Texas has climbed to the top with a key retail metric — and Dallas-Fort Worth is a key player.
For the first time, Texas is leading the nation in retail construction, according to a new report by Colliers, the real estate firm. As demand has surged, roughly 17 million square feet was under construction in the Lone Star State in the second quarter.
That’s a much healthier picture than the rest of the country, where activity remains historically low, the report said. In the second quarter, total space under construction in the U.S. was about 48 million square feet — meaning Texas has about one-third of the action.
The Lone Star State is riding a wave of in-bound migration from other states that’s supporting demand at new sites for grocers, luxury retailers and large-format stores. More people mean more shoppers — and the state, including the D-FW area, is stepping up with more options.
D-FW Retail News
The Dallas area leads the nation in retail space under construction with 7.2 million square feet in the pipeline as of the third quarter of this year.
“The Dallas-Fort Worth Metroplex exemplifies the new Texas retail paradigm, where decades of conservative development philosophy have suddenly given way to unprecedented construction activity,” the report said.
The region has also had strong annual rent price growth of 4.1%. That’s easily ahead of metros like San Antonio and Austin.
The area’s “current construction surge represents a fundamental shift in developer confidence, driven by the metro’s transformation into a true economic powerhouse that rivals coastal markets in scale and sophistication,” the report said. “The region’s retail expansion reflects something more profound than mere population growth — it signals the maturation of Texas as a business destination that can sustain the dense, high-velocity retail environments previously associated with established East and West Coast markets.”
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Other states have focused more energy on other sectors. Nationally, since 2020 in the U.S., roughly 21 million square feet of newly built retail has been listed for lease — and that’s less than 5% of all available space.
“Elevated financing and construction costs continue to limit new standalone retail development, while demand for multifamily, industrial, and mixed-use projects drives developer focus elsewhere,” the report said.
In the Austin market, 2.8% of the region’s total retail inventory is in the construction phase. That compares to 1.5% in D-FW.
Austin also had the highest occupancy among Texas metros at 97.1% in the final quarter of last year.
“The current construction surge represents a long-overdue correction to years of underdevelopment, as the market finally builds the retail infrastructure necessary to support its evolved economic identity,” the report said. “Austin’s situation exemplifies how Texas markets have been quietly accumulating pent-up demand while other regions struggled with oversupply.”
In Houston, the “market fundamentals remain healthy,” it said. The vacancy rates are within the historical 5%-6% range, and that’s supported by consistent leasing activity, stable rents and a development pipeline totaling 3.6 million square feet.”