4Q 2018 DFW Office Market Brief

Market Brief... Dallas/Fort Worth

OFFICE

4Q18 Property Pictured Above: Liberty Plaza, Addison, Texas

DFW OFFICE MARKET BRIEF 4Q 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

BRANDON AVEDIKIAN

JAKE NEAL

MARSHALL MAYS

DAN POND

Market Director - Dallas jengels@hldallas.com 972.280.8307

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

Market Associate - Dallas dpond@hldallas.com 972.380.3641

DYLAN SHAPIRO

MASON PRITCHER

Market Analyst - Dallas dshapiro@hldallas.com 972.381.3219

Market Analyst - Dallas mpricher@hldallas.com 972.280.8320

3

NEW LISTING

1111 FREEPORT PARKWAY

1111 Freeport Parkway: 96,500 SF Class B office building in the DFW Freeport/Coppell Submarket.

4

NEW LISTING 4101 INTERNATIONAL PARKWAY

4101 International Parkway: 205,750 SF Class B office building in the Upper Tollway/West Plano Submarket. Owned by CCI.

5

NEW LISTING COTTONWOOD OFFICE CENTER

Cottonwood Office Center: 165,818 SF Class B office building in the Office Center Submarket. Owned by CCI.

6

CROSSPOINT ATRIUM

NEW LISTING

Crosspoint Atrium: 227,891 SF Class B office building in the LBJ Submarket. Owned by Skywalker Properties.

7

HLC DFW OFFICE MARKET EXPERTS

VACANCY - OVERALL DFW

CONSTRUCTION - OVERALL DFW

25.00%

10,000,000 9,000,000

18.7% 17.5% 17.4%

16.6%

20.00%

8,000,000

15.00%

6,000,000

10.00%

4,000,000

5.00%

2,000,000

7,000,000 5,000,000 3,000,000

1.4%

0.7%

1,000,000 0

0.00% 4Q 15

1Q 16

2Q 16

3Q 16

4Q 16

1Q 17

Direct Vacancy

2Q 17

3Q 17

4Q 17

1Q 18

Sublet Vacancy

2Q 18

3Q 18

4Q 18

4Q 15

Total Vacancy

1Q 16

2Q 16

3Q 16

4Q 16

1Q 17

2Q 17

Delivered Inventory

ABSORPTION - OVERALL DFW

3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Under Construction

OVERVIEW - OVERALL DFW 1,600,000

20.0%

2,000,000

1,100,000

1,500,000

19.0% 600,000

1,000,000 18.0%

100,000

500,000 17.0%

(400,000)

(900,000) 4Q 15

1Q 16

2Q 16

3Q 16

4Q 16

1Q 17

2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

0

(500,000)

16.0%

4Q 18

4Q 15

1Q 16

2Q 16

3Q 16

Absorption

Total Net Absorption

4Q 16

1Q 17

2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

Deliveries

3Q 18

4Q 18

Vacancy

Source: CoStar 4Q 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

113

12,953,442

1,605,805

1,704,057

13.2%

(148,254)

18,100

38,848

$29.01

Dallas CBD

85

28,874,929

6,556,224

7,203,576

24.9%

702,528

261,400

163,025

$24.99

East Dallas

191

7,704,910

978,716

993,743

12.9%

(165,899)

30,000

382,710

$27.52

Far North Dallas

473

49,669,493

8,588,050

9,532,294

19.2%

453,655

1,190,811

1,313,675

$28.72

Fort Worth CBD

59

9,227,205

1,380,073

1,402,886

15.2%

(450)

0

0

$28.07

Las Colinas

293

35,395,870

5,458,937

6,477,285

18.3%

(295,755)

764,500

2,174,400

$25.44

LBJ Freeway

172

21,955,679

4,756,240

4,941,602

22.5%

(238,447)

0

0

$22.49

Lewisville/Denton

166

7,862,331

1,058,760

1,112,125

14.1%

66,210

0

203,499

$22.44

Mid-Cities

431

22,145,054

3,933,893

4,019,088

18.1%

427,546

164,870

274,259

$22.55

North Fort Worth

57

3,024,504

292,329

292,329

9.7%

161,111

25,000

102,920

$22.26

Northeast Fort Worth

52

3,665,646

1,153,068

1,153,068

31.5%

541,809

0

0

$20.95

Preston Center

49

4,671,097

414,696

437,843

9.4%

207,512

0

119,000

$37.81

Richardson/Plano

376

29,370,540

5,649,019

5,893,987

20.1%

603,762

550,998

229,000

$24.90

South Fort Worth

229

11,866,080

1,071,792

1,150,048

9.7%

112,691

167,497

47,920

$23.52

Southwest Dallas

88

3,734,137

345,827

345,827

9.3%

74,815

0

22,500

$18.77

Stemmons Freeway

119

13,231,061

3,254,194

3,274,574

24.7%

181,720

414,000

0

$16.97

Uptown/Turtle Creek

99

13,323,272

1,948,365

2,286,854

17.2%

291,121

1,044,988

265,860

$39.30

3,052

278,675,250

48,445,988

52,221,186

18.7%

2,975,675

4,632,164

5,337,616

$25.74

Totals

Source: CoStar 4Q 2018 Office Report

8

DALLAS CENTRALINTELLIGENCE BUSINESS DISTRICT SUBMARKET Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

245,803

154,056

(119,020)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

24.9%

25.8%

26.7%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

163,025

424,425

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$24.99

$25.36

163,025 Delivered SF Quoted Rates $24.99

VITAL STATS

28.0%

300,000 200,000 100,000

26.0%

0 (100,000) 24.0%

(200,000) (300,000) (400,000)

22.0% 4Q 15

1Q 16

2Q 16

3Q 16

Absorption

4Q 16

1Q 17

2Q 17

3Q 17

Deliveries

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Vacancy

Source: CoStar 4Q 2018 Office Report

CURRENT EVENTS • Since 2000, Dallas’ CBD district has seen over $6 billion in renovations and new developments. Downtown remains the largest workforce population at more than 135K employees. Almost 12K residents call downtown home, 1.2K luxury hotel rooms have been added over the past five years, more than 20 new restaurants have been added in recent years and several new parks are on the way. All of which makes Dallas’ downtown district a very appealing place for coming years.

