3Q 2017 DFW Office Market Brief

DFW OFFICE MARKET BRIEF

3Q2017

DFW OFFICE MARKET BRIEF 3Q 2017

TABLE OF CONTENTS

1. DALLAS/FORT WORTH OFFICE TEAM AND SUBMARKETS

1 2 3

2. OVERALL DALLAS/FORT WORTH OFFICE MARKET

A. Facts and Figures

2. SUBMARKET INTELLIGENCE

A. Dallas Central Business District

B. Central Expressway

C. D. E. F. G. H. I. J. K. L. M.

Far North Dallas Fort Worth Central Business District Las Colinas LBJ Mid Cities North Fort Worth Preston Center Richardson/Plano Southwest Fort Worth Stemmons Uptown/Turtle Creek

DFW OFFICE MARKET BRIEF 3Q 2017

1

HLC DALLAS/FORT WORTH

MATT CARTHEY

OFFICE PROFESSIONALS

Partner Fort Worth mcarthey@hlfortworth.com 817.710.1111

DAVID CASON

Vice President Fort Worth dcason@hlfortworth.com 817.810.9137

GEOFF SHELTON

HOLDEN LUNSFORD

JAMES ENGELS

MARSHALL MAYS

ANDREW SCUDDER

BRANDON AVEDIKIAN

DAN POND

DYLAN SHAPIRO

Market Associate Fort Worth mmays@hlfortworth.com 972.381.3201

Market Associate Dallas ascudder@hldallas.com 972.280.8320

Managing Principal Fort Worth gshelton@hlfortworth.com 817.710.1113

Market Associate Dallas bavedikian@hldallas.com 972.280.8302

Managing Principal Dallas holdenlunsford@hldallas.com 972.381.3218

Market Analyst Dallas dpond@hldallas.com 972.381.3218

Market Director Dallas jengels@hldallas.com 972.280.8307

Market Analyst Dallas dshapiro@hldallas.com 972.381.3219

HIGHLIGHTED SUBMARKETS LEWISVILLE/DENTON

FAR NORTH DALLAS RICHARDSON/ PLANO

LORI VUKOVICH Marketing Coordinator Dallas lvukovich@hldallas.com 972.381.3206

GISELA STERN-BALSLEY Marketing Coordinator Fort Worth gbalsley@hldallas.com 817.710.1110

NORTH FORT WORTH LBJ

LAS COLINAS

NORTHEAST FORT WORTH FORT WORTH CBD SOUTH FORT WORTH

MID-CITIES

PRESTON CENTER CENTRAL EXPRESSWAY STEMMONS FREEWAY UPTOWN/ TURTLE CREEK DALLAS CBD EAST DALLAS SOUTHWEST DALLAS

DFW OFFICE MARKET BRIEF 3Q 2017

3

NEW LISTINGS

THE BERKSHIRE AT PRESTON CENTER

188,920 SF, Class A office building in the Preston Center submarket. Owned by TA Realty.

4

DFW OFFICE MARKET BRIEF 3Q 2017

NEW LISTINGS

1701 NORTH COLLINS BOULEVARD

108,657 SF, Class B office building in the Richardson/Plano submarket. Owned by Centenario Realty.

DFW OFFICE MARKET BRIEF 3Q 2017

5

NEW LISTINGS

THE CROSSINGS I & II

529,128 SF, Class A two office building complex in the East LBJ Submarket. Owned by Goddard Investment Group.

6

DFW OFFICE MARKET BRIEF 3Q 2017

NEW LISTINGS

17440 N. DALLAS PARKWAY

53.657 SF, Class B office building in the Quorum Bent Tree submarket. Owned by The Gutow Company.

DFW OFFICE MARKET BRIEF 3Q 2017

7

NEW LISTINGS

ONE RIDGEMAR

177,199 SF Class A Office Building in the West-Southwest Fort Worth submarket. Owned by Frontier Equities.

8

DFW OFFICE MARKET BRIEF 3Q 2017

DFW OFFICE MARKET BRIEF 3Q 2017

8

NEW LISTINGS

LAKEVIEW CENTER I

101,429 SF Class B Office Building in the Las Colinas submarket. Owned by Seaboard Capital.

DFW OFFICE MARKET BRIEF 3Q 2017

9

SUBMARKET INTELLIGENCE

FACTS & FIGURES CONSTRUCTION - OVERALL DFW

VACANCY - OVERALL DFW 20.00%

18.40%

9,000,000

18.00% 17.2%

8,000,000

16.00% 7,000,000

14.00%

6,000,000

12.00% 10.00%

5,000,000

8.00%

4,000,000

6.00%

3,000,000

4.00% 1.10%

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Q4 15

Direct Vacancy

Q1 16

Q2 16

Q3 16

Q4 16

Sublet Vacancy

Q1 17

Q2 17

2,000,000

2.00%

1,000,000

0.00%

Q3 17

0

Total Vacancy

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Q4 15

Q1 16

Q2 16

Delivered Inventory

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

Under Construction

OVERVIEW - OVERALL DFW

ABSORPTION - OVERALL DFW

3,000,000

20.0%

2,500,000

2,500,000

2,000,000

19.0% 2,000,000

1,500,000

1,500,000

18.0% 1,000,000

1,000,000 17.0% 500,000

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Q4 15

Q1 16

Q2 16

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

500,000

16.0%

0

Q3 14

Q4 14

Q1 15

Q2 15

Total Net Absorption

Q3 15

Q4 15

Q1 16

Absorption

Existing Inventory

Vacancy

Q3 16

Q4 16

Deliveries

Q2 17

Q3 17

0

Vacancy

Quoted Rates

0

0

$29.40

92,237

322,110

$25.21

0

324,820

$25.24

681,427

756,599

2,218,392

$28.22

125,552

0

280,489

$26.22

17.0%

416,195

1,024,761

805,500

$25.28

21.9%

264,485

0

0

$22.10

820,318

10.8%

(14,990)

97,026

17,100

$22.24

4,572,694

4,641,527

21.5%

(270,053)

488,065

239,649

$22.01

372,164

429,519

15.6%

(195,042)

38,940

57,000

$21.51

3,603,421

1,765,827

1,765,827

49.0%

92,938

0

0

$19.33

4,526,163

447,631

485,030

10.7%

(6,987)

