The State of DFW Commercial Construction2026

Commercial construction in the Dallas-Fort Worth metroplex enters 2026 in a state of cautious expansion. After a two-year correction driven by rate-tightening, supply-chain normalization, and a multifamily oversupply that crested in 2024, the regional market is finding its footing again — but the floor under it is different than the floor of 2019. Capital is more expensive. Labor is harder to source. Owners are more sophisticated. The contractors that win in 2026 are not the cheapest bidders; they are the firms that own the most risk and ship the fewest surprises.^[8],[14],[1]

This report is Pereff's annual read on the market. It draws on Bureau of Labor Statistics employment series, Dodge construction starts, AGC contractor surveys, Federal Reserve rate data, county-level permit records from Collin, Denton, Dallas, and the City of Plano, and — most distinctively — 15 years of project data from Pereff's own portfolio of 100+ commercial builds across North Texas and beyond. Every number in this document is sourced. Every estimate is labeled directional. Nothing is fabricated.^[26]

The six numbers that define 2026

Four conclusions for owners and developers

1. Delivery method is the single biggest controllable variable in 2026 cost and schedule. Design-build and design-build-finance projects in our portfolio are running 18–28% faster to occupancy than design-bid-build equivalents.
2. City selection inside DFW now matters more than at any point in the last decade. The permit timeline delta between fast jurisdictions (Allen, Prosper) and slow ones (Dallas, Plano) is 12–18 weeks on a typical ground-up commercial project.
3. Multifamily oversupply is real but localized. North-corridor suburbs (Frisco, McKinney) are absorbing units faster than south Dallas. Underwriting in 2026 needs sub-market specificity, not metro averages.
4. AI is not optional. By Q4 2026, GCs without a working AI estimating workflow will be losing bids on speed alone. The technology is no longer a novelty; it is starting to compound into a cost advantage.^{[26],[17],[12],[24]}

Capital cost: easing, but slowly

The Federal Reserve held its target rate at 4.25–4.50% through the first five months of 2026, after three quarter-point cuts in late 2025. The MBA's Q1 2026 commercial real-estate originations survey shows new commercial mortgage originations up 14% year-over-year — a meaningful thaw, but still well below the 2021 peak. Conventional commercial construction loans in our deal flow are pricing in the 7.5–9.0% range; SBA 504 first-mortgage pricing is in the 6.25–6.75% range; HUD 223(f) refinances on stabilized multifamily are in the 5.5–6.0% range. These are the lowest spreads since 2022, but the absolute cost of capital remains roughly double what it was in the 2019–2021 era. Projects that pencilled at 4% debt service do not pencil at 7%, and our underwriting reflects that.^{[1],[23],[21],[22]}

Labor: still the binding constraint

ABC's 2026 workforce analysis estimates the U.S. construction industry is short approximately 501,000 workers this year. The DFW MSA's share of that gap — calculated from BLS employment data weighted by regional construction value-put-in-place — is roughly 38,000 unfilled positions. The shortage is not uniform across trades. Skilled electrical and HVAC labor is the tightest segment in our subcontract pricing: electrical wage growth in the DFW MSA ran +11.8% in the trailing twelve months, more than three times the rate of general inflation. Concrete and framing wages have grown more in line with CPI (+4 to +5%). The practical implication: any project with significant MEP scope should budget a 6–12% labor contingency over 2025 base estimates.^{[7],[4],[3],[2]}

Supply chain: normalized, with exceptions

Most building products have returned to pre-pandemic lead times. Structural steel is shipping in 6–10 weeks for typical small-to-mid commercial scopes. Cabinetry, doors, and standard finishes are back to 4–8 weeks. Glazing has fully normalized. The exceptions matter, though, because they are concentrated in items that gate construction completion: electrical switchgear, large commercial transformers, and certain commercial HVAC rooftop units still carry 6–8 month lead times for non-standard sizes. Our 2026 projects increasingly pull these long-lead items into preconstruction procurement before the GMP is signed — a practice that did not exist in our project plans before 2022.^[6],[26]