• The new East Quarter development in downtown Dallas has just landed a new tech firm. Dallas based tech product development firm, Dialexa has signed a lease for 24K SF in one of the two dozen properties now owned by J.P. Morgan which makes up the East Quarter.

Their new office will house around 300 workers. Started earlier this year, the East Quarter project led by Todd Interests, is redeveloping a group of 1920s buildings.

When completed the project will include 200K SF of office space, world class restaurants, multi-family, and a small park. Dialexa was founded eight years ago by two friends out of a home garage.

• Downtown Dallas’ 45-year-old Bryan Tower is now the most recent building to announce big renovations. Plans include an outdoor seating plaza, an events area, a new retail market, and restaurants. With Baylor Scott & White vacating in two years, upgrading amenities now will keep the building competitive for years to come and attract tenants to backfill the 200K+ SF vacancy. “The entry experience to Bryan Tower is receiving a substantial upgrade – in a way that provides inviting outdoor space for building tenants and welcoming plaza for daily use by the public.” Said Tyler Marshall of Spire Realty in an interview with Dallas News.

• In some of downtown Dallas’ office towers you will find luxury apartments scattered throughout the building’s vacancies. Dallas-based Bluelofts has started using vacant office space to build out apartments, in a true plug-and-play approach. They have a modular box which they set up in the vacancy containing a kitchen, bathroom and all necessary plumbing. With a $20K core box unit set up and placement of walls to separate each residential unit they can get in and convert the space faster than anyone.

TOP LEASE TRANSACTIONS • Regus Spaces has signed a 46.9K SF lease in The Epic.

• Lynn Pinker Cox & Hurst has signed a 39K SF expansion in 2100 Ross.

• Husch Blackwell has signed a 30.5K SF lease in 1900 Pearl.

• The FDA has signed a 27.6K SF lease in One Main.

• Outfront Media has signed a 10.2K SF lease in One Main • Wellington Realty has signed a 6.4K SF lease in 1700 Pacific.

DEALS ON THE MARKET • 1900 Pearl – a 261,400 SF class A office building.

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

9

CENTRAL INTELLIGENCE EXPRESSWAY SUBMARKET Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

18.0%

47,875

(127,421)

(34,234)

16.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

14.0%

13.2%

13.4%

11.9%

12.0%

U/C SF 38,848 Delivered SF 18,100 Quoted Rates $29.01

vs. Prev. Qtr

vs. 12 Mths Ago

56,948

18,100

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$29.01

$27.22

VITAL STATS

400,000 300,000 200,000

10.0%

100,000

8.0%

0

6.0%

(100,000)

4.0% (200,000)

2.0%

(300,000)

0.0% 4Q 15

1Q 16

2Q 16

3Q 16

Absorption

4Q 16

1Q 17

2Q 17

3Q 17

4Q 17

1Q 18

Deliveries

2Q 18

3Q 18

4Q 18

Vacancy

Source: CoStar 4Q 2018 Office Report

CURRENT EVENTS • While the Dallas office market continues to have a good

TOP LEASE TRANSACTIONS • Redmond & Greer has signed a 12.7K SF lease in 6060

year, three office markets are in the negative absorption range. Stemmons Fwy at -2.1%, LBJ -0.6% and Central Expressway -1.7%. Stemmons Fwy has lost 186K SF of occupancy with a standing vacancy rate of 28.1%.

Creating a value market with a lot of room for potential.

Central Expressway currently stands at 13.8% vacancy which is a strong number when compared to the Dallas average of 18.8%.

at The Crossing.

• New LifeStyles has signed a 7.6K SF lease in Uptown Tower.

• Advantage Midstream has signed a 7.1K SF lease in Premier Place.

• Katherine L. Lewis PC has signed a 5.7K SF lease in Meadow Park Tower.

• Dallas Luxury Realty has signed a 2.9K SF lease in Uptown Tower.

• Sierra Bay Developments has signed a 2.6K SF lease in 5445 La Sierra.

• Co-working has been one of the biggest stories over the past year with WeWork, Common Desk, Venture X, Serendipity Labs, Regus Spaces, and others continually making big splashes in the DFW office market. In DFW alone there are over three dozen different shared office providers. Now with over 80 locations and 1.5MM SF shared between some of the biggest names in coworking and more on the way. The future is unknown as to which companies will come out on top, but it appears the concept is here to stay. With flexible office leases and a menu of services and amenities shared office appeals to the fast-growing start-ups or companies that do not want to be tied to traditional leases.

HLC Deal

DEALS ON THE MARKET • Meadow Park Tower - a 251,755 SF class B office building.

