3Q 2018 DFW Office Market Brief

Market Brief... Dallas/Fort Worth

OFFICE

3Q18 Property Pictured Above: 4131 NCX, Dallas, Texas

DALLAS OFFICE MARKET BRIEF 3Q 2018

MESSAGE FROM HOLT

As we celebrate our 25th year in business, we are extremely honored to work with each of you. We attribute our success to you, our clients, for providing us the opportunity to earn your business and your trust.

We have the best professionals in the real estate industry, skillfully trained and ready to provide exemplary service to our clients at all times. Our company was founded on integrity and market knowledge—and these same principles are incorporated into a set of core Values that are the cornerstone of our business today.

Thank you for your loyalty and for entrusting Holt Lunsford Commercial with your real estate needs. As we celebrate the past and look forward to the future with great enthusiasm, we remain highly committed to you, our valued clients.

Holt Lunsford, Founder & CEO

DFW OFFICE MARKET BRIEF 3Q 2018

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. Far North Dallas D. Fort Worth Central Business District E. Las Colinas F. LBJ G. Mid Cities H. North Fort Worth I. Preston Center J. Richardson/Plano K. Southwest Fort Worth L. Stemmons M. Uptown/Turtle Creek

1

DFW

HLC SUBMARKET COVERAGE

2

HLC DFW OFFICE MARKET EXPERTS

MATT CARTHEY

GEOFF SHELTON

HOLDEN LUNSFORD

JOHN DICKENSON

DAVID CASON

Partner/Managing Principal - Fort Worth mcarthey@hlfortworth.com 817.710.1111

Managing Principal - Fort Worth gshelton@hlfortworth.com 817.710.1113

Partner/Managing Principal - Dallas holdenlunsford@hldallas.com 972.381.3218

Managing Principal - Dallas jdickenson@hldallas.com 972.421.1971

Vice President - Fort Worth dcason@hlfortworth.com 817.810.9137

JAMES ENGELS

VIRGINIA KERRIGAN

BRANDON AVEDIKIAN

JAKE NEAL

MARSHALL MAYS

Market Director - Dallas jengels@hldallas.com 972.280.8307

Market Director - Dallas vkerrigan@hldallas.com 972.421.1961

Market Director - Dallas bavedikian@hldallas.com 972.280.8302

Market Associate - Fort Worth jneal@hlfortworth.com 817.284.5555

Market Associate - Fort Worth mmays@hlfortworth.com 817.632.6150

DAN POND

DYLAN SHAPIRO

MASON PRITCHER

Market Associate - Dallas dpond@hldallas.com 972.380.3641

Market Analyst - Dallas dshapiro@hldallas.com 972.381.3219

Market Analyst - Dallas mpricher@hldallas.com 972.280.8320

3

NEW LISTING

2800 N DALLAS PARKWAY

2800 N Dallas Parkway: 87,595 SF Class A office building in Upper Tollway/West Plano Submarket. Owned by Bell Air Office, LLC.

4

3500 OAK LAWN

NEW LISTING

3500 Oak Lawn: 101,561 SF Class A office building in the Uptown/Turtle Creek Submarket. Owned by Westdale.

5

NEW LISTING

4131 NCX: 177,075 SF Class A office building in the Central Expressway Submarket. Owned by Westdale.

6

4131 NCX

4245 NCX

NEW LISTING

4245 NCX: 87,292 SF Class A office building in the Central Expressway Submarket. Owned by Westdale.

7

HLC DFW OFFICE MARKET EXPERTS

VACANCY - OVERALL DFW

CONSTRUCTION - OVERALL DFW 9,000,000

25.00%

8,000,000

19.10% 20.00%

7,000,000

17.40%

6,000,000

17.8% 16.6%

15.00%

5,000,000 4,000,000

10.00%

3,000,000 2,000,000

5.00%

1,000,000

1.30%

0.90%

0

0.00% Q3 15

Q4 15

Q1 16

Q2 16

Q3 16

Q4 16

Direct Vacancy

Q1 17

Q2 17

Q3 17

Q4 17

Sublet Vacancy

Q1 18

Q2 18

Q3 15

Q3 18

Q4 15

Q1 16

Q2 16

Q3 16

Q4 16

Q1 17

Q2 17

Delivered Inventory

Total Vacancy

ABSORPTION - OVERALL DFW

Q3 17

Q4 17

Q1 18

Q2 18

Q3 18

Under Construction

OVERVIEW - OVERALL DFW 20.0%

1,600,000

3,000,000

1,400,000 2,500,000

1,200,000 19.0%

1,000,000

2,000,000

800,000

1,500,000

600,000

18.0% 1,000,000

400,000 200,000

500,000

17.0%

0

0

(200,000) (400,000) Q3 15

Q4 15

Q1 16

Q2 16

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

Q4 17

Q1 18

Q2 18

16.0%

Q3 18

(500,000) Q3 15

Total Net Absorption

Q4 15

Q1 16

Q2 16

Absorption

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

Q4 17

Q1 18

Deliveries

Q2 18

Q3 18

Vacancy

Source: CoStar 3Q 2018 Office Report

Market

Existing Inventory # Bldgs.

Total RBA

Vacancy Direct SF

Total SF

Vac. %

YTD Net Absorption

YTD Deliveries

Under Const. SF

Quoted Rates

Central Expressway

112

12,952,071

1,673,177

1,758,568

13.6%

(220,865)

0

56,948

$29.01

Dallas CBD

85

28,935,409

6,830,635

7,488,111

25.9%

417,993

261,400

163,025

$24.99

East Dallas

190

7,636,988

977,604

994,631

13.0%

(138,687)

30,000

379,410

$26.46

Far North Dallas

471

49,518,860

8,642,698

9,380,902

18.9%

770,766

1,323,260

1,298,840

$28.64

Fort Worth CBD

59

9,194,931

1,411,740

1,425,373

15.5%

(22,937)

