1Q 2020 DFW Industrial Market Brief

Market Brief...

Dallas/Fort Worth

INDUSTRIAL

1Q2020 Property Pictured Above: Carter Distribution Center

TABLE OF CONTENTS 1. DALLAS/FORT WORTH INDUSTRIAL SUBMARKETS & EXPERTS

1 2 3

2. OVERALL DALLAS/FORT WORTH INDUSTRIAL MARKET

A. Industrial Trends & Transactions

B. Facts and Figures

2. SUBMARKET INTELLIGENCE

A. Great Southwest/Arlington

B. C. D. E. F. G. H.

DFW Airport Northeast & East Dallas Northwest Dallas South Dallas South Stemmons North Fort Worth South Fort Worth

3

4

HLC SUBMARKET COVERAGE

DFW

HLC DFW INDUSTRIAL MARKET EXPERTS

JIM BRICE

MATT CARTHEY

CANON SHOULTS

JOHN GORMAN

JOSH BARNES

ANDREW GILBERT

BEN WALLACE

GEORGE JENNINGS

Partner - Texas Leasing jbrice@holtlunsford.com 972.280.8306

Partner - Managing Principal mcarthey@holtlunsford.com 817.710.1111

Managing Principal cshoults@holtlunsford.com 972.280.8328

Senior Vice President jgorman@holtlunsford.com 214.920.9800

Senior Vice President jbarnes@holtlunsford.com 972.280.8353

Market Director agilbert@holtlunsford.com 972.280.8312

Market Director bwallace@holtlunsford.com 972.421.1966

Market Director gjennings@holtlunsford.com 817.632.6151

THOMAS GRAFTON

KEATON DUHON

MADDY CANTY

HOGAN HARRISON

HARRISON PUTT

BO PUCKETT

BLAKE TROIANI

Market Associate tgrafton@holtlunsford.com 817.632.6152

Market Associate kduhon@holtlunsford.com 817.284.5555

Market Associate mcanty@holtlunsford.com 972.280.8325

Market Associate hharrison@holtlunsford.com 817.710.7058

Market Associate hputt@holtlunsford.com 972.265.0124

Market Analyst bpuckett@holtlunsford.com 972.265.0123

Market Analyst btroiani@holtlunsford.com 972.265.0126

5

HLC DFW

HLC OUTLOOK Absorption

vs. Prev. Qtr

8,070,622

7,403,959

5,575,590

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

6.5%

6.7%

6.5%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

11,748,853

17,368,045

15,694,890

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

34,134,784

32,156,972

35,010,543

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

7,019,419

10,456,093

INDUSTRIAL TRENDS & TRANSACTIONS

vs. 12 Mths Ago

7,321,762

While the full effects of COVID-19 remain to be seen, the Dallas-Fort Worth industrial market ended 1Q 2020 with a record-setting start thanks to the great momentum that continued from late 2019. At 1Q 2020, CoStar reported net positive absorption of nearly 8.1M SF which set a new high watermark for quarterly absorption. Overall, Dallas-Fort Worth industrial construction ended the quarter with 7M SF of new product delivered and 34.1M SF currently under construction. Subsequently, the overall market vacancy has remained stable at a healthy 6.5% +/- since 1Q 2016.

While construction numbers appear to be significantly higher when compared to previous years, it is worth noting that several of the projects are either pre-leased or build-to-suit.

COVID-19 will likely cause short-term uncertainty in the Dallas-Fort Worth industrial market as landlords and tenants continue to navigate the changing business climate. While overall tenant demand and deal flow has slowed, we have seen certain sectors continue to perform well as most industrial tenants are considered “essential business”. Furthermore, we believe that the overall industrial market will weather the storm better than other asset classes as many of the large 3PL and e-commerce tenants are hiring as opposed to laying off employees.

TRENDS DUE TO COVID-19

While rent relief requests are present, they are not prevalent.

In some cases, landlords are offering increased concessions to secure deals.

We have seen an increase in tenant requests for short term deals and some landlords are increasing willing.

While capital markets are proceeding with caution, developers are still scouting new land positions.

For the time being, cities are not issuing construction permits for make ready projects and are only allowing essential construction for TI jobs related to incoming tenants.

TRENDS Need For Speed • More spec offices Desire For Flexibility • Requested expansion options and/or phased in occupancy Drive To Increase Efficiency • Increase parking requirements • Increased demand for high-quality second generation options vs rising rates for new construction Increased Attention On Workforce • Where are they coming from?

• Better work environment (Ex. HVAC Warehouse) Foreign Companies Look To Avoid Tariffs TI Requests And Costs Continue To Increase Pre-Leasing - 8.8M SF is pre-leased or build-to-suit projects

6

TOP LEASE TRANSACTIONS

• Geodis has signed a 618,875 SF lease in 3700 Pinnacle Point Drive with Cohen.