• 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 – 98,600 SF • 8750 N Central Expy – 51,517 SF • Three Energy Square – 38,714 SF • Meadows Building – 27,211 SF

10

FAR NORTH DALLAS SUBMARKET INTELLIGENCE Absorption (72,633)

vs. Prev. Qtr 649,846

VITAL STATS

vs. 12 Mths Ago (165,295)

20.0%

1,000,000 800,000

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

19.0%

19.2%

19.0%

18.1%

18.0%

600,000

vs. 12 Mths Ago

17.0%

400,000

16.0%

200,000

15.0%

0

14.0%

(200,000)

U/C SF 1,313,675 Delivered SF 57,987 Quoted Rates $28.72

vs. Prev. Qtr 1,286,546

1,878,672

vs. Prev. Qtr

vs. 12 Mths Ago

359,382

833,746

vs. Prev. Qtr

vs. 12 Mths Ago

$28.65

$28.03

(400,000)

13.0% 4Q 15

1Q 16

2Q 16

3Q 16

Absorption

4Q 16

1Q 17

2Q 17

3Q 17

4Q 17

1Q 18

Deliveries

2Q 18

3Q 18

4Q 18

Vacancy

Source: CoStar 4Q 2018 Office Report

CURRENT EVENTS

• It has been 20 years since Hall Park made its debut in Frisco, being the first to market in the area. Since then the “Platinum Corridor” or the 10-mile stretch of Dallas North Tollway, from Plano to Frisco has become one of the hottest areas for office space and real estate development. With several projects still in the works, such as VanTrust Real Estate’s 210K SF building at Frisco Station, the area is continuing its explosive growth.

Landing corporate headquarter relocations, it will be exciting to see the innovation in the industry in the coming years.

• The 1.6M SF former Electronic Data Systems office complex has been purchased by Dallas’ Highland Capital. 5400 Legacy Dr, being marketed by CBRE has been on the market since summer was projected to trade for $125MM. The complex has two eight-story buildings connected by an upper-level bridge of office space. The unique office complex was built by Ross Perot, who also built the surrounding Legacy business park, then relocated his company EDS to the building. Highland Capital also recently purchased the 1.4MM SF high-rise, Cityplace Tower.

• PGA of America plans to relocate its headquarters from Florida to Frisco on a 600-acre proposed development site. The move follows the recent public-private partnership with the city of Frisco, Hunt Realty Investments, and other stakeholders. Upon its expected completion in 2022, the new PGA headquarters will include a 500-room Omni Hotel, a 127K SF conference center, two championship golf courses, a short course, practice area including 45 holes and a clubhouse.

The 2027 and the 2034 PGA Championship will be played on one of the two 18-hole championship courses that will be built as part of the $520MM Frisco development • Frisco Station has signed another corporate headquarter move. The cutting-edge AT&T integrated 5G wireless network is estimated to be up to 1,000 times faster than current networks, which for marketing firm Brierley+Partners is perfect.

They are relocating their headquarters into a 56.7K SF top two floor space in the Offices One building in Frisco Station.

The Marketing firm will move their 500 employees to their new home, citing the location and room for growth as their main reasons. Developers VanTrust and Hillwood are also breaking ground on their second, seven-story, 210,000 SF office building in the Frisco Station project.

TOP LEASE TRANSACTIONS

• Altair Global has signed a 64K SF lease in Hall Park.

• Kimley-Horn has signed a 32K SF lease in The Offices at Frisco Station.

• Common Desk has signed a 26.5K SF lease in Fourteen555.

• Trintech has signed a 25.7K SF sublease in One Hanover Park.

• Specialty Insurance Services Corp. has signed a 23.1K SF lease in 5300 Democracy.

• Presidential Business Centers has signed a 17.6K SF renewal in Liberty Plaza.

• Invitation Homes has signed an 11.9K SF lease in Sojourn Office Center.

• BGE has signed a 10K SF expansion in Hall Park.

• Moraif Financial Group has signed a 4.5K SF lease in 2800 N Dallas Pky. • Veritas has signed a 2.4K SF lease in Fairways I. • Share Holdings has signed a 2K SF lease in Tollway Towers.

HLC Deal

HLC Deal

HLC Deal HLC Deal HLC Deal

DEALS ON THE MARKET

• Gramercy Center – a 256,590 SF class B office building.

• Platinum Park – a 166,424 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.

• The Offices Two at Frisco Station – 210,579 SF office buildings set to deliver 10/2019.

LARGE EXISTING VACANCIES • • • • • • • •

5400 Legacy Drive – 1,587,456 SF International Plaza II – 396,721 SF 6105 Tennyson Parkway – 393,64 SF The Campus at Legacy West – 370,625 SF International Plaza I – 361,266 SF The Princeton – 229,021 SF 6400 Legacy Drive – 222,191 SF 4101 International Plaza – 205,750 SF

11

FORT WORTH CENTRAL BUSINESS DISTRICT SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

22,487

(153,735)

(2,242)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

15.2%

15.4%

12.5%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

280,489

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

Delivered SF Quoted Rates $28.07

vs. Prev. Qtr

vs. 12 Mths Ago

$28.99

$26.75

VITAL STATS

16.0%

200,000 150,000 100,000

14.0%

50,000 0 (50,000)

12.0%

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

(200,000) 4Q 15

1Q 16

2Q 16

3Q 16

Absorption

4Q 16

1Q 17

2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

Deliveries

3Q 18

4Q 18

Vacancy

Source: CoStar 4Q 2018 Office Report

CURRENT EVENTS • The former Bank of America building at 500 West Seventh Street in downtown Fort Worth will undergo major changes, including a new name. The building will be renamed First on 7th and will undergo major renovations, including a remodeling of the lobby and updates in landscaping for shade in the plaza.