Demand: bifurcated by vertical

Dodge Construction Network's DFW starts data for the first five months of 2026 shows the bifurcation clearly. Medical/dental and industrial starts are up year-over-year (+7% and +4% respectively). Office is down sharply (-19%), continuing a multi-year decline driven by the persistence of hybrid work. Multifamily starts are down (-22%) as the market digests the 2022–2024 supply wave; we expect that to inflect back upward in late 2027 as absorption catches up. Retail and restaurant starts are roughly flat (+1%), with restaurant volume notably stronger than traditional retail. Ground-up commercial generally is down (-8%), but conversions and adaptive reuse are up sharply — a structural shift we'll return to in Section 11.^{[8],[14],[12]}

The cost ranges below reflect three data layers: Mortenson's Q1 2026 DFW construction cost index, Gordian/RSMeans 2026 building cost data normalized to the Dallas metro factor, and Pereff's own internal project records on 100+ commercial builds since 2011 — adjusted to May 2026 dollars. We publish ranges, not point estimates, because every range below has a wide standard deviation driven by site conditions, MEP density, finish level, structured parking, and city. Use the range as a sanity check, then ask Pereff AI for a directional estimate against your specific scope.^{[10],[11],[26]}

What moves a project to the top of its range

• MEP density — a dental operatory carries ~3× the plumbing and electrical of an equivalently sized retail bay.
• Imaging and shielded spaces — lead-lined walls add $40–$90/sf to the affected rooms (not the whole project).
• City — Plano and Dallas TI projects run 5–10% higher than equivalent work in Allen or McKinney, mostly due to general conditions on slower-permitting jobs.
• Existing-shell condition — a 1990s shell needing structural upgrades for code can add $15–$40/sf to a TI scope.
• Owner decision velocity — projects with weekly owner availability close 30–60 days faster, which compounds into measurable cost savings.^[26]

Until roughly 2022, the cost-to-build for a given project varied by maybe 5–7% across DFW's primary commercial markets. That gap has widened. In our 2025–2026 estimating data, the same 12,000 sf Class A office TI prices out 17–19% higher in central Dallas than in Allen — driven less by labor and materials than by general conditions, permit timelines, inspection cadence, and city-specific code interpretations. The table below summarizes our observed premiums and discounts versus the DFW commercial average.^[26],[11]

What this means for site selection

The cost-to-build delta is now large enough to change site-selection economics for many use types. For a medical practice choosing between a Plano shell and an Allen shell, the labor + permit + general-conditions arbitrage is often $20–$60/sf — which can swing the lifetime ROI of the buildout by 18–24 months of debt service. We make this an explicit input in our preconstruction conversations: city is no longer an afterthought.^[26]

Permit timelines are the most consistently underestimated variable in commercial construction planning. The official posted review windows from every DFW jurisdiction we work in are aspirational — typically 30–60 days quoted at intake. Real-world timelines, measured by actual time from submittal to issued permit on our 2024–2026 portfolio, run substantially longer. The table below shows median, not best-case, durations.^{[17],[18],[19],[20],[26]}

Four things that quietly add weeks

1. MEP coordination gaps. The most common comment we see on first-cycle plan reviews is missing or inconsistent MEP detail. A complete MEP package at submittal can cut a permit timeline by 4–6 weeks.
2. Health-department parallel review. Medical, dental, veterinary, and restaurant projects require a parallel review from the relevant health authority (TDSHS, TDLR, county health). This runs concurrent in theory, but in practice often becomes the binding constraint. Start it on day one.
3. Fire department water-flow requirements. For ground-up commercial in growth corridors, the fire-flow letter and the resulting tap/main upgrades can add 6–12 weeks if discovered late. Pull the letter in feasibility, not after design.
4. Variance and zoning interpretations. Projects requiring even minor variances (parking ratios, setback waivers, sign code) typically add 8–16 weeks. The cost of design adjustment to avoid a variance is almost always less than the cost of pursuing one.^[26]