• Eatery Essentials has signed a 399,971 SF lease in 2425 W Danieldale Road with AEW. • Tosca Services has signed a 152K SF lease in 4009 Distribution Drive with Barings.

• Mondelez has signed a 149,802 SF lease in 16200 Three Wide Drive with IDI. • Bell Textron has signed a 138,821 SF lease in 5401 Sandshell Drive with KKR. • Jinny Beauty Supply Co. has signed a 124,043 SF lease in 2527 Willowbrook Road with Ace Manor Property Management.

• Synnex Corporation has signed a 117,206 SF lease in 1601 S Shiloh with TA Realty.

• Mygrant Glass Company has signed a 93,079 SF lease in 2940 Telecom Parkway with Jackson Shaw.

• GSM Outdoors has signed a 93,076 SF lease in 5111 Frye Road with Link Industrial.

• Cooper Lighting has signed a 70,200 SF lease in 9500 N Royal Lane with Prologis.

• Wirepath Home Systems has signed a 72,153 SF lease in 2901 Trade Center Drive with Prologis.

• Siemens has signed a 67,200 SF lease in 8600 N Royal Lane with Sovereign Investments.

HLC Deal

HLC Deal

HLC Deal

HLC Deal

HLC DFW FACTS & FIGURES

Market

Existing Inventory

Vacancy

Total RBA

Direct SF

Total SF

Vac. %

DFW Airport

634

80,228,065

5,317,243

5,685,967

7.1%

East Dallas

609

47,007,516

3,209,940

3,265,308

6.9%

Great SW/Arlington

1,117

115,828,625

6,261,086

6,445,188

5.6%

Henderson County

18

1,205,432

29,968

29,968

2.5%

North Fort Worth

710

103,503,367

8,023,341

8,555,516

8.3%

Northeast Dallas

1,513

111,871,775

7,214,693

8,300,902

7.4%

Northwest Dallas

1,360

111,077,532

5,447,131

6,033,336

5.4%

24

2,185,084

72,221

72,221

3.3%

South Dallas

14,000,000

7.0%

12,000,000

6.0%

10,000,000

5.0% 8,000,000 4.0% 6,000,000 3.0%

# Bldgs.

NW Dallas Outlying

OVERALL DFW

8.0%

696

104,054,452

8,633,849

8,708,660

8..4%

South Fort Worth

1,423

79,676,939

3,408,575

3,467,075

4.4%

South Stemmons

2,075

112,734,121

5,583,812

5,799,985

5.1%

Totals

10,179

869,372,908

53,201,859

56,364,126

6.5%

4,000,000

2.0%

2,000,000

1.0% 0.0%

0 1Q 17

2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

Absorption

4Q 18

1Q 19

2Q 19

3Q 19

Deliveries

4Q 19

1Q 20

Vacancy

VACANCY - OVERALL DFW

10.0% 9.0% 8.0%

7.0%

6.5%

6.7% 6.1%

7.0% 6.0% 5.0% 4.0% 3.0% 2.0%

0.4%

0.3%

1.0% 0.0%

1Q 17

2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

Direct

4Q 18

1Q 19

2Q 19

3Q 19

Sublet

4Q 19

1Q 20

Total

ABSORPTION - OVERALL DFW 22,500,000 20,000,000

YTD Net Absorption

YTD Deliveries

Under Construction SF

YTD Leasing Activity

DFW Airport

188,439

240,471

6,434,577

2,484,987

East Dallas

309,051

0

2,091,300

420,357

1,868,580

2,068,225

977,680

1,341,090

Henderson County

(581)

0

0

0

North Fort Worth

1,552,209

2,530,697

11,330,794

2,632,416

Northeast Dallas

361,521

237,000

3,473,427

953,507

Northwest Dallas

(157,145)

307,938

2,529,574

1,740,728

NW Dallas Outlying

(3,500)

0

86,000

2,664

3,262,561

1,635,088

1,584,737

878,974

610,376

0

2,546,403

477,246

Market

17,500,000 15,000,000 12,500,000 10,000,000 7,500,000 5,000,000

Great SW/Arlington

2,500,000 0 1Q 17

2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Total Net

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Leasing Activity

CONSTRUCTION - OVERALL DFW 40,000,000 35,000,000

South Dallas South Fort Worth South Stemmons Totals

79,111

0

3,080,292

816,884

8,070,622

7,019,419

34,134,784

11,748,853

30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 1Q 17

2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

Delivered Inventory

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Under Construction

7 Source: CoStar 1Q 2020 Industrial Report

SUBMARKET INTELLIGENCE GREAT SOUTHWEST/ARLINGTON

HLC OUTLOOK

14+ YEARS CRE EXPERIENCE

While the effects of COVID-19 remain to be seen, the Great Southwest (GSW) industrial submarket entered 2020 with a strong start. GSW experienced positive absorption of 1,868,580 SF with 1.3M SF of leasing activity through 1Q 2020.