The renovations are meant to emphasize the outdoor sculptures next to the building. The ground floor of the 21-floor tower will also be open for up to 15,000 SF of retail and dining space.

• The brand-new commuter rail line from Fort Worth to DFW International Airport is scheduled to open in January. TexRail’s route is entirely in Tarrant County.

The 27-mile rail line will run from downtown Fort Worth, Northeast through North Richland Hills to downtown Grapevine, and then into DFW International Airport.

TexRail trains run hourly and operate 365 days a year.

• Despite a lack of federal funding for Fort Worth’s Panther Island project this year, officials said the project is on track for completion in the next decade. Congress approved nearly $530 million for the project in 2016, but those dollars won’t come in fiscal year 2019. Panther Island was left out of the White House’s budget for lack of an economic feasibility study. The U.S. Army Corps of Engineers’ work plan for fiscal year 2019, published last week, included several Texas projects, but not Panther Island. It’s the third consecutive year the work plan hasn’t included the Fort Worth project. Though as much as $40 million worth of work could be accomplished in 2019, Panther Island has about $9 million for the federal flood control component. It needs at least $26 million in 2020 to stay on schedule. An additional $35 million would be needed in 2021.

12

TOP LEASE TRANSACTIONS • WeWork leased 24,021 SF at 509 Main Street from Sundance

• WeWork leased 14,393 SF at The Commerce Building from Sundance

• AG Resource Management lease 7,003 SF at The Chase Bank Building from Sundance

DEALS ON THE MARKET • Royal Realty Services is selling the Oil & Gas Commerce/Star Telegram Building. The two (2) building Class B complex is 439,802 SF. • Tarrant County Junior College is selling 1500 Houston Street and neighboring 1400 Throckmorton Street.

1500 Houston is an existing 22,507 SF office building while the 1400 Throckmorton land site consists of 1.21 Acres. Both sites are under contract to an undisclosed developer.

NEW DEVELOPMENTS • The historic office building at 714 Main Street in Downtown Fort Worth has gotten approval to be redeveloped into a hotel. Development Service Group will turn the 97-year-old property into a 232 room Kimpton hotel. DSG purchased the property from XTO Energy, which put the building on the market in June after it relocated to Houston to be with its parent company, Exxon Mobil.

• The Sinclair Hotel, once a 1920’s Class B office building, will complete renovations and will open in April 2019. The 164 room hotel will operate through Marriott’s Autograph collection.

LAS COLINAS SUBMARKET INTELLIGENCE VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

15,550

68,156

(29,694)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

16.0%

18.3%

18.3%

15.6%

14.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,071,400

2,305,900

2,174,400 Delivered SF Quoted Rates $25.44

vs. Prev. Qtr

vs. 12 Mths Ago

300,000

20,000

vs. Prev. Qtr

vs. 12 Mths Ago

$25.23

$24.77

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% 0.0%

(1,000,000) 4Q 15

1Q 16

2Q 16

3Q 16

Absorption

4Q 16

1Q 17

2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

Deliveries

3Q 18

4Q 18

Vacancy

Source: CoStar 4Q 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 square feet at 3100 Olympus Boulevard and the entirety of a five-story, 250,000-square-foot 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 1 million 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 • ACE Cash Express signed a 80,000 SF lease at The Point.

• Planet signed a 25,118 SF lease at 5020 Riverside.

• WeWork signed a 76,229 SF lease at Williams Square.

DEALS ON THE MARKET • The Summit at Las Colinas – 375,706 SF Class A 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

• • • • •

Cottonwood Gardens – 78,813 SF Class B Office Building Valley Centre – 77,686 SF Class B Office Building Commerce Park III – 69,981 SF Class B Office Complex 1440 Corporate – 50,000 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 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.

• 1801 Wittington Place is a 103,000 SF Class B Office Building under construction set to deliver October 2019. The building is being constructed on a speculative basis.

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

Williams Square – 485,000 SF 1925 W John Carpenter – 405,432 SF 901 W Walnut Hill Lane – 346,951 SF 6000 Connection Drive – 293,890 SF 4000 Horizon Way – 292,988 SF Cottonwood Office Center – 165,818 SF 1555 W Walnut Hill Lane – 151,736 SF 8222 N Belt Line Road – 135,200 SF 6031 Connection Drive – 114,524 SF 3600 W Royal Lane – 114,500 SF 4851 Regent Boulevard – 105,176 SF Park West 2 – 103,980 SF 5040 Riverside – 100,661 SF

13

LBJ SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

(194,284)

(67,922)

(14,789)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

22.5%

21.6%

21.3%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

20,001

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$22.49

$22.42

Delivered SF Quoted Rates $22.49

VITAL STATS

vs. 12 Mths Ago 25.0%

300,000

24.5% 200,000

24.0% 23.5%

100,000

23.0% 22.5%

0

22.0% (100,000)

21.5% 21.0%

(200,000)

20.5% 20.0%

(300,000) 4Q 15

1Q 16

2Q 16

3Q 16

Absorption

4Q 16

1Q 17

2Q 17

3Q 17

Deliveries

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Vacancy

Source: CoStar 4Q 2018 Office Report

CURRENT EVENTS • Two new real estate projects will bring much needed Dallas County government offices. Of the two, the former Brinker International headquarters on Hillcrest Road and LBJ Fwy, is the largest. The 110K SF office project is currently in process of a redevelopment to consolidate several offices. After vacating the 4-story complex, Brinker, who owns Chili’s and Maggiano’s, moved its headquarters to the Cypress Waters development. The second of the two projects is a new development planned in south Dallas near I-20. The 70K SF office building is estimated to cost $25MM and is currently in the zoning process to allow for the justice of the peace courts to office there.