280,489

0

$28.99

Las Colinas

294

35,594,341

5,360,142

6,452,388

18.1%

17,185

650,000

2,071,400

$25.23

LBJ Freeway

172

21,766,170

4,503,941

4,679,698

21.5%

1,362

16,800

0

$22.49

Lewisville/Denton

165

7,783,437

898,404

957,940

12.3%

286,278

44,090

163,249

$22.09

Mid-Cities

429

22,038,614

4,110,483

4,184,673

19.0%

252,591

58,400

382,470

$22.40

North Fort Worth

58

3,034,004

454,403

454,403

15.0%

61,837

57,000

302,920

$21.90

Northeast Fort Worth

52

3,773,184

1,441,764

1,441,764

38.2%

271,413

0

0

$21.24

Preston Center

50

4,770,457

494,404

533,222

11.2%

112,133

0

119,000

$37.21

Richardson/Plano

378

29,514,624

6,236,262

6,403,072

21.7%

199,315

485,452

255,520

$24.35

South Fort Worth

229

11,725,233

1,001,798

1,056,369

9.0%

186,870

129,497

85,920

$23.71

Southwest Dallas

90

3,714,351

311,559

311,559

8.4%

128,079

54,000

22,500

$17.89

Stemmons Freeway

118

12,855,521

3,414,050

3,438,254

26.7%

(226,596)

0

0

$16.96

Uptown/Turtle Creek

99

12,923,584

1,693,379

2,019,613

15.6%

142,552

624,300

683,992

$39.37

3,051

277,731,779

49,456,443

52,980,540

19.1%

2,239,289

4,014,688

5,985,194

$25.64

Totals

Source: CoStar 3Q 2018 Office Report

8

DALLAS CENTRALINTELLIGENCE BUSINESS DISTRICT SUBMARKET Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

110,761

69,180

(73,286)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

25.9%

26.3%

26.2%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

163,025

322,110

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$25.19

$25.20

163,025 Delivered SF Quoted Rates $24.99

VITAL STATS 28.0%

400,000

200,000 26.0%

0

24.0% (200,000)

22.0%

(400,000) Q3 15

Q4 15

Q1 16

Q2 16

Absorption

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

Q4 17

Deliveries

Q1 18

Q2 18

Q3 18

Vacancy

Source: CoStar 3Q 2018 Office Report

CURRENT EVENTS • One AT&T plaza, the 37-story, 965K SF building, has been bought by two Dallas based investment firms, Woods Capital and Dundon Capital. While the economics of the sale have yet to be disclosed, the building is fully leased by AT&T, coming off a fresh renewal through 2030. 208 S Akard Street served as the company’s global headquarters since 2008.

CBRE listed the property, who’s sale will likely go down as one of the largest office building sales in North Texas this year.

• Comerica Bank Tower has been refinanced. Trigate Capital and M-M Properties have borrowed an undisclosed sum from New York-based Annaly Commercial Real Estate Group. Ownership will allocate the funds towards planned renovations in Dallas’ second tallest tower. The 1.5M SF building is one of the last skyscrapers in CBD to undergo a big renovation. “We are upgrading elevator landings, corridors and restrooms throughout the buildings,” Jason Obenhaus, TriGate Capital’s SVP, told CoStar news. He continued to say, “We are exploring other upgrades to the property.” Ownership decided the time was right to refinance the debt to help facilitate future leasing opportunity. HFF helped TriGate Capital and M-M properties secure the new loan.

• While Plano and Irving primarily receive all the headlines about company moves, downtown Dallas has quietly been landing several relocations as well. Just this past week two large firms, West Monroe Partners and Payless Shoe Source, joined the steady stream of businesses heading downtown.

While downtown still has the highest office vacancy rate sitting over 22%, companies hunting affordable commercial space in a walkable neighborhood are giving the area consideration. The average downtown office rents are half of what they are across Woodall Rogers in Uptown. In an interview with the Dallas Morning News, Phil Puckett said, “as office leases start to turn over in Uptown, some of the tenants are asking if they can be just as good in a downtown location.” While the downtown market has its work cut out with having over 6.5M SF of vacancy, new renovations, new developments, and cheaper rents are working heavily in its favor.

• Ross Avenue’s Trammell Crow center continues to make great progress with its $140-million renovation. The tower has now signed two new retail tenants, Royal Blue Grocer and a full-service restaurant by the NL group. Along with

the 26K SF of retail space being added to the tower across the street they are currently under construction building a 2,000-space parking garage with more retail. Two restaurants have already signed in the new development, Roti Modern Mediterranean and Southpaws Grill. A 200-room hotel is also planned on top of the parking garage and there is room next door for a residential tower to be added.

TOP LEASE TRANSACTIONS • Willis Towers Watson signed a 71.9K SF lease in Ross Tower.

• Common Desk signed a 52K SF lease in Trammell Crow Center.

• DLA Piper signed a 44.5K SF lease in 1900 Pearl.

• Arcosa Inc. signed a 39.8K SF lease in Ross Tower.

• Payless Shoe Source signed a 27K SF lease in Bryan Tower.

• Touchstone Bernays signed a 20.8K SF lease in Comerica Bank Tower.

• Husch Blackwell LLP signed a 20K SF lease in 1900 Pearl.

• Walter P. Moore signed a 20K SF lease in Ross Tower.

• Enforce LLC signed a 17.1K SF lease in 1700 Pacific Avenue.

• Trigate Capital signed a 12.1K SF lease in Comerica Bank Tower.

• West Monroe Partners signed a 12K SF lease in One Arts Plaza.

• RPG Holdings signed a 10.2K SF lease in 400 S Record Street.

• Hall Render signed a 5.5K SF lease in Factory Six03.

NEW DEVELOPMENTS • 401 N Houston Street/The Luminary – 102,315 SF • 140 Elm Street/The Drever – 60,710 SF

LARGE EXISTING VACANCIES • • • • • •

Thanksgiving Tower – 376,547 SF Bank of America Plaza – 314,729 SF Fountain Place – 295,918 SF 1700 Pacific – 236,493 SF Ross Tower – 172,046 SF Comerica Bank Tower – 153,745 SF

9

CENTRAL INTELLIGENCE EXPRESSWAY SUBMARKET VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(128,757)

114,533

10,107

16.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

14.0%

13.6%

12.6%

11.6%

12.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

10.0%

56,948 Delivered SF Quoted Rates $29.01

56,948

-

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$28.51

$27.88

18.0%

400,000

300,000

200,000

100,000

8.0%

0

6.0% (100,000) 4.0% (200,000)

2.0% 0.0%

(300,000) Q3 15

Q4 15

Q1 16

Q2 16

Absorption

Q3 16

Q4 16

Q1 17

Q2 17

Deliveries

Q3 17

Q4 17

Q1 18

Q2 18

Q3 18

Vacancy

Source: CoStar 3Q 2018 Office Report

CURRENT EVENTS • The Dallas landmark, CityPlace Tower, has changed hands. Highland Capital purchased the building in an off-market transaction and already has plans to upgrade. Originally built in 1985 the 1.35M SF tower has the only underground Dart station in the rail system.