Every project budget is built on a subcontract market, and the subcontract market is built on a labor market. In 2026, that labor market is not a single tight market — it is a portfolio of trade-specific markets at very different temperatures. The table below summarizes our 2025–2026 observation across the trades we subcontract most frequently, anchored against BLS DFW MSA wage data and AGC contractor surveys.^[4],[6],[26]

The MEP triangle is the real constraint

Three trades — electrical, mechanical, and plumbing — together drive 35–55% of the budget on most commercial buildouts and are simultaneously the three tightest labor markets in DFW. This is not a coincidence; demand for these trades has been pulled forward by data center construction, multifamily-podium volume, and the 2022–2024 medical buildout wave. The practical owner-side takeaway: every weekly decision on a project where MEP is the critical path is more valuable than it was in 2019. A two-week MEP schedule slip in 2026 costs more in interest carry alone than the entire general conditions of a small TI.^[4],[26]

The apprenticeship gap

The longer-term concern is downstream. ABC's 2026 workforce report estimates the industry needs to attract and train 501,000 net new workers over the next 12 months to meet projected construction demand. Texas accounts for roughly 12% of that need. Active apprentice enrollment in DFW commercial construction trades is growing — Texas Workforce Commission data shows +6% YoY — but the gap between retiring and entering tradespeople is widening, not closing. Owners should expect labor pressure to remain a multi-year reality, not a transient post-pandemic disruption.^[7],[15]

Most building products are now shipping in normal post-pandemic timeframes. AGC's 2026 outlook survey confirms broad lead-time normalization for cabinetry, doors, finishes, flooring, glazing, and standard structural steel. The exceptions are the items that gate completion: electrical switchgear, large transformers, certain commercial HVAC RTUs, and specialty medical/dental equipment. The right project posture in 2026 is selective long-lead procurement, not full owner-supplied materials.^[6],[26]

Why this changed our preconstruction process

Through 2021, building product procurement was a step that happened after the GMP and the building permit were both in hand. That sequence still works for most items, but on any project with substantial electrical scope it now creates a 4–6 month occupancy gap. Our 2026 preconstruction documents identify long-lead items in feasibility, lock the manufacturer specification in design development, and place the deposit at GMP signature — before the building permit issues. This adds owner-side complexity (a small procurement deposit is required earlier), but it routinely shaves 90–120 days off the project schedule.^[26]

The cost of construction capital in DFW has moved meaningfully in the last six months. SBA 504 first-mortgage rates have come down roughly 75 bps from their 2024 peak. HUD 223(f) refinances on stabilized multifamily are pricing in the 5.5–6.0% range. Conventional bank construction loans are pricing in the 7.5–9.0% range, with non-bank bridge in the 9.0–11.5% range for higher-leverage deals. Spreads have tightened across the board, but lender underwriting has not loosened — debt service coverage and personal-guarantee expectations have actually become more conservative through the rate cycle.^{[21],[22],[23]}

What lenders are scrutinizing differently in 2026

• Operating-cost stress tests. Lenders are sensitizing pro formas at higher property-tax and insurance assumptions than two years ago; DFW insurance rates have risen ~30% on commercial since 2023.
• Lease-up assumptions on multifamily. Two-year lease-up at sub-95% projected stabilized rents is the new conservative baseline.
• Sponsor liquidity post-close. Personal liquidity tests have effectively tightened, even where stated covenants haven't moved.
• Construction contract structure. Lenders prefer fixed-price or GMP contracts to cost-plus, and many will give better terms to design-build sponsors than to design-bid-build, because risk is concentrated on a single accountable party.^[23]

Pereff's role in the capital stack

Pereff is not a lender. We are a design-build general contractor that integrates an in-house financing facilitation function — we maintain working relationships with SBA-preferred lenders, HUD-approved mortgagees, and a curated set of regional banks and private capital sources, and we coordinate the capital stack alongside the design and construction work. The competitive advantage is sequencing: when financing is solved alongside design rather than after, the project closes 30–90 days faster and the financing structure fits the asset rather than the other way around. We are explicit about the distinction because it matters: we don't underwrite or originate loans; we facilitate access to lenders who do.^[27]

