector at -3.5%.

Leasing Activity Slows

Leasing activity slowed somewhat in Q4, down 9.8% quarter over quarter to 570,666 sq. ft. This was down 3.1% from Q4 2024. Notable leases recently signed include TruFit, signing a 34,000 sq. ft. lease at Lockhill Village Shopping Center; Goodwill, which signed a 14,000 sq. ft. lease at 6363 Rittiman Rd.; and Bargains Depot, which signed a 10,000 sq. ft. lease at Nacon Plaza II.

Net Absorption Sharply Increases

Net Absorption increased by 384% over the quarter and by 451% annually to 396,004 sq. ft. Notable move-ins during the fourth quarter include Dollar Tree taking 12,000 sq. ft. at 11658 N Pan Am Expressway, Terry Black’s BBQ moving into 12,000 sq. ft. in the Common Market shopping center, and Aqua-Tota Swimming School moving into 10,000 sq. ft. at 21206 TPC Parkway.

Vacancy Inches Down

The overall vacancy rate in San Antonio’s Retail market is 4.2%, down 10 basis points from Q3. Like most major Retail markets nationwide, vacancy is near record lows. Further, deliveries and the construction pipeline are down, leaving retail tenants looking to expand with limited options. San Antonio’s vacancy rate has remained under 5% since mid-2021.

Deliveries and Construction Pipeline Down Quarterly

New deliveries for Q4 2025 were down 45.2% quarter over quarter, totaling 235,656 sq. ft., but up 187% year over year. There is currently 1.2 million sq. ft. in the construction pipeline, down 20% quarter over quarter and 13.4% annually. The lack of new supply, along with a decline in future deliveries, is expected to constrain tenants looking to expand into the market.

Investment Sales Trends

CoStar Capital Market Analytics reports that the cumulative 12-month sales volume at the end of the third quarter in the San Antonio retail market was $468 million, a sharp increase from the third quarter’s 12-month volume of $122 million. With 457 deals completed, the average transaction price is $195 per sq. ft., and the average capitalization rate is 7.0%.  Notable sale transactions in Q4 2025 include Blackstone Inc.’s acquisition of a 27-property portfolio, which included a Lowe’s and an H-E-B located at 1130-1150 N Loop 1604 W. Global Fund Investors was the seller. The price was not disclosed. Also, JBL Asset Management, LLC sold the 3-property, 169,000 sq. ft. Thousand Oaks Shopping Center to Sterling Organization for an undisclosed amount. And Dhanani Private Equity Group acquired Park North Shopping Center for $115 million.

Rental Rates Increase

The average monthly rental rate (NNN) for San Antonio’s retail market increased 1.1% quarterly and 0.6% annually to $19.38 per sq. ft. ft. The highest average asking rental rate is $32.36 per sq. ft. in the CBD submarket, while the lowest asking rate is $16.07 per sq. ft. in the South submarket. With vacancy rates and inventory low, rates could continue to rise.

For More Information, Contact:

Steve Triolet
SVP of Research and Market Forecasting
tel 214 223 4008
steve.triolet@partnersrealestate.com

The post San Antonio Retail | Q4 2025 | Quarterly Market Report appeared first on Partners Real Estate.

DFW Office Market Activity Slows Down in Q4 2025

EXECUTIVE SUMMARY

Momentum slowed between quarters in the Dallas-Fort Worth office market. Leasing activity decreased 31.7% quarterly from 4.4 million sq. ft. to 3.0 million sq. ft. Total net absorption saw a significant drop for the quarter, decreasing 80.0% from 1.4 million sq. ft. in Q3 to 285,197 sq. ft. in Q4 2025. Class A properties recorded positive absorption while Class B properties posted negative absorption. Due to the slowdown in deliveries and Class A positive absorption, the vacancy rate remained unchanged at 25.3%.

Construction deliveries for the quarter totaled 189,382 sq. ft., down significantly from the previous quarter, and the construction pipeline increased 14.2% over the quarter to 2.9 million sq. ft. Rental rates rose 2.5% over the quarter and 4.8% over the year to $32.06 per sq. ft. Class A gross rental rates rose again to a record high of $36.20 per sq. ft. and are forecasted to continue to rise. Class B rental rates increased to $25.58 per sq. ft. from $25.22 per sq. ft. in Q3 2025.