GSW reported 1Q new construction completions of 2.1M SF (89% pre-leased with Home Depot accounting for 1.5M SF) and an additional 978K SF of product currently under construction (this signifies a slow down in the development of new product in GSW). The 1Q 2020 GSW vacancy rate remained stable at 5.6% versus 5.5% at YE 2019. As we continue 2020, we expect short-term uncertainty as the country continues to navigate the business climate due to COVID-19.

CANON SHOULTS

Managing Principal cshoults@holtlunsford.com 972.280.8328

TOP LEASE TRANSACTIONS Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

1,868,580

1,553,817

2,337,886

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

5.6%

5.5%

4.4%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

1,341,090

2,516,247

1,992,746

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

977,680

3,045,905

4,971,819

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,068,225

755,825

1,824,411

DEALS IN THE MARKET

VITAL STATS

10.0%

4,100,000

9.0% 8.0%

3,100,000

7.0% 6.0%

2,100,000

5.0% 4.0%

1,100,000

3.0% 2.0%

100,000

1.0% 0.0%

(900,000) 1Q 17

2Q 17

3Q 17

Absorption

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Deliveries

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Vacancy

Source: CoStar 1Q 2020 Industrial Report

8

• Amazon has signed a 322,524 SF lease in 1102 State Highway 161 with Nuveen.

• GSM Outdoors has signed a 93,076 SF lease in 5111 Frye Road with Link Industrial.

• DriveTime has signed a 84K SF lease in 15001 Trinity Boulevard with Hollingsworth Companies.

• eTak Worldwide has signed a 76,263 SF lease in 1010 E Avenue J. • Structural Technologies renewed a 72K SF lease in 15600 Trinity Boulevard with Stockbridge.

•

• Stonelake Urban Logistics Portfolio – Stonelake is selling a 3.1M SF two (2) building portfolio • Oakdale Logistics Center – PLR is selling a 400K SF shell building

NEW DEVELOPMENTS • 1113 W Oakdale Road – a 576,123 SF spec development with Crow Holdings Industrial • Oakdale Logistics Center | 949 W Oakdale Road – a 401,557 SF spec development with PLR

LARGE EXISTING VACANCIES • • • •

Cooper I-20 Building C | 1131 W Bardin Road – 401K SF 14900 Trinity Boulevard – 310K SF 3254 W Trinity Boulevard – 305K SF Parkway Logistics Center | 2911 S Great Southwest Parkway – 271K SF • Empire Distribution Center | 4125 - 4332 Empire Road – 251,599 SF

SUBMARKET INTELLIGENCE DFW AIRPORT

HLC OUTLOOK

8+ YEARS

The Dallas-Fort Worth (DFW) Airport industrial submarket vacancy rate is 7.1% at the end of 1Q 2020 with year-to-date absorption totaling 188,439 SF. DFW International Airport is ranked as one of the largest cargo airports in the country. It boasts a high proportion of newer buildings since 2000 and, as a result, the submarket has a high concentration of efficient product with clear heights and dock configurations suitable for modern distribution. The submarket consists of large big-box users including Amazon, Uline, PPG, Bed Bath & Beyond, and Fresenius Medical.

CRE EXPERIENCE ANDREW GILBERT

Market Director agilbert@holtlunsford.com 972.280.8312

Absorption

vs. Prev. Qtr

Rental rates have remained strong ranging from $4.50 to $8.50 for bulk distribution and shallow bay product. Rental abatements range from two to four months depending on renewal, versus new deals and the size of the lease transaction. Tenant improvement costs remain high because of increasing tenant demands and construction costs.

vs. 12 Mths Ago

188,439

231,709

304,988

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

7.1%

7.0%

7.9%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

2,484,987

1,997,448

2,315,527

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

6,434,577

5,479,910

4,687,940

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

240,471

-

879,065

VITAL STATS

9.0% 8.0%

1,800,000

7.0% 6.0%

1,300,000

5.0%

800,000

4.0%

300,000

3.0% (200,000) 2.0% (700,000)

1.0% 0.0%

(1,200,000) 2Q 17

3Q 17

Absorption

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Deliveries

1Q 19

TOP LEASE TRANSACTIONS • Amazon has signed a 1M SF lease in 2601 S Airfield Drive with CLX Ventures.

• Furniture Corporation of America has signed a 100,398 SF lease in 2601 W Airport Freeway with Bandera Ventures.