Closing the deal for an estimated $150 per SF, the sale included 6 acres of surrounding land for Highland Capital to develop. Co-founder and President of Highland Capital, James Dondero, said, “We hope to transform the surrounding area with our strategic renovations and improvements. Cityplace was designed to anchor an ambitious urban development, and we believe our plans will revitalize that vision.”

• The architectural firm Gensler is moving its Dallas regional office into the 63-year-old Meadows Building on North Central Expressway. Gensler will be leasing roughly 40,000 SF in the two-story wing of the landmark building. “We wanted to create a space that was experimental and authentic, which brings forth the craft of our profession, all the while reflecting our brand and identity as a firm,” Cindy Simpson, CoManaging Director of Gensler Dallas, said.

TOP LEASE TRANSACTIONS • Venture X signed a 24K SF lease in Campbell Centre.

• Powers Taylor signed an 8.9K SF lease in 5445 La HLC Deal

Sierra.

• Nacol Law Firm signed a 3.5K SF lease in Walnut Glen Tower.

• The Law Office of Kris Balekian Hayes signed a 2.5K SF lease in Uptown Tower.

• Lane Staffing signed a 1.5K SF lease in Uptown Tower.

10

DEALS IN THE MARKET • One Glen Lakes – a 149,618 SF Class A office building 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 – 146,152 SF • Two Energy Square – 69,973 SF • 8750 N Central Expressway – 51,517 SF • 6080 N Central Expressway – 45,252 SF • Three Energy Square – 38,567 SF • Walnut Glen Tower – 26,051 SF

FAR NORTH DALLAS SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(31,890)

317,330

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

18.9%

19.7%

16.3%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,167,216

2,430,850

vs. Prev. Qtr

vs. 12 Mths Ago

32,508

-

vs. Prev. Qtr

vs. 12 Mths Ago

$28.35

$28.19

677,867

1,298,840 Delivered SF 349,818 Quoted Rates $28.64

VITAL STATS 20.0%

1,100,000

19.0%

900,000 700,000

18.0%

500,000

17.0% 300,000

16.0%

100,000

15.0%

(100,000)

14.0% 13.0%

(300,000) (500,000) Q3 15

Q4 15

Q1 16

Q2 16

Absorption

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

Q4 17

Deliveries

Q1 18

Q2 18

Q3 18

Vacancy

Source: CoStar 3Q 2018 Office Report

CURRENT EVENTS • VanTrust Real Estate is breaking ground this month on a 210K SF Class-A building in Frisco Station. This will be the second of five planned office buildings in this new development. The 242acre mixed-use project at Dallas North Tollway and Warren Parkway is planned to eventually reach 5M SF of office space.

Frisco Station is in the northern part of the Platinum Corridor, which has been one of the strongest areas in Dallas for mixeduse developments. The design team for the Offices Two at Frisco Station includes HKS, Manhattan Construction, and Kimley Horn and Associates.

• Former Frontier Equity owned, The Addison, has sold. The 11-story Addison high-rise has a new owner, Florida-based TerraCap Management. The firm bought the 214K SF office building – its first such purchase in North Texas. TerraCap has been in business since 2008 with offices in Florida and Atlanta, and they now own or manage over 5M SF of properties. The building, which was renovated in 2016, is currently 83% leased.

• Innovatus Capital Partners, a New York-based company has purchased a new Frisco office building. The 163,923 SF office building known as Frisco Bridges Place is currently 93% leased.

Bradley Seiden of Innovatus says, “Far North Dallas has established itself as a clear leader in job growth and creation in the expanding DFW region.” The Investment firm says they plan to continue to expand their real estate portfolio to over $1 billion by 2020.

• Tech firm Geoforce has successfully relocated its company’s HQ to Granite Park. The company, in business since 2007, is moving from its previous headquarters in Coppell to Plano.

Geoforce is growing its flagship office by roughly 40 percent and moving into 13.5K SF of office space in Granite Park V tower.

• Germany-based Union Investment has acquired Granite Properties’ newly built office tower which houses Fannie Mae’s regional hub in Plano. The 324K SF building sold for $164 million ($506/psf), which on a price-per-square foot basis set a record for suburban Dallas. This is Union’s second office purchase with the first being 2000 McKinney Avenue in Uptown which sold for just over $225 million. Granite Park Seven, which is the home to Fannie Mae’s regional hub, is fully leased by the company who signed a 15-year lease. Including Fannie Mae, other notable corporate neighbors in the area include Liberty Mutual, JPMorgan and FedEx Office.

HLC Deal

TOP LEASE TRANSACTIONS • • • • • HLC Deal HLC Deal HLC Deal

HLC Deal

HLC Deal

• • • • • • • •

TForce signed a 17K SF lease in The Belvedere.

Geoforce signed a 13.4K SF lease in Granite Park V. Whitley Penn signed a 13K SF lease in Legacy West.

Spencer Fane signed an 11.1K SF lease in Granite Park Two. Hensley Lamkin Rachel Inc. signed an 11K SF expansion in The Belvedere.

AVH DFW LLC signed a 9.6K SF lease in 5000 Legacy Drive.

Enercon Services Inc signed a 9K SF renewal in Tollway Towers.

Liberty Capital Bank signed an 8.1K SF renewal and expansion in Liberty Plaza I. Paul Mason signed a 7.9K SF renewal in Tollway Towers.

Precocity LLC signed a 5.9K SF lease in The Landmark.

JKL Realty Ltd signed a 7.3K SF lease in Tollway Towers.

Wentworth signed a 3.5K SF lease in The Star.

CITT Services signed a 3.3K lease in Tollway Towers South.