• Dallas based EJES has relocated its growing corporate office. The company is moving into North Central Plaza III and will occupy 17K SF. Being in Dallas’ Park Central district is very appealing to EJES due to the proximity to major highways, wide range of amenities, and being in the center of their employee base. The trend of companies looking for and moving into better-amenitized buildings continues, with company recruitment and employee happiness being at the forefront of their mind.

TOP LEASE TRANSACTIONS • Aethon Energy Operating has signed a 47.6K SF lease in Lakeside Square

• Secure Collateral Management has signed a 22K SF lease in Lake Highlands Tower • Yogesh T. Patel has signed a 15.5K SF renewal and expansion in North Central Plaza I • Travel Group has signed a 14K SF lease in Gateway Tower

14

• Browning Oil Company has signed an 11.7K SF lease in Lakeside Square

• Securitas Security Services USA has signed a 9.3K SF lease in North Central Plaza III • Crown Laboratories has signed an 8.5K SF lease in Pinnacle Tower • Dewolff Boberg & Associates has signed an 8K SF renewal in The Crossings • Bellinger and Suberg has signed a 6.3K SF lease in Three Forest Plaza • Hance Law Group has signed a 5.2K SF lease in Churchill Tower • JMA Firm has signed a 5K SF lease in 12850 Hillcrest Road • Webb Mason has signed a 4K SF lease in Churchill Tower

HLC Deal

DEALS ON THE MARKET • Element Towers – a 675,510 SF Class A office complex 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

LARGE EXISTING VACANCIES • Pinnacle Tower – 146,632 SF • 5525 LBJ – 111,092 SF • LBJ Tower – 110,928 SF • The Crossings II (5501 LBJ) – 86,515 SF • The Crossings I (5429 LBJ) – 51,120 SF

MIDINTELLIGENCE CITIES SUBMARKET Absorption

vs. Prev. Qtr

VITAL STATS

vs. 12 Mths Ago 26.0%

300,000

25.0%

250,000 200,000

131,266

67,988

89,096

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

24.0%

18.1%

18.5%

20.4%

23.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

22.0%

330,729

248,400

vs. Prev. Qtr

vs. 12 Mths Ago

50,000

102,518

vs. Prev. Qtr

vs. 12 Mths Ago

$22.36

$22.10

274,259 Delivered SF 56,470 Quoted Rates $22.55

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) 4Q 15

1Q 16

2Q 16

3Q 16

Absorption

4Q 16

1Q 17

2Q 17

3Q 17

Deliveries

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Vacancy

Source: CoStar 4Q 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 • State of Texas Human Health signed a 25,526 SF Build to Suit at 2220 Forum Drive.

• Multiplan signed a 8,741 SF new lease at Copeland Tower.

• Texas Health Internal Medicine signed a 7,553 SF new lease at 1615 Hospital Parkway.

• Urology Clinic of North Texas signed a 6,446 SF new lease at 1631 Lancaster Drive.

• North Central Texas Regional Certification Agency signed a 4,828 SF new lease at 624 Six Flags Drive.

DEALS ON THE MARKET • Centrepoint I, II & III – 280,961 SF Class B Office Complex

• Park Springs Place – 88,000 SF Class B Office Building • Cornerstone Business Park – 71,567 SF Class B Office Building

LARGE EXISTING VACANCIES • 3400 William D Tate – 58,110 SF • 4200 Buckingham – 58,090 SF • 300 Six Flags Drive – 51,540 SF • Granite Place I – 50,435 SF • DFW Business Center South Tower – 48,068 SF • Airport Centre I – 46,052 SF

15

NORTH FORT WORTH SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

139,574

18,672

(35,682)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

9.7%

14.3%

15.7%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

102,920

25,000

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$21.57

$20.10

102,920 Delivered SF Quoted Rates $22.26

VITAL STATS 20.0%

200,000 150,000

16.0% 100,000 12.0%

50,000 0

8.0%

(50,000) 4.0% (100,000) 0.0%

(150,000) 4Q 15

1Q 16

2Q 16

3Q 16

Absorption

4Q 16

1Q 17

2Q 17

3Q 17

4Q 17

Deliveries

1Q 18

2Q 18

3Q 18

4Q 18

Vacancy

Source: CoStar 4Q 2018 Office Report

CURRENT EVENTS • For many years Texas Motor Speedway had been on an island of its own in far North Fort Worth. That’s changing quickly with the most recent example being the announcement of nearly 60 acres of office space being announced in the Champions Circle development.

Developer KDC is heading the project, along with Fine Line Diversified Development. The office space will be joining other recent projects in the area, including the opening of the Tanger Outlets shopping mall and the Marriott Conference Center Resort Hotel and Golf Club. The land has the capacity to fit as much as 12 million square feet of office space, according Bill Boecker, Fine Line Diversified Development’s CEO. “With the benefit of recently expanded major highways connecting Champions Circle to Dallas/Fort Worth Airport, downtown Fort Worth and other major regional destinations, the Alliance Corridor has experienced tremendous growth in the last 10 years,” Boecker said in an email.

