Waco is one of Texas's fastest growing secondary markets, positioned on the I-35 corridor between Dallas and Austin and anchored by Baylor University's expanding national profile and the tourism phenomenon built around Chip and Joanna Gaines' Magnolia brand. The metro of roughly 290,000 has seen commercial real estate fundamentals improve markedly since 2016, with 2.8 percent job growth and 2.0 percent population growth supporting demand across every property type. Affordability relative to Austin and Dallas-Fort Worth continues to draw capital and residents alike.

Waco Market Overview: Key Metrics

The Waco commercial real estate market in 2026 reflects a market shaped by Baylor University, Magnolia (Chip and Joanna Gaines), L3Harris Technologies, Hillcrest Baptist Medical Center (Baylor Scott and White), Sodexo, City of Waco, McLennan County government, H-E-B. Here are the key metrics investors and borrowers should know:

  • Multifamily Vacancy: 6.5%, near the national average with healthy absorption
  • Industrial Vacancy: 5.0%, reflecting strong logistics and distribution demand
  • Office Vacancy: 12.0%
  • Retail Vacancy: 7.0%
  • Rent Growth: 5.0% year-over-year
  • Job Growth: 2.8%, outpacing the national average
  • Population Growth: 2.0% annually
  • Median Asking Rent: $1,200

Multifamily Outlook in Waco

Waco multifamily is one of Texas's more compelling value-add stories, with vacancy at 6.5 percent and rent growth running 5.0 percent, among the strongest in the state. Cap rates of 6.00 to 7.50 percent for Class B product are compressing as out-of-market capital recognizes the in-migration from Austin and Dallas-Fort Worth. Woodway, Hewitt, and Lorena are absorbing the bulk of new demand, while Baylor University's enrollment growth adds steady student and faculty housing pressure near campus and downtown.

Industrial & Logistics Market

Industrial vacancy in Waco sits at 5.0 percent with cap rates of 5.75 to 7.00 percent, reflecting the market's role as a lower-cost alternative on the I-35 corridor connecting Dallas-Fort Worth and Austin. Distribution operators, food manufacturers, and light manufacturers are drawn to central Texas land and labor costs well below either metro anchor. L3Harris Technologies' advanced manufacturing presence adds a defense-adjacent demand base, while McGregor and the I-35 frontage west of downtown are seeing the most new development activity as logistics users seek central positioning between the two larger markets.

Office & Retail Dynamics

Office vacancy of 12.0 percent, with cap rates of 6.75 to 8.25 percent, reflects a market still working through excess space, with demand concentrated around Baylor University, Baylor Scott and White's Hillcrest Baptist Medical Center campus, and a growing professional services base. Downtown office near the Magnolia district commands a premium from creative and service tenants. Retail is far tighter at 7.0 percent vacancy, with cap rates of 6.00 to 7.50 percent, driven almost entirely by the Magnolia Market at the Silos ecosystem, which draws more than 2 million visitors annually, alongside Woodway corridor retail serving the established residential trade area.

Financing Landscape in Waco

Commercial Lending Solutions arranges Waco commercial real estate financing from $1 million upward, with the most active categories being agency execution for multifamily value-add in Woodway and Hewitt, CMBS for Magnolia district and Baylor-adjacent retail, and construction-to-permanent facilities for I-35 corridor industrial and Baylor-related development. Bridge facilities of 18 to 24 months support value-add multifamily repositioning and downtown adaptive reuse near the Silos. Waco's transformation story continues to attract national lender interest unusual for a market of this size, particularly among life companies and conduit lenders.

For borrowers in the Waco area, current commercial mortgage rates range from 6.00% for agency multifamily to higher rates for transitional and value-add projects. Key factors that influence your rate include property type, leverage, sponsor experience, and asset location within the metro.

Top Submarkets to Watch

The Waco metro features several distinct submarkets that present unique investment opportunities:

  • Downtown Waco
  • Silo District
  • South Waco
  • East Waco
  • Woodway
  • Hewitt
  • Lorena
  • Hillsboro
  • Corsicana
  • Temple
  • Killeen
  • Belton

Each of these submarkets has distinct characteristics in terms of tenant demand, development activity, and pricing. The top investment corridors in Waco include Woodway, Hewitt, Lorena, West Waco, Bellmead, Lacy-Lakeview, McGregor, downtown Waco Magnolia district.

Investment Outlook: Waco 2026

Waco's outlook remains strongly positive, supported by 2.8 percent job growth and 2.0 percent population growth that outpace most Texas secondary markets. The Magnolia tourism engine continues drawing national retail and hospitality brands downtown, Baylor University's enrollment growth and expansion of its law, medicine, and business programs sustain multifamily and office demand, and I-35 corridor industrial development is accelerating as Dallas-Fort Worth and Austin costs push distribution users toward central Texas. CLS expects continued cap rate compression across property types over the next 12 to 24 months as institutional capital increasingly recognizes Waco's growth trajectory.

CLS CRE in Waco

CLS CRE provides commercial mortgage brokerage services throughout the Waco metropolitan area, with access to 1,000+ lenders including banks, life insurance companies, CMBS conduits, agency lenders, debt funds, and credit unions. Whether you're acquiring, refinancing, or developing commercial property in Waco, our market expertise and lender relationships help you secure the most competitive terms available.

Explore our financing programs for Waco:

Trevor Damyan, Commercial Mortgage Broker
Trevor Damyan
Commercial Mortgage Broker, CLS CRE | CA DRE 02244836

Trevor Damyan is a commercial mortgage broker at Commercial Lending Solutions with a background in structured finance at CBRE and Marcus and Millichap Capital Corporation. He specializes in bridge loans, construction financing, SBA programs, DSCR loans, and complex capital structures for investors and developers across all 50 states.