SUPPLY & DEMAND

KEY MARKET INDICATORS

MARKET OVERVIEW

Dallas Economic Update

Employment in DFW grew at an annualized rate of 0.8% in September, adding 34,100 jobs annually, while Texas employment increased by 1.2%. The unemployment rate dropped 20 basis points to 4.2% from 4.4% in August. The jobless rate was 4.2% in Dallas and 4.1% in Fort Worth. The most significant gains were in mining, logging and construction, leisure and hospitality, government, and education and health services sectors. The largest losses were in manufacturing, transportation and utilities, and professional and business services.

 Vacancy Rate Remains at 25.3%

The total vacancy rate remained unchanged between quarters at 25.3% and dropped 30 basis points over the year. Submarkets with generally older inventory, such as the Dallas CBD at 33% and Far North Dallas and Las Colinas at 31%, are affected. The higher vacancy rates are primarily due to tenants gravitating toward newer properties with more amenities, which are more highly concentrated in Uptown and other northern suburban submarkets.

Construction Pipeline Increases, Delivers Decrease

Construction deliveries for the quarter totaled 189,382 sq. ft., a 78.9% decrease from the previous quarter. The under-construction pipeline grew by 14.2% over the quarter to 2.9 million sq. ft. Most of the pipeline is in the Uptown/Turtle Creek submarket (45%), followed by the Far North Dallas submarket (26.8%), with the remainder sprinkled across the other submarkets.

 Leasing Activity Decreased Quarterly and Annually

Quarterly leasing velocity, which is comprised of both new leases and renewals, stood at 3.0 million sq. ft. during Q4 2025, a 31.7% decrease over last quarter and down 29.2% from Q4 2024. Notable lease transactions in Q4 2025 include Fujitsu’s 70,000 sq. ft. lease at Galatyn Commons C in Richardson, Unleashed Brands’ 51,000 sq. ft. lease in 600 ELC, and Newrez’s 47,000 sq. ft. lease at Cypress Waters in Coppell.

 Net Absorption Positive, But Experiences a Sharp Drop Over the Quarter

Net absorption—move-ins minus move-outs—was positive 285,197 sq. ft. in Q4 2025, sharply down 80% quarter over quarter. Only Class A properties contributed to positive absorption, with Class A recording 310,702 sq. ft. Class B posted -25,505 sq. ft. of negative net absorption in Q4 2025. Some tenants that moved in during Q4 2025 included State Farm, which moved into 426,000 sq. ft. at Four CityLine, and GEICO, which took 165,000 sq. ft. at Galatyn Commons B.

 Investment Sales Trends

CoStar Capital Market Analytics reports the cumulative 12-month sales volume at $1.3 billion in the DFW office market. With 204 deals completed, the average transaction price currently stands at $286 per sq. ft. with an average cap rate of 7.9%. Notable recent sale transactions in Q4 2025 include Crescent Real Estate LLC’s purchase of 2100 McKinney from MetLife Investment Management for a reported price of $218 million or $604 per sq. ft. The 360,860 sq. ft. property is 81% leased. Also, Real Capital Solutions, Inc. purchased the 464,290 sq. ft. Walnut Glen Tower from Intercontinental Real Estate Corporation for $26.1 million or $56.21 per sq. ft. The property, located in the Central Expressway submarket, is 76.8% leased.

 Rental Rates Continue to Rise

The average gross rental rate for the DFW office market is $32.33 per sq. ft., up 0.8% quarterly from $32.06 per sq. ft., and up 4.6% annually. The Uptown/Turtle Creek submarket boasts the highest rental rates, with the overall average gross rent currently sitting at $62.10 per sq. ft. The lowest rental rate in the Stemmons Freeway submarket is $21.46 per sq. ft.

For More Information, Contact:

Steve Triolet
SVP of Research and Market Forecasting
tel 214 223 4008
steve.triolet@partnersrealestate.com

The post Dallas Office | Q4 2025 | Quarterly Market Report appeared first on Partners Real Estate.