• MedCore Partners announced that it plans to develop a new Class A office building on the Alliance campus in North Fort Worth. The building will be a two-story 65,000-square-foot building to be anchored by Spine Team of Texas, one of the top spine specialty practices in DFW. The building will also be the home of the Texas Health Spine Surgery Center-Alliance, an ambulatory spine surgery center operated by Spine Team Texas.

At present, MedCore claims that the project is nearly 70% pre-leased. The project is scheduled to be ready for occupancy in the first quarter of 2020. The new building will be located on the west side of the hospital campus near the intersection of Interstate Highway 35 and Golden Triangle Boulevard and will house complementary services to those offered next door in the 98-bed hospital.

16

TOP LEASE TRANSACTIONS • Confidential Tenant signed a 19,509 SF lease at 2301 Eagle.

• GMS Steel signed a 3,200 SF lease at 1250 Hwy 199 East.

DEALS ON THE MARKET • 5501 Alliance Gateway Freeway – 214,434 SF Class A Office Building

• 201 N Rupert Street – 57,087 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.

• 10865 Texas Health Trail – 60,000 SF Class A office building set to deliver June 2019.

LARGE EXISTING VACANCIES • 5501 Alliance Gateway Freeway – 214,434 SF • 13650 Heritage Parkway – 164,331 SF • 13601 Heritage Parkway – 65,450 SF • 3575 Lone Star Circle – 35,993 SF

PRESTON CENTER SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

95,379

76,881

13,258

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

9.4%

11.4%

13.8%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

119,000

119,000

vs. Prev. Qtr

vs. 12 Mths Ago

-

173,583

vs. Prev. Qtr

vs. 12 Mths Ago

$37.21

$39.57

119,000 Delivered SF Quoted Rates $37.81

VITAL STATS

14.0%

200,000

150,000 12.0% 100,000

10.0%

50,000

0 8.0% (50,000)

(100,000)

6.0% 4Q 15

1Q 16

2Q 16

3Q 16

Absorption

4Q 16

1Q 17

2Q 17

3Q 17

Deliveries

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Vacancy

Source: CoStar 4Q 2018 Office Report

CURRENT EVENTS • Preston Center again saw great leasing activity in the final quarter of 2018, with a positive net absorption north of 90K SF and vacancy now south of ten percent.

The newest building in Preston Center, The Terraces at Douglas Center, saw the biggest change, signing leases with Berkadia and Republic Title. Between highly diverse multi-tenanted buildings, tremendous walkable amenities, and central location between Park Cities and Preston Hollow; Preston Center is poised to continue to be a market with the lowest vacancy and highest rent in town.

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 • Bluffview Towers East – 18,719 SF • 8115 Preston Road/East Tower – 16,492 SF • Sherry Lane Place – 15,700 SF • 8333 Douglas - 13,142 SF

TOP LEASE TRANSACTIONS • Berkadia has signed a 17.2K SF lease in The Terraces at Douglas Center

• Madden Securities has signed a 12.6K SF lease in 8333 Douglas

• Republic Title has signed a 11.6K SF in The Terraces at Douglas Center

• Walker & Dunlop has signed a 10K SF renewal & expansion in Sterling Plaza

• Frank Branson has signed an 8.7K SF lease in Highland Park Place

• Tubular Synergy has signed a 6K SF lease in Preston Commons

• Shepherd Royalty has signed a 4.6K SF lease in Sterling Plaza.

17

RICHARDSON/PLANO SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

338,715

2,542

389,641

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

20.1%

21.1%

20.6%

U/C SF 229,000 Delivered SF 26,520 Quoted Rates $24.90

vs. Prev. Qtr

vs. 12 Mths Ago

255,520

524,478

vs. Prev. Qtr

vs. 12 Mths Ago

235,938

71,111

vs. Prev. Qtr

vs. 12 Mths Ago

$24.38

$24.64

VITAL STATS

23.0%

1,000,000

22.0%

800,000

21.0%

600,000

20.0%

400,000

19.0%

200,000

18.0%

0

17.0%

(200,000) (400,000)

16.0% 4Q 15

1Q 16

2Q 16

3Q 16

Absorption

4Q 16

1Q 17

2Q 17

3Q 17

Deliveries

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Vacancy

Source: CoStar 4Q 2018 Office Report

CURRENT EVENTS • Plano’s Collin Creek Mall has a new owner with big plans.

Developer Mehrdad Moayedi, who restored downtown Dallas’ Statler hotel, plans to convert the old shopping center into a $1 billion mixed-use project. The finished product is planned to include 400K SF of retail, 15-20 restaurants and about 1MM SF of office space with hopes to attract a corporate campus. The purchase was financed by Centurion American with funding from Trez Capital.

• Richardson’s Telecom Corridor saw over 1MM SF of negative absorption three years ago when insurance giant State Farm consolidated its offices at the new CityLine Development on Bush Turnpike. This year alone, after signing almost 750K SF of new deals, the Telecom Corridor has continued to be one of the hottest markets for office space in Dallas. Notable recently signed tenants include Steward Heath, Raytheon, Genpact, Infosys, and Goldman Sachs.

• JPMorgan has begun plans to expand its current 1MM SF Plano office campus. The 49-acre, $3 billion development houses thousands of Chase workers in three buildings served by two parking garages. Chase is now waiting for Plano’s planning and zoning department to approve a second phase $300MM project, which will include a 7-story 1,900-space parking garage and space to construct additional office buildings. In total the Legacy West development is 240-acres and its tenants include Toyota, Liberty Mutual, FedEx, and Boeing.