Delivery method is the most important decision a commercial owner makes that they probably underweight. The choice of how the project is structured — who designs, who builds, who carries which risks, in what sequence — has more impact on the eventual schedule, cost certainty, and quality outcome than any other single decision the owner makes after site selection. The table below compares the four delivery models we see most often in DFW commercial work, with our portfolio-derived performance data alongside published industry research.^{[13],[26],[6]}

Why design-build is winning share in DFW

Design-build's share of DFW commercial starts has grown roughly 15% year-over-year through the past two years, based on cross-referencing Dodge data with our own competitive bid observations. The reason is straightforward: in a market with tight labor, long electrical lead times, and expensive capital, the sequencing advantage of design-build compounds. A design-build team can lock subcontractors, place long-lead orders, and pursue permits concurrently with design completion — three workstreams in parallel rather than three workstreams in sequence. The result is measurably faster to occupancy and measurably more cost-certain.^[8],[26]

Where design-bid-build still makes sense

DBB remains the right delivery method for public projects with hard procurement rules, very large projects where bid competition genuinely lowers cost, and projects with highly developed owner-side design teams that want the architect arms-length from the contractor. For mid-market commercial — $500k to $30M — DBB's structural disadvantages on schedule and risk allocation are increasingly hard to justify outside of specific procurement-rule situations.^[26]

The case for integrating financing

Design-build-finance — integrating financing facilitation alongside design and construction — is the next step in the same logic. In our DBF projects, the time from owner kickoff to capital commitment letters runs 50–70% shorter than equivalent split-track projects (separate architect, GC, and financing broker). Capital structure, asset class, and construction scope are co-designed rather than retrofitted to each other. This is structurally how Pereff prefers to deliver, and it is the model we believe will define the upper half of the DFW commercial market through the late 2020s.^[27],[26]

Construction has historically been one of the slowest-digitalizing industries in the U.S. economy. McKinsey's productivity analyses consistently rank it just above agriculture on technology adoption. That ranking is about to change. AGC's 2026 AI adoption survey shows the percentage of construction firms reporting active use of generative AI in operations has grown from 7% to 23% in twelve months — the fastest technology adoption cycle the industry has ever recorded. Most of this is not robotics or autonomous construction. It is the unglamorous middle — estimating, takeoffs, document review, scheduling, RFI triage. This is where AI actually pays back.^{[24],[25],[13]}

Where AI is genuinely working in commercial GC operations

• Estimating and takeoff acceleration. Tool-assisted takeoffs on standard scopes are running 4–6x faster than fully manual takeoffs in our internal benchmarking.
• Document review at scope of work. Cross-checking spec sections, drawing index, and addenda for inconsistencies — work that historically took a junior PM 8–12 hours per submittal — can be done in under an hour with AI assist + human verification.
• RFI drafting and triage. Auto-drafting RFIs from scope ambiguity, then routing for human review and approval, saves substantial PM time on every project.
• Schedule scenario modeling. AI-assisted what-if scheduling on three- or four-variable changes (long-lead delay, inspection pushout, weather) gives PMs an analytical horsepower they did not have last year.
• Owner-facing question answering. The exact use case Pereff builds at scale: a knowledgeable advisor available 24/7 that draws on the firm's full project history, competitor intelligence, and current market data. This shifts the GC-owner relationship from gatekept information to ambient transparency.^[24],[26]

Where AI is overhyped today

• Autonomous design. Despite vendor pitches, no current generative tool produces code-compliant, constructable, ready-to-issue commercial construction documents without substantial architect time. The human-in-the-loop is permanent for the foreseeable future.
• Autonomous construction. Robotics adoption on commercial jobsites is real but narrow — drywall, layout, certain repetitive tasks. The labor displacement narrative is at least a decade premature for general commercial work in DFW.
• Fully automated estimating. AI accelerates takeoffs but does not replace the judgment required for trade-specific assumptions, scope-gap identification, or local cost factors. The estimator's job is changing, not disappearing.
• Predictive change-order avoidance. Vendor claims of preventing change orders through pre-construction AI are not supported by data we trust. Good preconstruction prevents change orders; AI helps but does not substitute.