DEALS IN THE MARKET • • • • • •

Parkway Centre II & III – 305,235 SF Class A office building Park Center – 236,740 SF Class A office building Parkway Center V – 200,800 SF Class A office building Bent Tree Tower II – 166,023 SF Class B office building Duke Bridges III – 160,608 SF Class A office building Parkwood Place I – 98,750 SF Class A office building

NEW DEVELOPMENTS • Headquarters II – 220,000 SF office building set to deliver 2/2020 • The Realm at Castle Hills – 248,387 SF office building set to deliver 9/2019 • Frisco Station II – 210,000 SF office building set to deliver 10/2019

LARGE EXISTING VACANCIES • • • • • • •

International Plaza II – 395,988 SF 6105 Tennyson Parkway – 393,64 SF The Campus at Legacy – 373,739 SF The Campus at Legacy West – 370,625 SF International Plaza I – 361,266 SF The Princeton – 229,021 SF 4101 International Plaza – 205,230 SF

11

FORT WORTH CENTRAL BUSINESS DISTRICT SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(153,735)

156,260

(2,549)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

15.5%

13.8%

12.6%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

280,489

Delivered SF Quoted Rates $28.99

vs. Prev. Qtr

vs. 12 Mths Ago

280,489

-

vs. Prev. Qtr

vs. 12 Mths Ago

$28.64

$26.45

VITAL STATS 16.0%

350,000 300,000 250,000 200,000

14.0%

150,000 100,000 50,000 0

12.0%

(50,000) (100,000) (150,000) 10.0%

(200,000) Q3 15

Q4 15

Q1 16

Q2 16

Q3 16

Absorption

Q4 16

Q1 17

Q2 17

Deliveries

Q3 17

Q4 17

Q1 18

Q2 18

Q3 18

Vacancy

Source: CoStar 3Q 2018 Office Report

CURRENT EVENTS • Fort Worth’s Panther Island development, skipped over for federal funding in the 2018 fiscal year, is now in a fierce competition for federal money with a long list of other projects. Despite strong support for the Texas project from the Army Corps of Engineers and Rep. Kay Granger, both of whom defended its viability after it was cut from the federal budget in 2018, the plan could go years without federal money while the Army Corps of Engineers works its way through bigger flood problems in other parts of the country. Officials say that the project is competing with others that total between $60 billion and $80 billion, many of which are viewed as more time-sensitive than the $1.16 billion plan to re-route the Trinity River.

• Texas’s newest commuter rail project, which is set to open in late 2018 and will connect Dallas Fort-Worth International Airport to downtown Fort Worth, is also bringing more than $300 million in transit-oriented development to the corridor. The construction project is part of the new 27-mile commuter rail line that will extend from Downtown Fort Worth, across Tarrant County, through North Richland Hills and Grapevine, and into Dallas Fort Worth International Airport.

• Trinity Bluff Hospitality LLC has acquired 1.5 acres in downtown Fort Worth’s Trinity Uptown neighborhood with plans to construct a 100-room Avid hotel. Avid is a newer concept from InterContinental Hotels Group (IHG). These hotels feature 24-hour coffee bars, breakfast on the go and a 24-hour market. A construction timeline for the new location was not disclosed.

12

TOP LEASE TRANSACTIONS • Whitley Penn signed a 46,370 SF lease at Frost Tower.

DEALS IN THE MARKET • 714 Main – 185,757 SF Class B Office Building (Under Contract)

• Oil & Gas/Star-Telegram Building – 439,802 SF Class B Office Complex • 1500 Houston – 22,507 SF Class B Office Building/0.71 Acre Redevelopment

LARGE EXISTING VACANCIES • 777 Main – 360,940 SF • Bank of America Tower – 189,859 SF • Burnett Plaza – 146,826 • 500 West 7th – 100,395 SF • Oil & Gas/Star-Telegram Building – 96,548 SF • Petroleum Building – 93,824 SF

LAS COLINAS SUBMARKET INTELLIGENCE VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

393,418

(782,143)

360,757

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

16.0%

18.1%

18.3%

16.2%

14.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,485,900

1,909,500

2,071,400 Delivered SF 300,000 Quoted Rates $25.23

vs. Prev. Qtr

vs. 12 Mths Ago

100,000

141,219

vs. Prev. Qtr

vs. 12 Mths Ago

$25.11

$25.08

20.0%

800,000

18.0%

600,000 400,000 200,000

12.0% 0 10.0% (200,000) 8.0% (400,000)

6.0%

(600,000)

4.0%

(800,000)

2.0%

(1,000,000)

0.0% Q3 15

Q4 15

Q1 16

Q2 16

Absorption

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

Q4 17

Q1 18

Deliveries

Q2 18

Q3 18

Vacancy

Source: CoStar 3Q 2018 Office Report

CURRENT EVENTS • Nokia is set to consolidate its Dallas-area operations into two buildings currently under construction within the Cypress Waters development. The new regional hub will span 100,000 SF at 3100 Olympus Boulevard and the entirety of a five-story, 250,000 SF building at 3201 Olympus Boulevard slated to deliver at the end of this quarter and early 2019, respectively.

• In the Cypress Waters development, contractors are rushing to finish two office buildings and are already planning to start their next one. Thanks to the huge lease recently signed

by Nokia, Billingsley Company has filled up most of the office space in the 1,000-acre development. There are over 12 companies occupying the 1M+ SF of office space in Coppell.

Developer Lucy Billingsley said, “We’ve got high tech and retail and food and beverage and finance — a little bit of everything, the breadth of the industries we are attracting is fabulous.” The Cypress Waters office project, which started over a decade ago, will be starting construction on their 13th office building in the community.

• In a new list published by the Dallas Business Journal, Las Colinas rounded out the top of the list at number one. The ranking was based on square feet completed and Las Colinas beat out the likes of Legacy Business Park, Dallas Market Center and Alliance Texas with 26,400,000 SF comprised of over 7,500 tenants.

TOP LEASE TRANSACTIONS • Nokia Siemens Networks signed a 350,000 SF lease at Cypress Waters.

• Maximus, Inc. signed a 75,628 SF lease at 8333 Ridgepoint Drive.

• Beazer Homes signed a 25,000 SF lease at Park West I. • Silver Creek Oil & Gas signed a 14,045 SF renewal at MacArthur Plaza.

• Silver Creek Midstream signed a 10,000 SF lease in 909 Lake Carolyn Parkway.

• Conference USA signed a 9,000 SF lease at The Sound at Cypress Waters.

• Cybernetic Entertainment signed an 8,160 SF sublease at Canal Centre.