Year-end Surge in Positive Absorption Keeps DFW Retail Market Vacancy Low

EXECUTIVE SUMMARY

The Dallas-Fort Worth (DFW) retail market experienced a surge in positive net absorption in Q4 2025, helping keep the vacancy rate low at 5.1%, despite an increase in deliveries. The under-construction pipeline rose 6.1% quarter over quarter to 7.4 million sq. ft., which is 82% pre-leased. Most of the construction underway is concentrated in the northern and southwestern submarkets of Dallas, aligning with housing growth. Average asking rates jumped 16.8% quarter-over-quarter and 22.6% year-over-year to $24.07 per sq. ft. Central Dallas, East, and North Central Dallas continue to command premium rents, while Central Fort Worth and Southwest Dallas offer more affordable options. Overall, the DFW retail market exhibits a healthy balance of demand, investment, and growth opportunities, driven by strong market fundamentals.

SUPPLY & DEMAND

KEY MARKET INDICATORS

MARKET OVERVIEW

Dallas Economic Update

Employment in DFW grew at an annualized rate of 0.8% in September, adding 34,100 jobs annually, while Texas employment increased by 1.2%. The unemployment rate dropped 20 basis points to 4.2% from 4.4% in August. The jobless rate was 4.2% in Dallas and 4.1% in Fort Worth. The most significant gains were in mining, logging and construction, leisure and hospitality, government, and education and health services sectors. The largest losses were in manufacturing, transportation and utilities, and professional and business services.

Vacancy Inches Down 10 Basis Points 

The overall vacancy rate in the DFW retail market decreased by 10 basis points over the quarter but rose by 40 basis points annually to 5.1%. This small quarterly decrease is most likely due to increased absorption, muted by quarterly deliveries that are not fully pre-leased. The vacancy rate is still low compared to the historical highs of 9.0% to 10.0% in 2009 through 2013.

Net Absorption Sharply Increases

Net absorption, calculated as move-ins minus move-outs, is at 1,260,692 sq. ft., sharply up from the previous quarter. Submarkets contributing to the positive absorption include East Dallas Outlying, Far North Dallas, North Central Dallas, and Southeast Dallas. Some of the notable moves during Q4 2025 include Target’s move into 148,000 sq. ft. at Rayzor Ranch Town Center, Lowe’s taking 124,000 sq. ft. at 634 W Interstate 30 in Royse City, and Kroger moving into 122,000 sq. ft. at Bonds Ranch Marketplace in Ft. Worth. The Southwest Dallas submarket recorded the highest amount of negative absorption in Q4 2025.

Leasing Activity Drops Quarterly and Annually

Leasing activity decreased 16.3% over the quarter, but remained healthy at 1.9 million sq. ft. Some of the more notable transactions in Q4 2025 include Club 4 Fitness’s lease for 59,000 sq. ft. at 14^th Street Market in Plano, Belk’s lease for 38,000 sq. ft. at Preston Ridge shopping center, and Padel Haus’s lease for 25,000 sq. ft. at 1500 Dragon St.

Deliveries and Construction Pipeline Increase

Construction deliveries were up over the past quarter by 7.8% from 1.0 million sq. ft. in Q3 2025 to 1.1 million sq. ft and up 231% from 334,881 sq. ft. delivered one year ago. The under-construction pipeline increased 6.1% quarterly and 31.7% annually to 7.4 million sq. ft. Far North Dallas, North Central Dallas, and Suburban Fort Worth submarkets have the highest levels of construction currently underway, with 1.7 million sq. ft., 1.6 million sq. ft., and 1.2 million sq. ft., respectively. Two of the largest centers under construction are Field West in Frisco (350,000 sq. ft.) and 2209 East University Drive in Denton (340,000 sq. ft.)

INVESTMENT SALES TRENDS

CoStar Capital Market Analytics reports that the cumulative 12-month sales volume in the DFW retail market is $1.2 billion. With 842 deals completed, the average transaction price currently stands at $321 per sq. ft. with an average cap rate of 6.9%. Notable sale transactions in Q4 2025 include Albanese Cormier Holdings, LLC’s purchase of the 252,000 square foot Shops at Legacy North for an undisclosed amount from CTO Realty Growth Inc. Additionally, the 161,000 square foot Wedgewood Village was purchased by H & R Sai Investment. Both sales were part of larger investment portfolios.