Pereff's AI-first commitment

Pereff is the first commercial GC in North Texas to put AI at the center of its buyer experience, not as a marketing veneer. Our public-facing AI concierge — accessible on the homepage as a search bar — draws on three knowledge bases: our full 15-year project history, a curated intelligence base on every meaningful DFW commercial GC competitor, and a continuously refreshed industry knowledge base of costs, timelines, regulations, and methods. Behind it sits the same engineering investment we make in our preconstruction process. The thesis is straightforward: in a market where every owner is doing more research before engaging a GC, the firm with the best research-grade information access wins more of the projects worth winning.^[27]

The DFW commercial market is the largest in the United States by starts dollar volume, and the structural demand under it is the most durable in the country. The North Central Texas Council of Governments projects regional population growth of approximately 2.1% in 2026 — adding 170,000 residents — and similar growth through 2030. That floor is the reason we are constructively optimistic on most of the verticals below even where near-term softness is real. Demand catches up. The question for commercial owners is sequencing.^[16]

Vertical outlook

Three medium-term themes we are positioning around

1. The flight to quality in office is creating a structural opportunity in Class A repositioning. Owners with B-quality assets in A-quality locations have a brief window to invest in amenity, lobby, and outdoor program — and the projects we are pricing in this space are generating very strong owner ROI.
2. Medical real estate consolidation continues to outpace dental, but dental is the steadier ground-up vertical. We expect dental ground-up volume in DFW to grow another 8–12% in 2026 — particularly outside the Plano/Frisco core where land basis still works.
3. Onshoring is a real, durable industrial tailwind. The narrative has been around for five years and only recently started showing up in our active pipeline. Light manufacturing buildouts (40–80k sf) are pricing well and clearing quickly.^[26],[8]

Geographic scope

All city-level data refers to the Dallas-Fort Worth-Arlington Metropolitan Statistical Area. Sub-market detail focuses on Collin, Denton, and Dallas counties — the markets where Pereff's project portfolio is concentrated. References to specific cities (Plano, Frisco, McKinney, Allen, Prosper, Richardson, Dallas, Fort Worth) reflect direct project experience and verified permit-portal data, not third-party averages.

Data dates

Cost figures are May 2026 directional ranges, anchored against Q1 2026 Mortenson and Gordian/RSMeans Dallas cost factors. Permit timelines are trailing 24 months (May 2024 – May 2026). Labor and wage data is May 2026 BLS Occupational Employment Statistics for the DFW MSA. Financing rates are as of mid-May 2026 and update monthly; consult lender for live pricing. Demand and outlook projections cover 2026 calendar year and a forward look to 2027.

Pereff portfolio data

Where this report cites Pereff project records, the underlying dataset is our full project history from 2011 through May 2026: 100+ commercial buildouts, 1,000+ multifamily units delivered, and approximately $35–50M in annual revenue at scalable run-rate. Cost-per-foot and timeline figures from this dataset are normalized to May 2026 dollars and aggregated to protect individual project confidentiality. The dataset is proprietary; specific project details available on request under NDA.

What we don't claim

• We do not present this as a peer-reviewed economic study. It is a practitioner's market read, sourced and dated.
• We do not claim DFW averages from our portfolio. We claim Pereff observations.
• We do not predict precise cost movements. We provide ranges with directional commentary.
• We do not offer legal, financing, or investment advice. We describe market conditions and our practical experience.

Source list (alphabetical by organisation)

About Pereff Development Group

Pereff Development Group is a Plano-based commercial general contractor specializing in design-build delivery for medical, dental, veterinary, retail, restaurant, office, multifamily, and ground-up commercial projects across North Texas. Founded by Stephen Pereff in 2011 after 25+ years in commercial real estate development, the firm integrates architecture, construction, and project financing facilitation under one accountable team. Pereff is the first commercial general contractor in North Texas to put AI at the center of its buyer experience.

Contact the research team

Questions about specific numbers, requests for the underlying methodology on a particular section, or interest in a project-specific briefing: ask Pereff AI directly on the homepage, or contact Stephen via the start-a-project flow. We respond personally.