0

290,583

$39.32

352

27,505,181

5,624,880

5,990,444

21.8%

232,662

433,216

457,291

$24.48

South Fort Worth

204

10,560,265

1,079,988

1,155,665

10.9%

30,767

181,781

113,497

$24.63

Southwest Dallas

82

3,291,392

383,478

386,584

11.7%

126,508

72,028

0

$18.45

Stemmons Freeway

116

12,539,547

3,149,204

3,218,999

25.7%

146,140

63,000

0

$16.66

Uptown/Turtle Creek

94

12,183,447

1,260,931

1,485,746

12.2%

(29,790)

0

1,305,014

$37.98

2,893

265,981,309

45,862,992

48,860,264

18.4%

1,301,963

3,247,653

6,431,445

# Bldgs.

Total RBA

Direct SF

Total SF

Vac. %

Central Expressway

106

12,829,416

1,519,274

1,544,651

12.0%

(78,764)

Dallas CBD

81

28,780,932

7,038,974

7,523,333

26.1%

(128,949)

East Dallas

183

7,575,709

767,042

783,690

10.3%

(90,136)

Far North Dallas

452

47,512,521

6,575,115

7,189,171

15.1%

Fort Worth CBD

55

8,550,232

1,084,312

1,124,046

13.1%

Las Colinas

276

33,664,148

5,202,590

5,731,350

LBJ Freeway

168

20,966,164

4,316,833

4,584,364

Lewisville/Denton

159

7,593,772

702,055

Mid-Cities

414

21,550,806

North Fort Worth

52

2,748,193

Northeast Fort Worth

50

Preston Center

49

Richardson/Plano

Totals

YTD Deliveries

Q1 17

Under Const. SF

Market

YTD Net Absorption

Q2 16

$25.26 Source: CoStar Property®

DFW OFFICE MARKET BRIEF 3Q 2017

11

SUBMARKET INTELLIGENCE

DALLAS CENTRAL BUSINESS DISTRICT

CURRENT EVENTS An investor who has been heavily active in Dallas over the years, has purchased another large property south of the central business district. Mike Hoque acquired about 15 acres on Corinth Street at Cesar Chavez Boulevard for redevelopment. The redevelopment plan for the land will involve mix use.

New York-based shared office provider, Serendipity Lab Coworking signed a 29,000 SF lease in the KPMG Plaza tower on Ross Avenue.

Craig Hall, who developed the building, has invested in Serendipity Lap Coworking as a shareholder.

Dallas’ city plan commission has given approval for a mixed-use building that would be constructed on Harwood Street next door to the former Dallas Public Library building. Centurion American Development Group states that the building will have multifamily and offices used in conjunction with a parking garage.

DEALS ON THE MARKET

• Renaissance Tower – a 1.7M square feet Class A office property • Oilwell Supply Building – a 65K square feet Class B office property

NEW DEVELOPMENTS

• 1900 N Pearl Street/1900 Pearl – 261,400 SF with Lincoln Property Company • 140 Elm Street/The Drever – 60,710 SF

LARGE EXISTING VACANCIES • • • • •

Thanksgiving Tower/1601 Elm Street – 376,547 SF Bank of America Plaza/901 Main Street – 351,324 SF Fountain Place/1445 Ross Avenue – 295,898 SF 1700 Pacific/1700 Pacific Avenue – 236,493 SF 1700 Pacific/1700 Pacific Avenue – 206,909 SF

Renaissance Tower

JLL has recently released a report drawing attention to the occupancy differences between the towers in downtown and Uptown Dallas.

Uptown’s major office projects average more than 94 percent leased, while downtown’s big towers are just over 70 percent rented.

TOP LEASE TRANSACTIONS

• Clearview Renewables signed a 28.6K SF lease at 901 Main Street.

• Calise Partners signed a 14K SF lease in Energy Plaza.

• Skiermont Derby signed a 14K SF lease in Thanksgiving Tower.

• Cozen O’Connor signed a 12.2K SF lease in Comerica Bank Tower.

• KPMG LLP signed an 11.4K SF expansion in KMPG at Hall Arts.

• Johnston Pratt PLLC signed a 10K SF lease in Comerica Bank Tower.

• Francis & Totusek LLP signed a 5.5K SF lease at 500 N Akard Street.

• Intelligent Technology Solutions, Inc. signed a 5.5K SF lease at 600 N Pearl Street.

• Stripes Agency signed a 4K SF lease in Harwood Center.

Absorption

vs. Prev. Qtr

VITAL STATS

vs. 12 Mths Ago

(132,310)

117,039

(18,193)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

26.1%

25.7%

25.4%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

322,110

322,110

414,347

Delivered SF

vs. Prev. Qtr

Vs. 12 Mths Ago

-

92,237

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$25.21

$25.31

$25.50

28.0%

600,000

400,000

26.0%

200,000

0

24.0%

(200,000)

(400,000)

22.0%

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Absorption

Q4 15

Q1 16

Q2 16

Deliveries

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

(600,000)

Vacancy

Source: CoStar 2017 3Q Office Report

12

DFW OFFICE MARKET BRIEF 3Q 2017

SUBMARKET INTELLIGENCE

CENTRAL EXPRESSWAY

CURRENT EVENTS

Cityplace Tower

Owner Northwood Investors and commercial property firm Cushman & Wakefield are teaming up to build an office tower at the corner of Park Lane and U.S. 75. The proposed tower would be eleven floors tall and 340K square feet. If constructed, the office tower will be one of the biggest developments in the U.S. in the last 75 years.

TOP LEASE TRANSACTIONS • • • •

OpenDoor Labs signed an 11.5K SF lease at Mockingbird Station.

MD Buyline signed a 5.5K SF lease at 2711 N Haskell Avenue.

Vista Property Co. signed a 3.2K SF lease at 8350 N Central Expressway.

Seven Hills Society signed a 2.6K SF lease at 11300 N Central Expressway.

