In May 2026, the commercial real estate sector in Texas is witnessing a resilient recovery, driven by a shift in work dynamics and a resurgence in demand for office and retail spaces.
Following the disruptions caused by the COVID-19 pandemic, many commercial real estate investors are now cautiously optimistic. According to a report by the Texas Real Estate Council, office space vacancies in cities like Dallas and Austin have decreased by 4% over the last year, signaling a renewed interest in in-person work.
“Companies are starting to realize the value of in-person collaboration,” explained John Matthews, a senior vice president at Colliers International. “We are seeing more businesses transitioning back to physical office spaces, which is a positive sign for landlords and investors.”
In Dallas, average lease rates for office space have increased to approximately $30 per square foot, up from $28 in 2025. This uptick can be attributed to companies seeking to enhance their office environments to attract and retain top talent. In contrast, retail spaces are also witnessing a rebound, with vacancy rates declining as consumer confidence grows.
Austin’s unique blend of technology and culture continues to attract both startups and established companies, further fueling demand for commercial space. The city’s office market has seen an influx of technology firms moving to the area, prompting a surge in leasing activity, with new developments underway that cater to these growing sectors.
According to the Austin Chamber of Commerce, the city has added an impressive 25,000 new jobs in the tech sector alone over the past year, driving demand for office spaces that accommodate collaborative work environments.
Despite these positive trends, challenges remain. The ongoing shift toward hybrid work models has led some companies to reconsider their space requirements, resulting in a fluctuating market. “While we are seeing recovery, the demand for flexible workspaces is still a key consideration for many firms,” added Matthews, emphasizing the importance of adaptability in today's commercial real estate landscape.
Investors are also expressing interest in repurposing underutilized spaces. With e-commerce on the rise, many traditional retail locations are being transformed into mixed-use developments that combine residential and retail components, catering to the changing needs of consumers.
As Texas continues to adapt to the post-pandemic reality, the commercial real estate market is poised for growth. While challenges remain, the ongoing recovery reflects the resilience of the state’s economy and its ability to attract businesses and investors alike.