• Heineken USA Inc. has signed a 5,500 SF lease at Urban Towers.

DEALS IN THE MARKET • Vista Office Park – 355,387 SF Class B Office Building • Cottonwood Office Center – 165,818 SF Class B Office Campus • Royal 10 Office Center – 114,500 SF Class B Office Building • Riverside Commons Building 1 – 100,661 SF Class A Office Building • Gateway Plaza – 78,840 SF Class B Office Building • 6500 N Belt Line Road – 29,571 SF Class B Office Building

NEW DEVELOPMENTS • 777 Hidden Ridge is a 1,125,000 SF Class A office building complex currently under construction set to deliver Summer 2019. The building is a part of Verizon’s 110-acre project and will serve as the headquarters for Pioneer Natural Resources.

• 3200 Olympus Boulevard is a 250,000 SF Class A office building currently under construction set to deliver in October of 2019 in the Cypress Waters development.

• 3201 Olympus Boulevard is a 250,000 SF Class A office building currently under construction set to deliver in March of 2019 in the Cypress Waters development. The building has already been leased in its entirety by Nokia Siemens Networks. The balance of their 350,000 SF lease will be accommodated at 3100 Olympus Boulevard.

• 3000 Olympus Boulevard is a 216,400 SF Class A office building under construction set to deliver Summer 2019. The building will be occupied by Brinker Financial.

LARGE EXISTING VACANCIES • • • • • • • •

1925 W John Carpenter – 405,432 SF 901 W Walnut Hill Lane – 355,387 SF6000 6000 Connection Drive – 293,890 SF 4000 Horizon Way – 292,988 SF Cottonwood Office Center – 165,818 SF 1555 W Walnut Hill Lane – 158,476 SF 6031 Connection Drive – 114,524 SF Park West 2 – 103,980 SF

13

LBJ SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(67,922)

(30,550)

207,676

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

21.5%

21.2%

21.2%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

Delivered SF Quoted Rates $22.49

16,800

-

vs. Prev. Qtr

vs. 12 Mths Ago

$22.27

$22.13

VITAL STATS 26.0%

300,000 250,000

25.0%

200,000 24.0%

150,000 100,000

23.0%

50,000

22.0%

0 21.0%

(50,000) (100,000)

20.0% Q3 15

Q4 15

Q1 16

Q2 16

Absorption

Q3 16

Q4 16

Q1 17

Q2 17

Deliveries

Q3 17

Q4 17

Q1 18

Q2 18

Q3 18

Vacancy

Source: CoStar 3Q 2018 Office Report

CURRENT EVENTS • The Crossings I & II have just completed a several HLC Deal

million-dollar renovation. The two buildings located just east of the Dallas Galleria have more than half a million square feet. Jim Wilson of the Atlanta based Goddard Investment Group was quoted saying, “rather than selling them, lets fix them up.” The 10 and 12 story buildings have 75,000 and 100,000 SF available respectively.

TOP LEASE TRANSACTIONS • Fusion Laboratories Inc. signed a 13.9K SF lease in

DEALS IN THE MARKET • Element Towers – a 675,510 SF Class A office complex • Crosspoint Atrium – a 227,891 SF Class A office building

• Lakeside Square – 409,544 SF Class A office building NEW DEVELOPMENTS No developments are currently under construction at this time. However, three have been proposed: • Four Lincoln Centre – 400,000 SF • Park Tower at Dallas Midtown – 376,870 SF • The Inwood at Alpha West – 210,000 SF

Prism at Midtown.

• Senior Benefits One, LLC signed an 11.1K SF lease in Northpointe Centre.

• Davis Craig, PLLC signed a 9.9K SF lease in One Galleria.

• DeWolff, Boberg & Associates signed a 8K SF renewal in The Crossings.

• Golden Redd & Company signed a 4.2K SF lease in The Crossings.

• Prospera Financial Services signed a 2.2K SF expansion in The Crossings.

HLC Deal

HLC Deal

HLC Deal

14

LARGE EXISTING VACANCIES • Pinnacle Tower – 146,632 SF • 5525 Lyndon B Johnson Freeway – 111,092 SF • LBJ Tower – 110,928 SF • 13342 Midway Road – 105,000 SF

MIDINTELLIGENCE CITIES SUBMARKET Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

27,330

114,114

Vacancy

VITAL STATS 26.0%

300,000

32,963

25.0%

250,000

vs. Prev. Qtr

vs. 12 Mths Ago

24.0%

19.0%

19.1%

20.8%

23.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

22.0%

362,470

354,018

vs. Prev. Qtr

vs. 12 Mths Ago

58,400

129,840

vs. Prev. Qtr

vs. 12 Mths Ago

$22.36

$21.97

382,470 Delivered SF Quoted Rates $22.40

200,000 150,000 100,000 50,000

21.0%

0

20.0%

(50,000)

19.0%

(100,000)

18.0%

(150,000)

17.0%

(200,000) Q3 15

Q4 15

Q1 16

Q2 16

Q3 16

Absorption

Q4 16

Q1 17

Q2 17

Q3 17

Deliveries

Q4 17

Q1 18

Q2 18

Q3 18

Vacancy

Source: CoStar 3Q 2018 Office Report

CURRENT EVENTS • The Texas Live! Complex had a successful grand opening weekend starting August 9th. A partnership between the Texas Rangers, the Cordish Companies and the City of Arlington is one of the largest and most exciting sports-anchored developments in the country.

The $250-million dining, entertainment and hospitality district is located directly in-between Globe Life Park, Cowboys’ AT&T Stadium and the future Globe Life Field set to open in 2020. Next door to Texas Live!, the new Live! By Loews hotel is under construction.

The 14-story hotel will blend sports and entertainment with first-class hospitality and superior amenities. In addition to 302 guest rooms, the hotel will feature 35,000 square feet of meeting, event and convention space. As part of an economic development incentive to help Texas Live! become a reality, the Arlington City Council in 2015 approved a $50-million grant from the City’s natural gas well revenue to support construction.

• Glade Parks, a 194-acre mixed use development off Texas 121 in Euless by North Rock Real Estate is slated to fully open in 2019. Recently announced restaurants include JR’s Steak and Grill, Midici, and Thirsty Lion Gastropub & Grill. Glade Parks will also be the home of Euless’ first liquor store, Total Wine & More. Also a part of the development, a boutique hotel by Aloft is scheduled to open this fall. The hotel will further complement the outdoor plaza which will feature entertainment and family-friendly activities.