Rental Rates Jump 16.8%

Average asking rental rates jumped 16.8% quarter-over-quarter and 22.6% year-over-year to $24.07 per sq. ft.  The submarkets with the highest rental rates include North Central Dallas ($29.31 per sq. ft.), East Dallas Outlying ($28.89 per sq. ft.), and Central Dallas ($27.59 per sq. ft.), which are well above the metro average. In contrast, the lowest-asking-rent submarkets include Southwest Dallas ($16.18 per sq. ft.), Central Fort Worth ($17.28 per sq. ft.), and Southeast Dallas ($17.40 per sq. ft.).  

For More Information, Contact:

Steve Triolet
SVP of Research and Market Forecasting
tel 214 223 4008
steve.triolet@partnersrealestate.com

The post Dallas Retail | Q4 2025 | Quarterly Market Report appeared first on Partners Real Estate.

DFW Industrial Market Recorded a Significant Increase in Absorption and Leasing Activity Over the Quarter

EXECUTIVE SUMMARY

The Dallas-Fort Worth (DFW) industrial market experienced increased absorption and leasing activity; however, vacancy only decreased by 10 basis points due to increased deliveries.

Deliveries totaled 6.7 million square feet this quarter, a sharp 82% increase from the previous quarter and 30.6% from the previous year. Construction activity slightly decreased 1.4% over the quarter to 34 million square feet.

Leasing activity increased by 23.6% over the quarter and by 70.6% year-over-year. Quarterly net absorption increased significantly by 79.1% to 7.7 million square feet, primarily driven by warehouse/distribution properties, which recorded 7.6 million sq. ft. The manufacturing segment recorded negative absorption of -121,430 sq. ft., while Flex posted positive net absorption totaling 231,896 sq. ft.

Investment sales totaled $2.4 billion over the past year, with 968 properties sold at an average sales price of $129 per sq. ft. and an average cap rate of 6.4%.

Rental rates were up 3.2% for the quarter and up 4.8% year-over-year to an average of $10.01 per square foot. The market’s shift toward normalization reflects a recalibration after years of extraordinary growth, signaling a steady foundation for future activity.

SUPPLY & DEMAND

KEY MARKET INDICATORS

DFW ECONOMIC UPDATE

Employment in DFW grew at an annualized rate of 0.8% in September, adding 34,100 jobs annually, while Texas employment increased by 1.2%. The unemployment rate dropped 20 basis points to 4.2% from 4.4% in August. The jobless rate was 4.2% in Dallas and 4.1% in Fort Worth. The most significant gains were in mining, logging and construction, leisure and hospitality, government, and education and health services sectors. The largest losses were in manufacturing, transportation and utilities, and professional and business services.

MARKET OVERVIEW

Vacancy Rate Drops 10 Basis Points to 9.2% Over the Quarter

The overall vacancy rate in DFW’s industrial market dropped 10 basis points to 9.2% over the quarter and decreased 70 basis points from 9.9% recorded one year ago. For the different industrial property types, the total vacancy rates are 6.6% for Flex, 4.2% for Manufacturing, and 10.1% for Warehouse/Distribution space. DFW’s industrial market is currently categorized as having “neutral conditions”—with a vacancy rate between 8% and 10%—meaning neither landlords nor tenants have a significant upper hand in overall lease negotiations.

Deliveries Up, Construction Down

Deliveries in the DFW industrial market increased significantly to 6.7 million sq. ft. from 3.7 million sq. ft., down 82% from the previous quarter and down 30.6% year-over-year.  The under-construction pipeline dropped marginally by 1.4% quarter over quarter but rose 36.2% year over year.

Leasing up 23.6% from the Previous Quarter

Leasing activity has increased by 23.6% over the past quarter and by 70.6% over the year, as new construction entering the market has returned to historic norms. Recent notable lease transactions include Moonshot signing a lease for 505,000 sq. ft. at Lewisville 121 Business Center, Thrive Market signing a lease for 378,000 sq. ft. at DFW Commerce Center, and Irby signing a lease for 307,000 sq. ft. at Crossroads Logistics Park.

Quarterly Positive Net Absorption Increases 79.1% to 7.7 million sq. ft.