TOP LEASE TRANSACTIONS • MetroPCS has signed a 115K SF renewal in Lakeside Centre II • Hill & Wilkinson Construction has signed a 43K SF lease in 190 Technology Park 18

• CalAmp has signed a 24.3K SF lease in 2400 N Glenville

• Intrusion Inc has signed a 22.5K SF lease in 1101 East Arapaho Road • Dee Brown Inc. has signed a 11.4K SF lease in 1600 North Collins • National Produce Consultants has signed a 3.9K SF expansion in 555 Republic Place • DCA has signed a 3.4K SF Renewal & Expansion in Woodcreek Plaza • Collaborative for Fresh Produce has signed a 2.5K SF expansion in Woodcreek Plaza • Nexmetro has signed a 2.1K SF lease in The Tower at Lakeside Campus • BP Corporation has signed a 2K SF lease in CityView • Cross Architects has signed a 1.7K SF expansion in CityView

HLC Deal

HLC Deal

HLC Deal HLC Deal

DEALS ON THE MARKET • Richardson Office Center I+II – 240,000 SF Class B Office Building.

• 3300 Renner – 185,078 SF Class B Office Building

NEW DEVELOPMENTS No developments are currently under construction currently.

However, seven have been proposed: • 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

SOUTHWESTINTELLIGENCE FORT WORTH SUBMARKET Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(67,886)

84,304

72,279

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

9.7%

8.8%

9.4%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

85,920

129,497

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

47,920 Delivered SF 38,000 Quoted Rates $23.52

vs. Prev. Qtr

vs. 12 Mths Ago

$23.71

$23.53

VITAL STATS

12.0%

250,000 200,000

11.0% 150,000 10.0%

100,000 50,000

9.0%

0 8.0% (50,000) 7.0%

(100,000) 4Q 15

1Q 16

2Q 16

3Q 16

4Q 16

1Q 17

Absorption

2Q 17

3Q 17

Deliveries

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Vacancy

Source: CoStar 4Q 2018 Office Report

CURRENT EVENTS • Previously known as the Frost Bank Building and originally as the Overton Park Bank Building, 4200 South Hulen Office Building is the new name of the landmark at the southwest corner of South Hulen and Overton Plaza. The contemporary, triangular-shaped, 122,993 square-foot building features Fort Worth’s only six-story, centralized, well-type atrium, which is capped on the roof by an opaque skylight that spreads natural light from the sixth floor to the atrium lobby. After struggling with occupancy upon the exit of Frost Bank, the owners have invested $3 million in renovating the entrances, lobby, common areas and office space on the first and second floors. “Frost Bank’s move-out last March allowed us to make some great renovations,” said Alexander. “For the new name for our building, we decided to focus on its location to make it quick and easy to find. While the building was in good shape, we decided to freshen it up to be more in tune with the times for our tenants, their employees and their clients. We appreciate our tenants’ patience during the renovation.”

• One of Fort Worth’s more successful home developments in the past 20 years is planning a new phase in Southwest Fort Worth. Originally developed by the Siratt family’s Montserrat Properties LLC and located on Team Ranch Road and Interstate 820, Montserrat has 210 lots on about 215 acres. The goal of Phase 2 is to add another 245 acres to the west of the current neighborhood, which has yet to be given a name. “We plan to have the design finalized and begin the platting and annexation process with the City of Fort Worth soon,” said Colby Siratt. At that point, they will begin pre-selling lots. They expect for homes to be priced from $750,000 and up, with the average home being priced from $1 - $2 million.

This new development will be another draw for higher earning individuals in West Fort Worth, and gives reason to believe that there could be an increase in mixed use construction in the area with the development of Walsh Ranch and Montserrat’s Phase 2.

TOP LEASE TRANSACTIONS • Elevate signed a 11,159 SF new lease at Overton Centre.

• Warthan Dermatology signed a 8,000 SF new lease at 5751 Edwards Ranch Road.

• AG&E Engineering signed a 3,694 SF new lease at Summit Office Park.

DEALS ON THE MARKET • 1212 Lancaster Avenue – 89,632 SF Class B Office • 1407 Texas Street – 26,332 SF Class B Office • Plaza on Hulen – 25,000 SF Class B Office Complex NEW DEVELOPMENTS • Near Southside Mercantile – 17,000 SF Class B office/ mixed-use building set to Deliver September 2019.

LARGE EXISTING VACANCIES • Pier One – 79,777 SF Class A Sublease Vacancy • Summit Office Park – 63,788 SF Class B Direct Vacancy • University Centre I&II – 43,699 SF Class A Direct Vacancy

• Western Place I & II – 42,000 SF Class B Direct Vacancy

• 3909 Hulen Street – 28,000 SF Class B Direct Vacancy

19

STEMMONS SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

67,016

(137,815)

50,296

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

24.7%

25.3%

24.3%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

414,000

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

Delivered SF Quoted Rates $16.97

vs. Prev. Qtr

vs. 12 Mths Ago

$16.96

$16.76

VITAL STATS 28.0%

500,000

27.5%

400,000

27.0%

300,000

26.5%

200,000

26.0% 25.5%

100,000

25.0%

0

24.5%

(100,000)

24.0%

(200,000)

23.5% 23.0%

(300,000) 4Q 15

1Q 16

2Q 16

3Q 16

Absorption

4Q 16

1Q 17

2Q 17

3Q 17

Deliveries

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Vacancy

Source: CoStar 4Q 2018 Office Report

CURRENT EVENTS • One of Dallas’ most unique-looking buildings is soon to be demolished. The former Salvation Army headquarters at the corner of the Medical District on Harry Hines has a new owner, The Freeman Co. Built in 1963 for the former Great National Life Insurance Co, the aluminum wrapped building is set to be torn down by years end. The Freeman Co has plans to build a brand new “architecturally significant building” on the lot as said by David Gauthreaux in an interview with the Dallas Morning News.