TOP LEASE TRANSACTIONS • Small Business Administration signed a 79,122 SF new lease at 14925 Kingsport Drive.

• Texas Capital Bank signed a 18,068 SF new lease at 1900 L Don Dodson.

• Late Model Auto Salvage signed a 7,173 SF new lease at 860 W Airport Freeway.

• Cobra Energy signed a 7,586 SF new lease at 2225

HLC Deal

Avenue J.

DEALS IN THE MARKET • Copeland Tower – 126,602 SF Class B Office Building • Stadium Place – 84,216 SF Class B Office Building • Park Springs Place – 88,000 SF Class B Office Building LARGE EXISTING VACANCIES • DFW Business Center South Tower – 48,068 SF • 300 Six Flags Drive – 51,540 SF • 4200 Buckingham – 97,090 SF • 15100 FAA Boulevard – 60,037 SF • 3400 William D Tate – 58,110 SF • Airport Centre I – 82,416 SF • 14951 Kingsport – 100,800 SF

15

NORTH FORT WORTH SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

22,772

82,632

(52,071)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

15.0%

14.8%

14.6%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

251,000

97,000

vs. Prev. Qtr

vs. 12 Mths Ago

VITAL STATS 20.0%

500,000

400,000

302,920 Delivered SF 32,000 Quoted Rates $21.90

25,000

-

vs. Prev. Qtr

vs. 12 Mths Ago

$19.95

$20.00

16.0% 300,000 12.0%

200,000

100,000

8.0%

0 4.0% (100,000)

0.0%

(200,000) Q3 15

Q4 15

Q1 16

Q2 16

Q3 16

Absorption

Q4 16

Q1 17

Q2 17

Deliveries

Q3 17

Q4 17

Q1 18

Q2 18

Q3 18

Vacancy

Source: CoStar 3Q 2018 Office Report

CURRENT EVENTS • Another master-planned residential neighborhood is coming to northwest Fort Worth — this one with up to 2,200 homes. The project is known as Northstar, and it will be located on 750 acres near U.S. 287, Bates Aston Road and Avondale Haslet Road, just a few miles west of Haslet and south of the Wise County city of Rhome.

It will be built by the same developers who created the popular Morningstar residential development in the Aledo area. At Northstar, which is in the Northwest school district, the first 410 lots are expected to be available for building homes by the end of 2019. Prices will start in the low $200,000s, officials say. Northstar is expected to be especially attractive to families working in the AllianceTexas area.

• DFW has made its closing argument for Amazon HQ2.

AllianceTexas, the massive development just to the north of Fort Worth, was just an idea 30 years ago.

Today, the 26,000-acre project has close to 50,000 workers, 44M SF of development and more than $8 billion in private investment. Those numbers rival (and some even surpass) Amazon’s criteria for HQ2. One year ago, the online retailer announced a massive expansion plan and invited cities to compete to be the host. The DFW area is among the finalists still in the race, which will be decided before the end of the year.

When Amazon released details for HQ2, it threw out some huge numbers for the project: up to 8M SF of commercial space, 50,000 jobs, $5 billion in capital improvements. Mike Berry (CEO – Hillwood), who’s worked in real estate for over 30 years, couldn’t recall any single project of that size. DFW measures up very well in regards to meeting Amazon’s criteria among the finalists. Go deeper into city-to-city comparisons and the business climate could be a difference-maker.

That’s where North Texas hopefully has the edge — especially with Alliance as a case study.

16

TOP LEASE TRANSACTIONS • First American Payment signed a 52,208 SF lease at 2601 Meacham Boulevard.

• Goosehead Insurance signed a 46,146 SF lease at 1500 Solana Boulevard.

• Coremark signed a 24,702 SF lease at 1500 Solana Boulevard.

DEALS IN THE MARKET • 2800 Meacham Boulevard – 39,381 SF Class B Office Building

• 4775 North Freeway – 21,417 SF Class B Office Building NEW DEVELOPMENTS • Charles Schwab Corporate Campus – 500,000 SF Class A office building set to deliver May 2019 • Mercedes-Benz Financial Services – 200,000 SF Class A office building set to deliver March 2019 • 108 Countryview Drive – 30,000 SF Class B office building set to deliver December 2018 • Chapel Crossing – 50,000 SF Class A office building set to deliver October 2018

LARGE EXISTING VACANCIES • 5555 N Beach Street – 424,218 SF • 5401 N Beach Street – 431,579 SF • 2601 Meacham Boulevard – 216,082 SF • 5501 Alliance Gateway Freeway – 161,000 SF • 13650 Heritage Parkway – 164,331 SF

PRESTON CENTER SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

76,881

(4,807)

(47,272)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

11.2%

12.8%

11.6%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

119,000

292,583

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$39.97

$39.42

VITAL STATS 14.0%

250,000

200,000

119,000 Delivered SF Quoted Rates $37.21

12.0%

150,000

100,000 10.0% 50,000

0

8.0%

(50,000)

(100,000)

6.0% Q3 15

Q4 15

Q1 16

Q2 16

Absorption

Q3 16

Q4 16

Q1 17

Q2 17

Deliveries

Q3 17

Q4 17

Q1 18

Q2 18

Q3 18

Vacancy

Source: CoStar 3Q 2018 Office Report

CURRENT EVENTS • Hilltop Holdings is spending $24 million for the development of a 119,000 SF University Park office building that will become headquarters for the company and its largest subsidiary, PlainsCapital Bank. The 1.7-acre plot of land at 6565 Hillcrest will be divided up in shares of 50% and two 25% portions.

Noted Dallas billionaire and shareholder of Hilltop Holdings Gerald J. Ford is coming in as a 25% owner.

Construction began last year on the $60 million Hilltop Plaza building and is set to deliver second half of 2019.

NEW DEVELOPMENTS • 6517 Hillcrest Avenue (Hilltop Plaza) – Under Construction 119,000 SF Class A office building

LARGE EXISTING VACANCIES • The Terraces at Douglas Center – 74,813 SF • 8117 Preston Road/West Tower – 24,162 SF • Highland Park Place – 26,084 SF • Sherry Lane Place – 15,700 SF • 8115 Preston Road/East Tower – 15,477 SF • 8333 Douglas at Douglas Center – 13,330 SF

TOP LEASE TRANSACTIONS • Republic Title signed an 11.6K SF lease in The Terraces at Douglas Center.