Net absorption—move-ins minus move-outs—recorded 7.7 million sq. ft. in Q4 2025, pushing the year-end total net absorption to 26.4 million sq. ft. Warehouse/distribution properties accounted for most of the positive net absorption for the quarter, with 7.8 million sq. ft. recorded, while flex recorded 231,896 sq. ft. Manufacturing reported negative absorption of -121,430 sq. ft. in the fourth quarter. Notable recent move-ins include Hayes Company taking 1.5 million sq. ft. in Gateway Crossing Logistics Park, Modine moving into 684,000 sq. ft. in Wildlife Commerce Park, Maersk taking 348,000 sq. ft. in Cedar Hill Logistics Center, and SPM Oil & Gas taking 305,000 sq. ft. at Northlink C.

Investment Sales Trends

CoStar Capital Market Analytics reports that over the past 12 months, sales volume for the DFW market totaled $2.4 billion. This represents 968 properties sold with an average sales price of $129 per sq. ft. and an average cap rate of 6.4%. Notable recent sales transactions include EQT Real Estate’s disposition of the 796,000-square-foot Speedway Logistics Crossing Building 3 to Sterling Investors for $83.5 million, or $105 per sq. ft. Also, LaSalle Investment Management purchased the 1650 Lakeside Parkway as part of a larger portfolio from QuadReal. The property contains 292,850 sq. ft. and was 49% leased at the time of sale.

Asking Rents at an All-Time High of $10.01 per sq. ft. Annually

The average monthly rental rate for the DFW industrial market was $10.01 per sq. ft., up 3.2% from $9.70 in Q3 2025 and up 4.8% year-over-year from $9.55 per sq. ft. The average monthly rate for flex space stood at $13.79 per sq. ft., while the rates for manufacturing space and warehouse/distribution space were $6.75 per sq. ft. and $9.33 per sq. ft., respectively.The Northwest Dallas Outlying and DFW Airport submarkets currently have the highest overall average rates at $19.13 and $12.87 per sq. ft., respectively.

For More Information, Contact:

Steve Triolet
SVP of Research and Market Forecasting
tel 214 223 4008
steve.triolet@partnersrealestate.com

The post Dallas Industrial | Q4 2025 | Quarterly Market Report appeared first on Partners Real Estate.

Austin’s Retail Market Remains Tight with Low Vacancy

EXECUTIVE SUMMARY

The Austin retail market remained active in Q4 2025, with positive net absorption, low vacancy, active leasing, and increased deliveries. Net absorption decreased, but was still positive at 340,079 sq. ft., pushing the year-end 2025 absorption total to 1.1 million sq. ft. Vacancy rose by 10 basis points, but is still tight at 3.4%. New construction deliveries increased 5.3% over the quarter, and leasing activity was up by 1.9%. The construction pipeline grew 5.3% quarterly and 18.9% year-over-year, offering new opportunities for expanding retail tenants.
The average asking rental rate grew 2.3% quarter over quarter to $26.57 per square foot, with the CBD commanding the highest rates. Investment sales activity increased 63% over the quarter, with a cumulative 12-month volume of $157 million and an average transaction price of $290 per square foot. With a tight vacancy rate and limited supply, rents are expected to remain steady, positioning Austin’s retail market for continued growth in 2026.

SUPPLY & DEMAND

KEY MARKET INDICATORS

MARKET OVERVIEW

Austin Economic Update

Austin’s unemployment rate was 3.8% in September, up from 3.7% in August, but below the state and national rates of 4.1% and 4.3%, respectively. In September, the local labor force increased at an annualized rate of 0.7%.
The most significant gains from September to September were in government (4,100 jobs or 2.0%) and education and health services (3,100 jobs or 1.9%). Sectors that declined include manufacturing (-1,100 jobs or -1.5%), information (-1,100 jobs or -2.2%), professional and business services (-1,300 jobs or -0.8%), other services (-400 jobs or -0.7%), and construction and mining (-300 jobs or -0.3%).
Average hourly earnings dropped to $34.32 in September from $36.41 in August.
Vacancy Sees Marginal Increase Over the Quarter
The overall vacancy rate in the DFW retail market rose 10 basis points over the quarter and was up 40 basis points annually. This small decrease is most likely due to decreased absorption and increased deliveries. Total available space dropped 10 basis points from 4.8% in Q3 to 4.7% in Q4 2025. The vacancy rate is extremely low compared to the historical highs of 9.0% to 10.0% in 2009 through 2013.