DEALS ON THE MARKET

• 10100 N Central Expressway – a 94,294 SF Class B office property

NEW DEVELOPMENTS

No developments are currently under construction at this time. However, three have been proposed: • Four Energy Square – 400,000 SF Built to Suit • 8010 Park Lane – 352,000 SF Office (Community Center) Building • Office Tower in The Glen at Preston Hollow – 250,000 SF Class A Office Building

LARGE EXISTING VACANCIES • • • • •

Cityplace Tower/2711 N Haskell Avenue – 123,128 SF The Office at Park Lane/8020 Park Lane – 119,060 SF 6060 at The Crossing/6080 N Central Expressway – 45,817 SF Mockingbird Station/5307 E Mockingbird Lane – 34,371 SF Three Energy Square/6688 N Central Expressway – 32,412 SF

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(42,816)

9,295

14,100

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

12.0%

11.7%

11.6%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Delivered SF

vs. Prev. Qtr

Vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$29.40

$26.86

$26.34

VITAL STATS 20.0%

400,000

18.0%

350,000

16.0%

300,000

14.0%

250,000

12.0%

200,000

10.0%

150,000

8.0%

100,000

6.0%

50,000

4.0%

0

2.0%

(50,000)

0.0%

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Absorption

Q4 15

Q1 16

Q2 16

Deliveries

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

(100,000)

Vacancy

Source: CoStar 2017 3Q Office Report

DFW OFFICE MARKET BRIEF 3Q 2017

13

SUBMARKET INTELLIGENCE CURRENT EVENTS San Antonio-based insurer and financial services firm USAA is expanding its high-tech campus located east of the Dallas North Tollway on Legacy Drive.

USAA has filed plans with the city for an additional 4-story building with more than 150,000 square feet, to be constructed adjacent to the existing offices.

Toyota’s new $1billion corporate campus, which also includes relocation costs, is officially open for business at Legacy West in Plano. The move is part of a larger strategy by Toyota North America to invest $10 billion in Toyota’s U.S. manufacturing in the next five years.

Billingsley Co. refinanced seven office buildings in International Business Park. The more than $110 million loan was secured by HFF, and will be used to refinance the existing debt and stabilize the property. HFF arranged the three-year loan with Ares Commercial Real Estate Corp.

NTT Data Corp., which recently moved their U.S. headquarters to Plano’s Legacy West Development, is already looking to expand. They are in the market for a big block of office space in the J.C. Penney Campus. NTT Data Corp. is looking for about 250,000 SF in the Penney campus.

JP Morgan Chase & Co. will move about 6,000 employees into Plano’s Legacy West sometime in the next month. JP Morgan Chase has completed a 20-year power purchase agreement with a subsidiary of NRG Energy Inc. to power the campus. Specifically, the agreement is to support a 100-megawatt wind farm in Erath County, Texas. This wind farm will provide 75 percent of JP Morgan Chase’s energy consumption in Texas.

Digility Inc., is relocating its corporate office to the Addison Circle development on the Dallas North Tollway. The British high-tech firm currently has about 50 employees in a 9,900-square foot office space.

RealPage Inc. has purchased a company called On-site, which is a leasing platform for property managers and renters. This is their fourth acquisition of the year, and the deal is said to be valued at $250 million.

Dubai-based Invest Group Overseas is searching for strategic development partners to build office, hotel, and retail projects. They have hired a real estate brokerage firm to find developers willing to buy 11 sites in the $700 million project called The Gate. The Gate is located in Frisco’s highly touted $5 Billion Mile.

FAR NORTH DALLAS TOP LEASE TRANSACTIONS • • • • • • • • • • •

NTT Data signed a 232.7K SF lease in The Campus at Legacy West.

Alkami Technology signed a 53.2K SF lease in Granite Park Three.

Smith Anglin Financial, LLC signed a 22.3K SF lease in Signature Exchange.

Rover Petroleum signed a 20K SF lease in Dominion Plaza.

Alorica, Inc. signed a 17.6K SF lease in Legacy Business Park.

Colony Northstar Advisors signed a 17K SF lease in Galleria North Tower II. WNC Insurance Services Inc. signed a 15.6K SF lease in 14110 North Dallas Parkway.

Josh DeShong Real Estate & Pratt, Ayock & Associates signed a 15.1K SF lease in 5050 Quorum.

TEKsystems, Inc. signed a 12.3K SF lease in Park Center.

Bridger Logistics signed a 12K SF lease in International Business Park.

Palm Harbor Homes Inc. signed an 11K SF lease in The Spectrum.

DEALS ON THE MARKET • • • • •

Forum I, II, & III – a 203,099 SF Class B office property portfolio Legacy Business Park – a 200,000 SF Class B office building Lone Star Building/14460 Qorvo Drive – a 139,291 SF Class A office building 13725 Montford Drive – a 70,061 SF Class B office building 16803 N Dallas Parkway – a 62,598 SF Class B office building

NEW DEVELOPMENTS • • • • •

Hall Park – T2 – 300,000 SF spec under construction with Hall Group Wade Park – 266,136 SF spec under construction Fourteen555 North Building – a 240,000 SF office building by Cawley The Offices One – 228,857 SF spec under construction with VanTrust Children’s Health Specialty Center 2 Plano – 200,000 SF Class A Office Medical Building by McCarthy Building Cos. Inc. • Legacy West – 93,199 SF Class A Office Building under construction with the Karahan Companies • Plano Towne Square Place – an 80,000 SF Class B Office building by Primera Co • Alliance Boulevard & Preston Road – a 47,992 SF Class A Office Medical building in the Baylor Hospital Campus

LARGE EXISTING VACANCIES • • • • •

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

297,898

229,215

(46,039)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

15.1%

15.7%

15.3%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,218,392

1,950,797

1,819,475

Delivered SF

vs. Prev. Qtr

Vs. 12 Mths Ago

-

-

76,200

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$28.22

$27.58

$26.81

The Campus at Legacy West/6501 Legacy Drive – 370,625 SF The Princeton/14651 N Dallas Parkway – 231,487 SF 4101 International Parkway – 205,230 SF Tollway Office Center II/3905 N Dallas Parkway – 160,000 SF Crossmark Building/5100 Legacy Drive – 149,392 SF

VITAL STATS 17.0%

1,000,000

800,000

16.0%

600,000

400,000

15.0%

200,000

0

14.0%

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Absorption

Q4 15

Q1 16

Q2 16

Deliveries

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

(200,000)

Vacancy

Source: CoStar 2017 3Q Office Report

14

DFW OFFICE MARKET BRIEF 3Q 2017

SUBMARKET INTELLIGENCE

FORT WORTH CENTRAL BUSINESS DISTRICT XTO - Petroleum Building

CURRENT EVENTS After being under construction for the past two years, v ertical construction has been completed for Frost Tower. Frost Bank will occupy over 73,000 square feet of the building’s 278,000 square feet of office space. The building will include a Sky Lobby Café with a beverage bar and terrace when it is completed in the First Quarter of 2018.