• Looking back at the year of 2018, the biggest sale stays with Equinix’s purchase of the Infomart. The $800MM transaction is not only the biggest of the year but one of the biggest ever in North Texas. The 1980’s 1.6MM SF office building was architecturally inspired by London’s famed Crystal Palace.

• The old 89,000 SF Feizy Office Center building will soon become a 147-room Hilton hotel. The owner, Magnolia Hospitality group, has just broke ground on the site in Dallas’ Design District. The repurposed development is slated for a 2020 completion.

TOP LEASE TRANSACTIONS • Planet Granite has signed a 40K SF lease in 141 Glass Street

• Jaime Barron has signed a 12.7K SF lease in Brookhollow Place

• Tiverix has signed a 4.8K SF lease in Ricchi Towers • Drive Casa has signed a 4.1K SF lease in 7929 Brookriver Drive

20

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

NEW DEVELOPMENTS No new developments are currently under construction at this time, however, three have been proposed: • 2345 Mockingbird Lane/West Love – 200,000 SF • 141 Glass Street – 65,000 SF • The Design District Tower – 243,100 SF

LARGE EXISTING VACANCIES • Pegasus Place - The Tower – 518,656 SF • 1430 & 1440 Empire Central Drive – 320,000 SF • The Connection at 8600 – 200,000 SF • Comerica Service Center – 142,600 SF • 7800 Ricchi Tower – 104,357 SF • Ricchi Towers/South – 90,626 SF • Infomart Freeway – 65,888 SF

SUBMARKETUPTOWN INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

153,447

78,240

191,700

Vacancy

vs. Prev. Qtr

VITAL STATS 20.0%

800,000

18.0%

700,000

vs. 12 Mths Ago

16.0%

600,000

14.0%

17.2%

15.7%

12.5%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

265,860

686,548

1,310,848

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

420,688

130,000

-

2.0%

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

0.0%

$39.30

$39.37

$38.52

500,000 400,000

12.0%

300,000

10.0%

200,000

8.0%

100,000

6.0%

0

4.0%

(100,000) (200,000) (300,000) 4Q 15

1Q 16

2Q 16

3Q 16

Absorption

4Q 16

1Q 17

2Q 17

3Q 17

Deliveries

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Vacancy

Source: CoStar 4Q 2018 Office Report

CURRENT EVENTS • Uptown Dallas is getting a new trophy office tower.

Kaizen Development Partners is building The Link at Uptown, a 300K SF office tower at the intersection of Olive and Akard streets. The Link, designed by BOKA Powell, will have two restaurants, a pop-up lunch concept, an outdoor terrace, fitness center, conference center, and golf simulators. Construction is planned to begin as soon as the site is cleared with an expected delivery for fall 2021.

• Uptown Dallas’ newest project has begun opening its doors. The first office tenants are now moved into The Union on Field Street. The building, which is now more than 60% leased, was a four year $300MM project to complete. The Union project includes 2 towers, one office building and one high-rise residential tower with retail anchored by Tom Thumb. Office tenants including Weaver, Streetlights Residential, and HBK have already relocated into the 400K SF office building. Among the moves is Transwestern, who plans on relocating its regional offices from Providence Towers. They will be leasing 21K SF in the new Union project.

• Uptown’s new Central Market plans include far more than just a grocery store. The super-market will be part of a high-rise development planned for the block at McKinney and Lemmon avenue and will include offices, shops, and restaurants. Central Market will occupy the lower levels of the 19-story mixed use project developer KDC has planned. Current plans show a 450K SF office tower and a 2-acre public plaza on the roof of the Central Market that will have access to the office tower and additional retail.

TOP LEASE TRANSACTIONS • Stevens has signed an 8.7K SF lease in The Crescent • Aldous Walker has signed an 8.1K SF lease in 4311 Oak Lawn

• IBC Bank has signed a 7K SF expansion in 3800 Maple • PMG has signed a 4.8K SF lease in The Centrum • Annandale Capital has signed a 4.2K SF lease in 2626 Cole

• Monster Moto has signed a 3.8K SF lease in The Centrum • 3DPT has signed a 3.6K SF lease in 3500 Oak Lawn • Lincoln has signed a 3.2K SF lease in Miyama Parkside

HLC Deal

NEW DEVELOPMENTS Under Construction • 2850 N Harwood Street, No. 10 – 231,098 SF office building with Harwood International Proposed • Victory Center – 455,526 SF office building with Hines • 2601 Victory Avenue – 347,892 SF office building with Hillwood • 3001 Turtle Creek Boulevard – 326,682 SF office building with Hillwood • The Link – 300,000 SF office building with Kaizen • 2727 Turtle Creek – 260,072 SF office building with Prescott

LARGE EXISTING VACANCIES • PwC Tower/2121 Pearl Street – 214,616 SF • 2501 Cedar Springs Road – 109,404 SF • 2101 Cedar Springs/Rosewood Court – 84,362 SF • 2100 McKinney/2100 McKinney Avenue – 68,047 • One McKinney Plaza/3232 McKinney Avenue – 61,533 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