Market Overview

Demand Slows, But Remains Positive
Net absorption, which is the difference between move-ins and move-outs, is at 340,079 sq. ft., down 18.4% from the previous quarter. The addition of quarterly positive absorption pushed the year-end total to 1.1 million sq. ft. Notable fourth-quarter move-ins, once again dominated by Big Box concepts, include Lowe’s moving into 120,000 sq. ft. in Georgetown, H-E-B moving into 100,000 sq. ft. on Hwy 290 in Manor, and Burlington moving into 47,000 sq. ft. at Lake Creek Festival Center in the Far Northwest submarket.

Construction Pipeline and Deliveries Up in Q4

In Q4 2025, the under-construction pipeline increased by 5.3% over the quarter and 18.9% over the past year to 2.7 million sq. ft. Deliveries increased 52.9% quarterly to 494,633 sq. ft. This is positive for the market, as the limited supply over recent quarters has limited growth opportunities for retail tenants looking to expand. Notable retail completions in the fourth quarter include an H-E-B in Manor Crossing, in the Far Northeast submarket, and 61,093 sq. ft. at Centro Plaza in Leander.

Leasing Activity Increases

Leasing activity rose 1.9% quarterly, recording 553,311 sq. ft. in Q4 2025. Notable deals signed in the fourth quarter include Office Depot’s lease for 43,000 sq. ft. at Braker Lane Crossing in the Northwest submarket, and Crunch Fitness’s 33,000 sq. ft. lease at Plaza FAMSA in the Central submarket. Also, Melrose signed a lease for 12,000 sq. ft. at Boardwalk Shopping Center in Round Rock.

Investment Sales Trends

CoStar Capital Market Analytics reports a cumulative 12-month sales volume of $157 million for Q4 2025, a 63% increase over the previous quarter. Over the past year, 156 properties were sold, with an average transaction price of $290 per square foot and an average capitalization rate of 6.7%. A notable fourth-quarter transaction was the 99,453-square-foot, 7-property Lantana Place property portfolio located at 7415 Southwest Parkway, for a reported $57.5 million, or $578 per sq. ft.

Rental Rates Increase

Austin’s average asking rent currently stands at $26.57 per sq. ft., up 2.3% from $25.96 per sq. ft. in the previous quarter. The CBD submarket had the highest average rate at $44.90 per sq. ft., while the Northeast submarket had the lowest average rate at $22.11 per sq. ft. With near-record-low vacancy rates and a limited retail pipeline, rates are expected to remain near record highs.

For More Information, Contact:

Steve Triolet
SVP of Research and Market Forecasting
tel 214 223 4008
steve.triolet@partnersrealestate.com

The post Austin Retail | Q4 2025 | Quarterly Market Report appeared first on Partners Real Estate.

Atlanta Retail Market Showed Mixed Results

EXECUTIVE SUMMARY

While healthy population and household wage growth in Metro Atlanta continued to bolster consumption of goods, total annual leasing in 2025 declined by 14.4% year-over-year (YOY) to 5.8 million sq. ft. Leasing activity moderated amid heightened macroeconomic uncertainty and limited availability, evidenced by a 4.6% vacancy rate in Q4. However, vacancy trended upward at a measured pace in the six preceding quarters (Q2 2024 – Q3 2025), providing much-needed supply-side relief. Closures by major retailers increased vacancy levels while simultaneously weighing on overall occupancy. Atlanta recorded 228,770 sq. ft. of negative net absorption in the fourth quarter, bringing total occupancy loss for the year to 874,556 sq. ft. Despite the decline, rental rate momentum remained intact, with average triple-net rents across Atlanta rising by 4.1% quarter-over-quarter (QOQ) to a record $19.98 per sq. ft., reflecting broad-based market health.