Though Exxon Mobil has plans to relocate the bulk of XTO Energy’s Fort Worth operation to a campus near Houston, the real estate they occupied is already in high demand. XTO has already lined up buyers for the first two buildings they released to the market, 801 Grove Street and 600 E Exchange Avenue. XTO plans to sell four other buildings however has not specified the timeline for taking those buildings to market.

The Marriott Fairfield Inn & Suites is set to open across from the Fort Worth Convention Center. The 114-room hotel is the first of seven new hotels planning to be opened in downtown Fort Worth and is the product of heavy renovations of the former Park Central hotel at 1010 Houston Street. The seven projects all together will add approximately 1,035 rooms to the downtown inventory.

TOP LEASE TRANSACTIONS

• UMB Bank – 19,000 SF Lease at 777 Main • TEP Barnett – 20,752 SF Sublease at 777 Main

LARGE EXISTING VACANCIES

DEALS ON THE MARKET

• Oil & Gas/Star-Telegram – 439,802 SF Class B Office Complex • Petroleum Building & Garage – 93,824 SF Class B Office Tower

NEW DEVELOPMENTS

• Frost Tower – 640 Taylor – 280,489 SF Class AA Office Tower

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(2,549)

101,881

(44,370)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

13.1%

13.1%

14.5%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

• • • • •

777 Main – 147,073 SF Direct Vacancy 777 Main – 113,328 SF Sublease Available Burnett Plaza – 140,214 SF Direct Vacancy Oil & Gas/Star-Telegram – 147,013 SF Direct Vacancy 301 Commerce – 126,574 SF Direct Vacancy

VITAL STATS 18.0%

120,000 100,000 80,000

280,489

280,489

280,489

Delivered SF

vs. Prev. Qtr

Vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$26.22

$26.15

$25.17

16.0% 60,000 40,000 14.0%

20,000 0 (20,000)

12.0% (40,000) (60,000) 10.0%

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Absorption

Q4 15

Q1 16

Q2 16

Deliveries

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

(80,000)

Vacancy

Source: CoStar 2017 3Q Office Report

DFW OFFICE MARKET BRIEF 3Q 2017

15

SUBMARKET INTELLIGENCE

CURRENT EVENTS Japan-based printer and equipment firm, OKI Data, has announced that it will move its Americas Headquarters to Las Colinas after opening a small regional office last year. They plan to relocate from New Jersey to 8505 Freeport by the end of the year.

Oculus Health has finalized its move from Portsmouth, New Hampshire to space at Las Colinas Corporate Center II at State Highways 114 and 161. Microsoft was under lease for the space but subleased it and transferred the existing furniture to Oculus. They have immediately located 80 people to the new space and plan to expand that number to 200 by the end of 2018. This new Irving office is the consolidation of three other locations.

Construction is now underway on a new Texas-style hotel next to Irving’s soon-to-be built $113 million convention center hotel. The Valencia Group will call the new hotel the Valencia Texican Court Hotel and will feature concepts similar to the old motor court hotels of the 1950s. The design is said to be very similar to the group’s Lone Star Court Austin Hotel at The Domain.

Toyota has purchased the naming rights to Irving’s newest music venue, now adopting the name Toyota Music Factory. The venue hosted its first concert with ZZ Top on September 9th. Freshii and Thirsty Lion Gastropub & Grill are set to open by the end of October.

TOP LEASE TRANSACTIONS

• Cognizant signed a 48,277 SF lease at 5001 Statesman Drive.

• Regus signed a 31,006 SF renewal at The Urban Towers.

• Pei Wei signed a 16,269 SF lease at Las Colinas Highlands.

LAS COLINAS NEW DEVELOPMENTS

• A 250,000 square foot Class A office building is under construction in Cypress Waters Office Park. The building will house Signet Jewelers.

• The Music Factory 100,000 SF Class A office building is under construction in the Urban Center. The building is set to deliver Q1 2018. The building is fully leased to The Ethos Group.

• Royal 10 Office Center is a 114,500 SF Class B office building under construction in Freeport. The building is set to deliver Q3 2018.

LARGE EXISTING VACANCIES • • • • • • • • • • •

1925 W John Carpenter – 405,432 SF 1915 Hurd – 322,590 SF Browning Place I – 172,344 SF Park West 2 – 165,408 SF 121 Corporate Center – 126,596 SF Connection Park I – 105,176 SF Two Colinas Crossing – 97,757 SF MacArthur Center I – 83,947 SF 122 West John Carpenter – 76,656 SF Riverside Commons – 75,048 SF Cottonwood Court – 73,400 SF

Toyota Music Factory

DEALS ON THE MARKET

• 1925 W John Carpenter Freeway – 405,432 SF Class A Office Building.

• 6001 Campus Circle Drive – 136,000 SF Class B Office Building • Commerce Park – 179, 049 SF Class B Office and Flex Business Park.

• 1159 Cottonwood Lane – 73,400 SF Class B Office Building.

• 1304 W Walnut Hill Lane – 42,868 SF Class B Office Building.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

151,540

(121,101)

Vacancy

vs. Prev. Qtr

17.0%

17.1%

U/C SF

vs. Prev. Qtr

VITAL STATS

169,630

18.0%

600,000

vs. 12 Mths Ago

17.5%

500,000

17.0%

400,000

16.5%

300,000

16.0%

200,000

15.5%

100,000

15.0%

0

14.5%

(100,000)

15.4% vs. 12 Mths Ago

805,500

832,219

1,339,761

Delivered SF

vs. Prev. Qtr

Vs. 12 Mths Ago

141,219

339,359

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$25.28

$25.08

$23.40

14.0%

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Absorption

Q4 15

Q1 16

Q2 16

Deliveries

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

(200,000)

Vacancy

Source: CoStar 2017 3Q Office Report

16

DFW OFFICE MARKET BRIEF 3Q 2017

SUBMARKET INTELLIGENCE

CURRENT EVENTS Major physician and health care-staffing firm The Delta Co., is relocating from Farmers Branch to the Cypress Waters development on LBJ Freeway. Their new 38,000 SF headquarters will overlook North Lake.