• M Terry Enterprises signed an 8.8K SF renewal in

HLC Deal

The Berkshire.

• Anderson Tax signed a 5.3K SF lease in Sterling Plaza.

• Veritas signed a 3.7K SF lease in Douglas Plaza.

• Blackburn May & Co signed a 3.2K SF lease in Highland Park Place.

17

RICHARDSON/PLANO SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(35,114)

11,766

112,479

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

VITAL STATS 1,200,000

23.0%

1,000,000 22.0%

21.7%

20.9%

22.3%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

255,520 Delivered SF 235,938 Quoted Rates $24.35

439,938

610,589

vs. Prev. Qtr

vs. 12 Mths Ago

170,500

313,000

vs. Prev. Qtr

vs. 12 Mths Ago

$24.47

$24.54

800,000 600,000

21.0%

400,000 20.0%

200,000 0

19.0%

(200,000) 18.0%

(400,000) (600,000)

17.0%

(800,000) 16.0%

(1,000,000) Q3 15

Q4 15

Q1 16

Q2 16

Absorption

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

Q4 17

Deliveries

Q1 18

Q2 18

Q3 18

Vacancy

Source: CoStar 3Q 2018 Office Report

CURRENT EVENTS • Dallas real estate investor Champion Partners is rebooting a Plano office building. 3033 West George Bush, now renamed APEX, has recently been vacated of full-building tenant NetScout. The 186,245 SF office project has been renovated adding a tenant lounge, café, fitness center and conference center.

TOP LEASE TRANSACTIONS • Service Experts Heating and Air signed a 13K SF lease in East Side Village.

• ProcessWeaver Inc. signed a 9.2K SF lease in 2600 N Central Expressway.

• Krasamo signed a 4.5K SF lease in CityView Corporate

HLC Deal

Center II. • Level 2 Legal signed a 3.9K SF lease in Collins Plaza.

• SBA Network signed a 3.5K SF lease in CityView Corporate Center.

• Elmo E Cure, Jr. signed a 2.3K SF lease in CityView.

HLC Deal

HLC Deal

DEALS IN THE MARKET • The Points at Waterview – a 202,695 SF Class A office building

NEW DEVELOPMENTS No developments are currently under construction at this time. However, here are proposed spaces: • Heritage Creekside Towers - 2,200,000 SF • CityLine – 2,000,000 SF • 7 CityLine – 417,000 SF • One Heritage Creekside – Phase I – 343,800 SF • Legacy Central 5 – 300,000 SF

LARGE EXISTING VACANCIES • 601 Data Drive – 433,452 SF • Legacy Central 2 – 310,000 SF • 3400 N Central Expressway – 300,000 SF • 465 Independence Parkway – 251,347 SF • Campbell Glenn II/1125 E Campbell Road – 205,820 SF • APEX/3033 W President George Bush Highway – 186,244 SF • 2400 Glenville Drive – 161,309 SF

18

SOUTHWESTINTELLIGENCE FORT WORTH SUBMARKET Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

85,659

50,776

14,587

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

9.0%

9.7%

10.2%

U/C SF 85,920 Delivered SF Quoted Rates $23.71

vs. Prev. Qtr

vs. 12 Mths Ago

85,920

114,497

vs. Prev. Qtr

vs. 12 Mths Ago

129,497

-

vs. Prev. Qtr

vs. 12 Mths Ago

$23.73

$24.15

VITAL STATS 12.0%

250,000

200,000

11.0%

150,000 10.0% 100,000 9.0% 50,000

8.0%

0

7.0%

(50,000) Q3 15

Q4 15

Q1 16

Q2 16

Absorption

Q3 16

Q4 16

Q1 17

Q2 17

Q3 17

Q4 17

Q1 18

Deliveries

Q2 18

Q3 18

Vacancy Source: CoStar 3Q 2018 Office Report

CURRENT EVENTS • It has been a long road since the Star-Telegram described the city’s south side as a “decayed … skid row” years ago. Today West Magnolia Avenue is an American prize-winner. The 16-block-long backbone of Fort Worth’s medical district was added to the list of “Great Streets in America,” part of an updated list of “Great Places in America” as named by the Washington, D.C.-based American Planning Association. In the announcement, American Planning Association President Cynthia Bowen said: “Because of Fort Worth’s community-wide engagement, West Magnolia Avenue is a national example of how a community can work together to create access and opportunity for all.” The area is now flooded with restaurants, bars, and creative office space, making it a destination for both locals and visitors in Fort Worth.

• One of Fort Worth’s most well-known companies will be moving its headquarters. Alcon, which was started in Fort Worth over 70 years ago is relocating its head office to Geneva, Switzerland. Parent company Novartis (based in Switzerland), announced the move and said it plans to employ up to 700 people at the new headquarters after its planned spinoff of Alcon.

With that being said, the company isn’t leaving Fort Worth anytime soon. Novartis stated that the current headquarters in Fort Worth “will remain a major operational, commercial and innovation hub for the proposed standalone company.”

TOP LEASE TRANSACTIONS • Ulrich Barn Builders signed a 22,930 SF sublease at Pier 1 Building.

• BB&T signed a 10,000 SF new lease at 5128 Apache Plume Road.