A slowdown in new construction placed upward pressure on rents as elevated construction and financing costs continued to suppress development. Atlanta welcomed 1.3 million sq. ft. of new product in 2025, a 33.0% drop from 2024. Most submarkets recorded a drop-off in retail construction, with steep declines seen in Airport/South Atlanta, Buckhead, and Central Perimeter. The construction pipeline also thinned, with only 837,139 sq. ft. of space under construction in the fourth quarter, the lowest level since Q1 2010.

SUPPLY & DEMAND

KEY MARKET INDICATORS

MARKET OVERVIEW

ATLANTA ECONOMIC UPDATE

Payroll growth in the Atlanta Metro increased by a modest 0.3% YOY in November, a notable deceleration from year-ago levels amid ongoing job loss in the construction sector (-2.7%). Construction employment has softened in response to still elevated financing costs that contributed to fewer new project starts in the office, retail and industrial sectors. However, the labor market sustained positive momentum in other industries as robust payroll growth persisted in education and health services (4.7%) and leisure and hospitality (2.9%). Atlanta’s economic fundamentals continued to benefit from sustained population growth as the region added over 64,000 residents between 2024 and 2025. Strong in-migration and the subsequent expansion of the region’s consumer base reinforced the metro’s appeal to companies seeking access to a deep, educated workforce, further supported by favorable tax incentives and a business-friendly regulatory environment.

RETAIL MARKET REMAINED RESILIENT DESPITE SOFTENING COMMUNITY CENTER DEMAND

The slowdown in leasing activity during 2025 reflected a notable pullback in occupier demand for community centers, which documented a 36.1% YOY drop in leasing to 851,174 sq. ft. However, overall retail market fundamentals remained healthy in 2025, with power centers standing out as a key source of demand. Total leasing activity for the product type reached a three-year high of 531,983 sq. ft., reflecting a 16.6% increase from 2024. Moreover, leasing in lifestyle centers reached a four-year high of 237,906 sf in 2025, up 43.8% versus the prior year. On the submarket level, tenant demand was pronounced in the Midtown/Downtown submarket, where transactions climbed 42.6% to 323,415 sq. ft. Powering the increase was the 150,000-sq.-ft. Wayfair lease at The District At Howell Mill and the 49,538-sq.-ft. Publix deal at Summerhill Station. The Centennial Yards project taking shape Downtown has also welcomed a growing roster of retail tenants, including Shake Shack, SKOL Brewing, Café Momentum, and Brown Toy Box, just to name a few. Occupier demand is projected to improve across Metro Atlanta next year, as sustained population growth and income gains reinforce the region’s long-term demand drivers.

NORTHEAST SUBMARKET DEFIED REGIONAL CONSTRUCTION SLOWDOWN

Despite stable occupier demand, retail construction activity hovered near historic lows in 2025. The muted development pipeline–driven by a declaration in new construction south of Atlanta–highlighted the impact that high construction costs and restrictive financing conditions had on new supply. However, the Northeast proved largely insulated from the slowdown affecting other parts of Atlanta. Deliveries in the submarket increased by 34.0% YOY to 714,589 sq. ft. as developers increasingly targeted high population growth areas in Barrow, Jackson, and Hall counties. The Northeast also boasted the most under construction product at 243,759 sq. ft., which represented 29.1% of the total Metro Atlanta construction pipeline in the fourth quarter.

HEALTHY INVESTOR DEMAND PERSISTED

Investor appetite remained strong in 2025 as $2.4 billion of retail sales were recorded in 2025 across 714 properties. The average cap rate remained firm at 7.3% in 2025, while the retail sale price per sq. ft. increased by 4.0% YOY to $196.3. Among the most significant trades of Q4 2025, SITE Centers, sold the 356,414-sq.- ft. Perimeter Pointe shopping center in Sandy Springs for $48.0 million, or $134.67 per sq. ft. The property was fully leased at the time of sale and includes national tenants such as LA Fitness, Dick’s Sporting Goods, and Regal Cinemas. Retail investor sentiment is expected to remain positive in 2026, supported by stabilizing financing rates, limited availability, and a new construction pipeline that remains near historic lows.

For More Information, Contact:

Alex Kaplan
SVP of Research
tel 404 850 0667
alex.kaplan@partnersrealestate.com

The post Atlanta Retail | Q4 2025 | Quarterly Market Report appeared first on Partners Real Estate.