TOP LEASE TRANSACTIONS

• US Oncology signed a 21K SF renewal in Three Forest Plaza.

• Health Texas Provider Network signed an 18K SF lease in Gateway Tower.

• Monitronics International signed a 17K SF renewal in One Valley View Place.

• Girling Community Care signed an 8.8K SF lease at Crosspoint Atrium in Dallas.

• York Risk Services Group signed an 8.7K SF lease at The Crossings II in Dallas.

• Fidelity National Financial 7.4K SF lease at Three Lincoln Centre in Dallas.

• Law Firm Aaron A, Herbert P.C. signed a 6.3K SF expansion at 8300 LBJ Freeway.

• 501 OPS signed a 3.1K SF lease at Branch Park.

LBJ LARGE EXISTING VACANCIES • • • • • •

Pinnacle Tower/5005 LBJ Freeway – 234,700 SF 7171 Forest Ln – 162,138 SF LBJ Tower/8390 Lyndon B Johnson Freeway – 144,828 SF Three Galleria Tower/13155 Noel Rd – 133,170 SF 5525 Lyndon B Johnson Freeway – 111,092 SF LBJ Tower/8390 Lyndon B Johnson Freeway – 110,615 SF

Pinnacle Tower

DEALS ON THE MARKET

• Lakeside Square – a 404,324 SF Class A office building.

• Northcreek Place II & Wells Fargo Tower – a 311,875 SF 3 office property portfolio.

• 13111 N Central Expressway – a 122,949 SF Class B office building.

• Brinker International Company Campus – a 108,000 SF Class B office building.

NEW DEVELOPMENTS

No developments are currently under construction at this time. However, two have been proposed: • Four Lincoln Centre – 400,000 SF • Park Tower at Dallas Midtown – 376,870 SF

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

246,048

15,188

Vacancy

vs. Prev. Qtr

21.9% U/C SF

23.0% vs. Prev. Qtr

VITAL STATS

44,790

18.0%

600,000

vs. 12 Mths Ago

17.5%

500,000

17.0%

400,000

16.5%

300,000

16.0%

200,000

15.5%

100,000

15.0%

0

14.5%

(100,000)

24.4% vs. 12 Mths Ago

-

-

-

Delivered SF

vs. Prev. Qtr

Vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$22.10

$21.85

$21.13

14.0%

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Absorption

Q4 15

Q1 16

Q2 16

Deliveries

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

(200,000)

Vacancy

Source: CoStar 2017 3Q Office Report

DFW OFFICE MARKET BRIEF 3Q 2017

17

SUBMARKET INTELLIGENCE

CURRENT EVENTS The Trade Group, one of Inc. 5,000’s fastest growing companies, has announced that it will relocate its North Texas global headquarters to Grapevine from Carrolton. The company is one of the nation’s leading trade show exhibit and event companies and has outgrown the 120,000 square feet that it currently occupies in two separate facilities in Carrolton. The City of Grapevine has awarded the company over $1M in incentives to help build the proposed 170,000 square foot facility near Grapevine Mills Mall. The new facility will house roughly 130 office and production staff under one roof with plans in place to add over 90 employees over the next five years.

The Texas Rangers hosted a ground-breaking ceremony for the construction of the new Globe Life Field in Arlington.

Current plans call for the completion of the ballpark in time for the start of the 2020 season. HKS is still finalizing the design of the park but has announced that one recent tweak is to have the retractable roof open west to east to cover the infield first. Many of the existing ballpark retractable roofs cover the outfield first.

MID CITIES TOP LEASE TRANSACTIONS

• CapTel Service Specialists signed a 45,740 SF lease for the 3rd and 4th floors at Centrepoint IV. • Texas Health Resources signed a 20,828 SF expansion for the 7th floor at 500 E Border Street.

DEALS ON THE MARKET

• Gramercy Center – 55,000 SF Class B Office Building • Centreport Office Center I & II – 133,246 SF Class B Office Complex • Arlington Downs Centre – 26,228 SF Class B Office Building • Northstar One – 24,050 SF Class B Office Building • The Oaks - 40,000 SF Class C Office Building • Richland Centre – 38,251 SF Class B Office Building • The Offices at Green Oaks – 35,692 SF Class B Office Building • Copeland Tower – 126,602 SF Class B Office Building • Stadium Place – 84,216 SF Class B Office Building

LARGE EXISTING VACANCIES • • • • • •

4200 Buckingham – 129,740 SF DFW Towers North & South – 107,727 SF State National Center – 73,671 SF Airport Centre I – 60,388 SF 15100 FAA Boulevard – 60,037 SF 3400 William D. Tate Avenue – 58,110 SF

Texas Live & New Ballpark

Absorption

vs. Prev. Qtr

VITAL STATS

vs. 12 Mths Ago

(37,238)

(157,007)

75,286

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

21.5%

20.9%

18.3%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

239,649

339,489

528,065

Delivered SF

vs. Prev. Qtr

Vs. 12 Mths Ago

129,840

200,000

92,418

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$22.01

$2.00

$21.55

26.0%

250,000

25.0%

200,000 150,000

24.0%

100,000

23.0%

50,000 22.0% 0 21.0%

(50,000)

20.0%

(100,000)

19.0% 18.0%

(150,000)

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Absorption

Q4 15

Q1 16

Q2 16

Deliveries

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

(200,000)

Vacancy

Source: CoStar 2017 3Q Office Report

18

DFW OFFICE MARKET BRIEF 3Q 2017

SUBMARKET INTELLIGENCE

CURRENT EVENTS Hillwood has announced that it will team up with T5 Data Centers and IPI Data Center Partners to build a 350 to 400-acre data center campus at Alliance Texas. With approximately eight different sites identified surrounding the existing Facebook Data Center, this new team will market these sites to data center companies as well as corporations. The new proposed development sites could accommodate more than 5 million square feet of data center space, doubling the existing Data Center capacity in the DFW area.

The Offices at Kimball Park building was delivered in August.

The 115,000 square foot Class A office project, developed

by Jeff Medici, opened with over 55% of its space already leased. Tenants include Executive Medicine, Independence Title, Liberty Mutual, Medici Development Partners and Keller Williams Realty DFW. The building boasts an extravagant twostory lobby along with covered parking and programmable 40-inch display panels outside each office.