• Blue River partners signed a 5,044 SF deal at Summit

HLC Deal

Office Park

DEALS IN THE MARKET • Plaza on Hulen – 25,000 SF Class B Office Complex • 1212 Lancaster Avenue – 89,632 SF Class B Office • 1407 Texas Street – 26,332 SF Class B Office • 550 Bailey – 128,645 SF Class A Office NEW DEVELOPMENTS • Waterside Office Building – 27,850 SF Class B office building set to deliver December 2018

LARGE EXISTING VACANCIES • Pier One – 79,777 SF Class A Sublease Vacancy • Summit Office Park – 45.100 SF Class B Direct Vacancy • Western Place I & II – 42,000 SF Class B Direct Vacancy

• First Command Plaza – 24,190 SF Class A Direct Vacancy

• University Centre I&II – 32,354 SF Class A Direct Vacancy

• 4200 Hulen – 25,624 SF Class B Direct Vacancy • 550 Bailey – 20,118 SF Class A Direct Vacancy

19

STEMMONS SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(154,115)

33,352

55,657

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

26.7%

25.5%

25.1%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$16.97

$16.77

Delivered SF Quoted Rates $16.96

VITAL STATS 28.0%

200,000

27.5%

150,000

27.0%

100,000

26.5%

50,000

26.0%

0

25.5%

(50,000)

25.0%

(100,000)

24.5%

(150,000)

24.0%

(200,000)

23.5%

(250,000)

23.0%

(300,000) Q3 15

Q4 15

Q1 16

Q2 16

Absorption

Q3 16

Q4 16

Q1 17

Q2 17

Deliveries

Q3 17

Q4 17

Q1 18

Q2 18

Q3 18

Vacancy

Source: CoStar 3Q 2018 Office Report

CURRENT EVENTS • A Stemmons submarket Class A office building is for sale. Mockingbird Towers, the 448,377 SF two tower project is 64.1% leased. Following a $7MM renovation

by Caddo Holdings, which included a tenant lounge, updated lobby, updated elevator corridors, workout facility, and even a golf simulator. CBRE is marketing the building for sale.

TOP LEASE TRANSACTIONS • Dallas County signed a 27.5K SF lease in 1300 W Mockingbird Lane.

• Drive Casa signed a 4.1K SF lease in 7929 Brookriver Drive.

• Primed Connections has signed a 2.8K SF lease in 7929 Brookriver Drive.

DEALS IN THE MARKET • Mockingbird Towers – a 448,377 SF office building complex

20

NEW DEVELOPMENTS No new developments are currently under construction at this time, however, one has been proposed: • The Design District Tower – 243,100 SF

LARGE EXISTING VACANCIES • Pegasus Place - The Tower – 518,656 SF • The Connection at 8600 – 200,000 SF • 1430 Empire Central Drive – 160,000 SF • Comerica Service Center – 142,600 SF • 7800 Ricchi Tower – 107,135 SF • Ricchi Towers/South – 90,626 SF • Infomart Freeway – 65,888 SF • Comerica Service Center/1508 W Mockingbird Lane – 142,600 SF

• 1300 W Mockingbird Lane – 110,121 SF • Infomart/1950 N Stemmons Freeway – 65,888 SF

SUBMARKETUPTOWN INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

83,118

86,229

(208,106)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

15.6%

15.4%

14.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

683,992 Delivered SF 130,000 Quoted Rates $39.37

813,992

1,308,292

vs. Prev. Qtr

vs. 12 Mths Ago

494,300

-

vs. Prev. Qtr

vs. 12 Mths Ago

$39.04

$38.53

VITAL STATS 800,000

16.0%

700,000 15.0%

600,000 500,000

14.0%

400,000 13.0%

300,000 200,000

12.0%

100,000 11.0%

0 (100,000)

10.0%

(200,000) 9.0%

(300,000) Q3 15

Q4 15

Q1 16

Q2 16

Q3 16

Q4 16

Absorption

Q1 17

Q2 17

Deliveries

Q3 17

Q4 17

Q1 18

Q2 18

Q3 18

Vacancy

Source: CoStar 3Q 2018 Office Report

CURRENT EVENTS • McKinney & Olive is now 100% leased. After closing on Stackpath’s expansion and three smaller leases, the 20-story, 530K SF tower, which delivered last year is fully leased. “Being 100 percent leased is a significant milestone, and we’re very honored to have reached it” says John Zogg, managing director of Crescent Real Estate. The retail component of the building is nearly 100% leased as well, according to Crescent the final retail additions are expected to be announced this fall.

• The Crescent Real Estate group is planning a “top-tobottom” redo to an Uptown tower they acquired earlier this year. The 200,000 SF office building is scheduled to deliver this coming March. Crescents goal with office space is as Lindsay Wilson says, “our goal is to make 2401 Cedar Springs a part of Uptown, engaging not just people who work there but those who live, work, and play nearby”.

• The New York based provider of coworking space WeWork, has decided to expand its Dallas-area footprint. Signing a 52K SF lease in 3090 Olive Street, Nathan Lenahan said, “The combination of legacy companies and the newer wave of startups make Victory Park the perfect location for us.” Victory Park Plaza is a $3 billion, 75 acre mixed-use development sitting adjacent to the American Airlines Center. The new second and third floor coworking office space is slated to deliver in early 2019.

• CyrusOne signed a new lease and plans to take the top 2 floors in Harwood No. 10, relocating their global HQ from Rosewood Court in Uptown. The Dallasbased REIT is the first tenant to sign on to the project.

Harwood No. 10, designed by HDF, will include a European-style alleyway with more than 14K SF of retail and restaurant space. The buildings design includes gardens on the 10th, 16th and 17th floors. The building is the 10th of 18 in the planned district by Dallas-based developer, Harwood International.

TOP LEASE TRANSACTIONS • WeWork signed a 51.9K SF lease in Victory Plaza West.

• CyrusOne signed a 50K SF pre-lease in Harwood No. 10.

• Stackpath signed a 17K SF expansion in McKinney & Olive.

• Chicago Title Insurance Co. signed a 16K SF renewal in Quadrangle Office Tower.

DEALS IN THE MARKET • Quadrangle Office Tower/2828 Routh – 128,905 SF Class A office building

NEW DEVELOPMENTS Under Construction • 2850 N Harwood Street, No. 10 – 231,098 SF office building with Harwood International • The Union – 418,132 SF office building Under Renovation • 2401 Cedar Springs – 200,000 SF Proposed • Victory Center – a proposed 455,526 SF office building with Hines • 3001 Turtle Creek Boulevard – a proposed 326,682 SF office building with Hillwood • 2601 Victory Avenue – a proposed 347,892 SF office building with Hillwood

LARGE EXISTING VACANCIES • 2501 Cedar Springs Road – 109,404 SF • 3800 Maple Avenue – 67,334 SF • 2100 McKinney Avenue – 68,047 • One McKinney Plaza/3232 McKinney Avenue – 61,533 SF • Victory Plaza West/3090 Olive Street – 51,945 SF 21

DALLAS

5950 Berkshire Lane Suite 900 Dallas, Texas 75225 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

www.holtlunsford.com

HOUSTON

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