NORTH FORT WORTH TOP LEASE TRANSACTIONS

• Spaces signed a 23,243 SF lease at Granite Place at Southlake Town Square.

DEALS ON THE MARKET

• 534 N Main Street – 33,000 SF Class C Office Building • 5501 Alliance Gateway Freeway – 214,434 SF Class A Office Building • 2800 Meacham Boulevard – 39,381 SF Class B Office Building • 4775 North Freeway – 21,417 SF Class B Office Building

NEW DEVELOPMENTS

• TD Ameritrade Regional Office Campus, Westlake – 355,000 SF Class A office complex.

LARGE EXISTING VACANCIES • • • • • • • •

Solana, Westlake – 1,074,049 SF across 9 Buildings 5555 N Beach Street – 561,119 SF 5401 N Beach Street – 457,628 SF 2601 Meacham Blvd – 268,290 SF 5501 Alliance Gateway Freeway – 214,434 SF Sublease Granite Place I – 134,473 SF Heritage Commons II – 91,598 SF Sublease The Offices at Kimball Park – 49,000 SF

Cedar Ridge Office Park

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(216,171)

7,110

109,504

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

15.6%

7.3%

8.5%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

57,000

47,000

23,940

Delivered SF

vs. Prev. Qtr

Vs. 12 Mths Ago

15,000

-

56,539

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$21.51

$20.64

$15.70

VITAL STATS 16.0%

500,000 400,000

12.0%

300,000 200,000

8.0%

100,000 0

4.0%

(100,000) (200,000)

0.0%

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Absorption

Q4 15

Q1 16

Q2 16

Deliveries

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

(300,000)

Vacancy

Source: CoStar 2017 3Q Office Report

DFW OFFICE MARKET BRIEF 3Q 2017

19

SUBMARKET INTELLIGENCE

CURRENT EVENTS TA Realty has purchased the 16-story Berkshire tower on the Dallas North Tollway in Preston Center. Holt Lunsford Commercial, who will be moving their headquarters to the Berkshire, has been hired to take over leasing and management.

Real estate firm Lionstone Investments, has been acquired

by New England-based Columbia Threadneedle Investments of Boston. Lionstone, which was founded in 2001, manages $6 billion in assets including 8333 Douglas Tower in Preston Center. The terms of the deal were not disclosed.

PRESTON CENTER • 8333 Douglas at Douglas Center/8333 Douglas Avenue – 24,866 SF • 8343 Douglas at Douglas Center/8343 Douglas Avenue – 20,843 SF • Sterling Plaza/5949 Sherry Lane – 20,177 SF • Preston Sherry Plaza/8201 Preston – 19,101 SF • Bluffview Towers East/3890 Northwest Highway – 18,719 SF The Berkshire

3100 Monticello, a 9-story 180,000 SF office building, in Highland Park was recently purchased by Prescott Realty Group. The building is over 80% leased and was sold by Westdale Asset Management for an undisclosed price.

TOP LEASE TRANSACTIONS • • • • •

HLC Deal

Bank of the Ozarks signed a 33K SF lease in 8300 Douglas.

Holt Lunsford Commercial signed a 26K SF lease at The Berkshire.

Executive Workspace.com signed a 13K SF lease in 8300 Douglas.

NRT Texas signed a 5.4K SF lease at 5950 Sherry Lane.

CMI signed a 1.4K SF lease at 8100 Lomo Alto Drive.

DEALS ON THE MARKET

• 10056 Marsh Lane – 34,380 SF Class B Office Building.

NEW DEVELOPMENTS

• 5960 Berkshire, Terraces at Douglas Center – 171,583 SF building with Houston-based Lionstone Investments Inc. and Dallas-based PegasusAblon.

• 6517 Hillcrest Avenue, Park Plaza – 119,000 SF Class A office building.

LARGE EXISTING VACANCIES Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

7,340

1,829

54,800

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

10.7%

10.9%

10.5%

VITAL STATS 250,000

12.0%

200,000

11.0%

150,000 10.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

290,583

171,583

171,583

Delivered SF

vs. Prev. Qtr

Vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$39.32

$36.64

$34.97

100,000 9.0% 50,000 8.0% 0 7.0%

6.0%

(50,000)

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Absorption

Q4 15

Q1 16

Q2 16

Deliveries

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

(100,000)

Vacancy

Source: CoStar 2017 3Q Office Report

20

DFW OFFICE MARKET BRIEF 3Q 2017

SUBMARKET INTELLIGENCE

CURRENT EVENTS Property Reserve Inc., a real estate and investment arm of the Church of Jesus Christ Of Latter-Day Saints, has purchased the Raytheon Headquarters at 1717 E CityLine Drive. KDC marketed the three building, 500,000 SF office complex for sale.

Entrada Partners has acquired six offices and one industrial project in North Texas. The acquisitions total more than 508,000 square feet and are located in Irving, Dallas, Richardson, and Farmers Branch.

• Counterpoint at Las Colinas at 8101 and 8113 Ridgepoint Drive • Sterling Tech Center at 7801, 7803 and 7805 Mesquite Bend Drive in Coppell • Dallas Tech Center at 10005, 100015, 10025 and 10105 W. Technology Boulevard in Dallas • Westwood Business Park III at 1805 Royal Lane in Dallas • International Corporate Park II at 401, 403, 405, 407 and 409 International Boulevard in Richardson • Valwood XII at 13701 Hutton Drive in Farmers Branch Houston-based Transwestern is ramping up its operations with a new investment fund. Their new president Charles Hazen believes that foreign capital will continue to pour into DFW’s strong and stable market. Last year, Transwestern Investment Group lead the partnership that bought the State Farm Insurance campus for $825 million.

NetScout Systems Inc., is breaking ground on their new office campus in Watters Creek. The One Bethany is 145,000 square feet and will house close to 500 employees.

KDC has been selected to run the development of Independent Bank Group’s $52 million headquarters near State Highway 121 in McKinney. The first phase of the 400,000-square foot development will be constructed in the Craig Ranch development.

The City of Allen executives put together two possible sites to pitch for the new Amazon headquarters. One of the sites is the proposed 135-acre campus called The Strand, at State Highway 121 and Alma Road. The second proposed project is Howard Hughes’ 328-acre development at North Central Expressway and the State Highway 121.

RICHARDSON/PLANO TOP LEASE TRANSACTIONS • Keller Williams signed a 20K SF extension in Custer Court.

• L&S Mechanical signed a 19.1K SF lease in Corporate Place of Richardson.

• Pediatrix Medical Group Inc. signed a 19K SF expansion in 3001 President GBT. • PriceTrace signed a 14K SF lease in Eastside Centre.

• Crosby signed a 12.1K SF lease at Tower 2600 in Richardson.

HLC • Murray and Mensch signed a 3.6K SF lease in Summit Park.

Deal • Dickey Family Dentistry signed a 3K SF lease in The Atrium at 1333 McDermott.

DEALS ON THE MARKET • Keller Williams signed a 20K SF extension in Custer Court.

• L&S Mechanical signed a 19.1K SF lease in Corporate Place of Richardson.

• Pediatrix Medical Group Inc. signed a 19K SF expansion in 3001 President GBT. • PriceTrace signed a 14K SF lease in Eastside Centre.

• Crosby signed a 12.1K SF lease at Tower 2600 in Richardson.

• Dickey Family Dentistry signed a 3K SF lease in The Atrium at 1333 McDermott.

NEW DEVELOPMENTS • 3400 CityLine – a 300,000 SF spec owned by Transwestern • One Bethany at Watters Creek – a 120,976 SF spec by Kaizen Development Partners • Raintree Circle & W Exchange – a 48,000 SF Class B office building • 2 Greenside – a 48,441 SF Class A office building owned by Blue Island Capital

LARGE EXISTING VACANCIES • • • • • •

601 Data Drive – 433,452 SF 2400 N Glenville Drive – 364,965 SF 3400 N Central Expressway – 300,000 SF 465 Independence Parkway – 251,347 SF 6620 Chase Oaks Boulevard – 212,019 SF Campbell Glenn II/1125 E Campbell Road – 205,820 SF

VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

317,888

99,051

913,977

23.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

22.0%

21.8%

22.1%

19.7%

21.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

20.0%

457,291

732,291

698,792

Delivered SF

vs. Prev. Qtr

Vs. 12 Mths Ago

300,000

80,546

317,507

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$24.48

$24.10

$23.32

2,000,000

1,500,000

1,000,000

500,000 19.0% 0 18.0% (500,000)

17.0%

16.0%

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Absorption

Q4 15

Q1 16

Q2 16

Deliveries

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

(1,000,000)

Vacancy

Source: CoStar 2017 3Q Office Report

DFW OFFICE MARKET BRIEF 3Q 2017

21

SUBMARKET INTELLIGENCE

SOUTHWEST FORT WORTH

CURRENT EVENTS Simon, in partnership with Cassco Development Co., announced the opening of The Shops at Clearfork, a 500,000-square-foot, open-air luxury shopping, dining, entertainment and mixed-use - including office - destination situated in the heart of Fort Worth. With two office buildings totaling 120,000 square feet located directly above ground-floor retail, The Shops at Clearfork is becoming a dynamic hub for business in Fort Worth. WeWork, the largest co-working company in the world, is expected to open its first Fort Worth location in The Offices at Clearfork before the end of the year.

Additional tenants including CH4 Energy, CERIS, Merrill Lynch and Mustang Energy will soon join The Miles Foundation and Frost Bank in the Class-A office setting.

Dickies Arena, the new 14,000-seat multipurpose arena, is 17% of the way through its construction. Scheduled to open in the fall of 2019, the arena is being built by a public-private partnership with Event Facilities Fort Worth, a non-profit headed by Ed Bass. The arena will become the new home of the Stock Show and Rodeo in 2020 and will eventually begin to host a variety of events including concerts and sporting events. Though there will be much more construction to be completed, the superstructure of the arena is projected to be topped out in December.

DEALS ON THE MARKET

• 3509 Hulen – 21,500 SF Class B Garden Office • 3301 West Freeway – 16,750 SF Class B Garden office

NEW DEVELOPMENTS

• Worthington National Bank @ Edwards Ranch - 13,100 SF Class A Office Building

LARGE EXISTING VACANCIES

• Wilcox Plaza – 118,925 SF Direct Vacancy • Offices @ Clearfork – 5128 Apache Plume – 33,066 SF Direct Vacancy • First Cash Plaza – 33,378 SF Direct Vacancy • 5600 Clearfork Main Street – 19,192 SF Direct Vacancy • 5049 Edwards Ranch Road – 18,664 SF Direct Vacancy • 5128 Apache Plume Road – 33,066 SF Direct Vacancy

One Ridgmar

TOP LEASE TRANSACTIONS • • • • • HLC Deal •

WeWork – 47,714 SF New Lease @ Clearfork Clearfork Wealth Management – 5,960 SF New Lease @ Clearfork Steward Title – 4,220 SF New Lease @ Clearfork Superior Silica Sands – 18,000 SF New Lease @ Clearfork Vista Bank – 6,119 SF New Lease Summit Office Park CH4 Energy – 8,308 SF New Lease at 5128 Apache Plume Road

TOP SALE TRANSACTIONS

• 111 Boland – 40,000 SF Class A Office Building • One Ridgmar – 177,199 SF

HLC Deal

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

24,659

(40,219)

41,649

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

10.9%

11.2%

9.3%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

113,497

98,497

181,781

Delivered SF

vs. Prev. Qtr

Vs. 12 Mths Ago

-

-

170,892

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$24.63

$24.51

$23.93

VITAL STATS 28.5%

200,000

28.0%

150,000 100,000

27.5%

50,000

27.0%

0

26.5%

(50,000) 26.0%

(100,000)

25.5%

(150,000)

25.0%

(200,000)

24.5% 24.0%

(250,000)

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Absorption

Q4 15

Q1 16

Q2 16

Deliveries

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

(300,000)

Vacancy

Source: CoStar 2017 3Q Office Report

22

DFW OFFICE MARKET BRIEF 3Q 2017

SUBMARKET INTELLIGENCE

STEMMONS

CURRENT EVENTS Partners are looking to rebrand Graystone Centre and Triwest Plaza as one big corporate campus called Elements Tower. The restorations should be completed in about a month. The Element Towers are located west of the Galleria between the Dallas North Tollway and Stemmons Freeway.

Stanton Road Capital has recently purchased the 634K SF Trinity Towers. The towers were sold for roughly $115 PSF.

TOP LEASE TRANSACTIONS

• PetData Inc signed a 10.9K SF lease at Ricchi Towers.

• National Veterans Outreach Program has signed a 3.4K SF lease at 8700 N Stemmons Freeway.

• Taylor Smith Consulting LLC has signed a 2.7K SF lease at Ricchi Towers

DEALS ON THE MARKET • • • • • •

Brookriver Executive Center – a 285,312 SF office complex Optima Business Park – a 197,958 SF Class B office complex 4800 Harry Hines Boulevard – a 97,636 SF Class B office building Feizy Center – a 89,000 class C office building One Cockerell Plaza – a 78,791 SF Class B office building One Empire Place – a 31,230 SF Class B office building

NEW DEVELOPMENTS

No new developments are currently under construction at this time, however, a few have been proposed: • The Design District Tower – 243,100 SF • West Love – 200,000 SF

LARGE EXISTING VACANCIES • • • • •

Pegasus Place - The Tower/3000 Pegasus Park Drive – 518,656 SF The Connection at 8600/8600 Harry Hines Boulevard – 200,000 SF Comerica Service Center/1508 W Mockingbird Lane – 142,600 SF Infomart/1950 N Stemmons Fwy – 117,822 SF Ricchi Towers South Tower/8585 N Stemmons Freeway – 89,584 SF

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

55,557

83,138

17,096

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

25.7%

26.1%

28.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

63,000

Delivered SF

vs. Prev. Qtr

Vs. 12 Mths Ago

Pegasus Place

VITAL STATS 28.5%

200,000

28.0%

150,000 100,000

27.5%

50,000

27.0%

0

26.5%

(50,000) 26.0%

(100,000)

25.5%

(150,000)

25.0%

-

63,000

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$16.66

$16.61

$15.72

(200,000)

24.5% 24.0%

(250,000)

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Absorption

Q4 15

Q1 16

Q2 16

Deliveries

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

(300,000)

Vacancy

Source: CoStar 2017 3Q Office Report

DFW OFFICE MARKET BRIEF 3Q 2017

23

SUBMARKET INTELLIGENCE

UPTOWN/TURTLE CREEK

CURRENT EVENTS

Turtle Creek Tower

Construction has started on a new office project in Dallas’ Oak Lawn neighborhood. The 4-story building is being built just a block away from the Old Parkland campus at Fairmont and Knight streets. The 31,483 SF office development will open in about a year on the east side of the Dallas North Tollway.

JT Philp Co. and Frist Preston HT started construction on a four-story, 31K SF office building at the corner of Knight and Fairmont Street in Dallas. The building will be called Parkland Knight, and Peloton Commercial Real Estate will be leasing the vacancies.

Two real estate companies created by MQ Development have been quietly buying multiple blocks in Dallas’ Oak Lawn neighborhood.

The land being assembled, is said to be for a mixed-use project.

The purchase of these Oak Lawn properties is said to be one of the largest assemblies of properties in years.

Dallas-based petroleum refiner, HollyFrontier Corp. has announced its plan to expand their headquarters at 2828 N Harwood in Uptown Dallas. HollyFrontier, a fortune 500 company, will soon occupy four floors totaling to 90,000 SF of office space.

A group led by Hillwood’s Ross Perot Jr. is heading up a Victory Park proposal site for the new Amazon Headquarters. Hillwood is partnering with Hunt Realty Investments, Hines, Karns, Cousins, Provident Realty Advisors, and Estein USA. Many believe that downtown Dallas and its surrounding areas have an advantage over the suburbs.

TOP LEASE TRANSACTIONS

• HollyFrontier Corporation signed a 22.3K SF lease in 2828 N Harwood Street • RREAF Holdings signed a 16K SF lease in Miyama Parkside • Avison Young signed a 13.5K SF lease in Parkview at 1920 Mckinney • Deutsche Bank Securities Inc. signed a 9.4K SF renwal in The Crescent Office Towers

• • • •

DEALS ON THE MARKET

• Turtle Creek Tower – 142,974 SF Class A office building.

• Quadrangle Office Tower – 128,905 SF Class A office building.

NEW DEVELOPMENTS

• PWC Tower – 494,300 SF office building with Trammel Crow Company.

• The Union – 418,132 SF office building with RED Development, LLC. • 2850 N Harwood St, No. 10 – 231,098 SF office building with Harwood International.

• New Rolex Building – 130,000 SF Build to Suit for Rolex Watch Service Corp.

• 2525 Knight St – a 31,483 SF Class B office building

LARGE EXISTING VACANCIES • • • • •

vs. Prev. Qtr

vs. 12 Mths Ago

8,894

10,066

214,293

16.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

15.0%

12.2%

12.3%

13.5%

14.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,305,014

1,305,014

1,273,530

vs. Prev. Qtr

Vs. 12 Mths Ago

-

-

678,486

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$37.98

$37.37

$38.56

2501 Cedar Springs Road – 109,404 SF 3800 Maple/3800 Maple Avenue – 71,074 SF One McKinney Plaza/3232 McKinney Avenue – 59,299 SF The Centrum/3102 Oak Lawn Avenue – 57,000 SF Victory Plaza West/3090 Olive Street – 51,945 SF

VITAL STATS

Absorption

Delivered SF

Texture Staffing signed a 3.9K SF lease in The Centrum BM Harris signed a 3.9K SF lease in The Crescent Office Towers Intelis Capital signed a 3.7K SF lease in 2021 McKinney Avenue First Texas Homes Inc. signed a 1.9K SF lease in The Crescent Office Towers

800,000 700,000 600,000 500,000 400,000

13.0%

300,000 200,000

12.0%

100,000 0

11.0%

(100,000) 10.0%

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Absorption

Q4 15

Q1 16

Q2 16

Deliveries

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

(200,000)

Vacancy

Source: CoStar 2017 3Q Office Report

24

DFW OFFICE MARKET BRIEF 3Q 2017

DALLAS

5055 Keller Springs Road Suite 300 Addison, Texas 75001 T 972.241.8300 F 972.241.7955

FORT WORTH

300 Throckmorton Street Suite 550 Fort Worth, Texas 76102 T 817.710.1110 F 817.810.9017

HOUSTON

11757 Katy Freeway Suite 250 Houston, Texas 77079 T 713.850.8500 F 713.850.8550