• Cooper Lighting has signed a 70,200 SF renewal in 9500 N Royal Lane with Prologis.

• Siemens has signed a 67,200 SF extension in 8600 N Royal Lane with Sovereign Investments.

building project with Clarion set for completion in 2Q 2020 • Majestic Airport Center DFW – a 285,150 SF project with Majestic

LARGE EXISTING VACANCIES • • • • •

2700 Market Street – 374,812 SF 2600 Market Street – 267,254 SF 180 N Freeport Pkwy – 142,080 SF 4051 N State Highway 121 – 120K SF 4255 Patriot Drive – 100K SF

NEW DEVELOPMENTS 2,300,000

1Q 17

The DFW Airport submarket continues to be one of the top three markets for institutional owners to buy or develop in the metroplex. With fee-simple land built out, most of the development currently taking place is on 40-year ground lease land owned

by DFW Airport. The developers have banded together and hired Ernst & Young to assist them in obtaining the Triple Freeport Tax Exemption for all buildings south of the airport located in Passport Park. The goal is to have the exemption in place by the end of 2020 which will dramatically increase the deal flow for bulk product in the southern portion of the submarket.

2Q 19

3Q 19

4Q 19

1Q 20

Vacancy

• Passport Park – a 2M SF four (4) building project with Trammell Crow set for completion in 2Q 2020 • Passport Logistics Center – a 1.2M SF three (3) building project with Dalfen Industrial • Mustang Park – a 1M SF three (3) building development with Prologis • 2900 Genesis Way – a 404K SF build-to-suit development for The Trade Group with 85K SF available to be leased • DFW Airfield Logistics Center – a 355K SF two (2)

Source: CoStar 1Q 2020 Industrial Report

9

SUBMARKET INTELLIGENCE NORTHEAST & EAST DALLAS

HLC OUTLOOK

12+ YEARS

Although COVID-19 has had its effect, Northeast and East Dallas are off to a great start, reporting positive absorption in 1Q 2020. The best performing sector was East Dallas/Mesquite Industrial and the worst performing was Richardson Flex. However, Richardson Industrial was among the best performing sectors as evidenced by the leasing activity outlined below. Leasing activity submarket-wide has remained relatively strong and we continue to see leases signed. The recent effects of COVID-19 have taken a larger toll on locally owned “mom and pop” operations while the activity for larger corporations has remained steady. With most of the businesses in these micro markets being categorized as “essential” and showings still taking place we don’t expect to see a dramatic spike in vacancy.

CRE EXPERIENCE JOSH BARNES

Principal jbarnes@holtlunsford.com 972.280.8353

TOP LEASE TRANSACTIONS • Tosca Services has signed a 152K SF renewal in 4009 Distribution Drive with Barings.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(301,863)

(761,083)

436,062

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

7.6%

6.7%

5.7%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

in 1601 S Shiloh with TA Realty.

2,160,702

1,472,802

vs. Prev. Qtr

vs. 12 Mths Ago

• Dobinsky DBA Section Stack has signed a 31,458 SF

HLC Deal

lease with Jackson Shaw.

3,832,124

4,670,594

5,048,180

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

DEALS IN THE MARKET • 4040 Forest Lane – Fort Capital is selling a

901,318

VITAL STATS

8.0%

• GenMega has signed a 50,452 SF lease in 11011 Regency Crest Drive with Link Industrial.

2,354,363

485,546

• Mygrant Glass Company has signed a 93,079 SF

HLC Deal

lease in 2940 Telecom Parkway with Jackson Shaw.

U/C SF

1,102,062

• Synnex Corporation has signed a 117,206 SF lease

HLC Deal

2,050,000 1,800,000

7.0%

1,550,000 6.0%

1,300,000

5.0%

1,050,000

4.0%

649,361 SF building and is currently under contract with Xebec Realty. This warehouse is currently occupied primarily by At Home.

• Shutterfly BTS – Core 5 is selling a 237K SF buildto-suit building

800,000 550,000

3.0%

300,000 2.0% 50,000 1.0%

(200,000)

0.0%

(450,000) 1Q 17

2Q 17

3Q 17

Absorption

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Deliveries

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Vacancy

Source: CoStar 1Q 2020 Industrial Report

10

NEW DEVELOPMENTS • Urban District 30 – a 980,700 SF five (5) building spec project with Urban Logistics Realty • East Dallas Logistics Center – a 545,547 SF two (2) building spec project with Dalfen • CORE5 Logistics at McKinney | Phase 1 – a 431,234 SF two (2) building spec project with Core5 Industrial Partners • McKinney Trade Center – a 367,455 SF three (3) building spec project with ML Realty Partners

• Marquis Distribution Center – a 355,071 SF two (2) building spec project with Huntington/Link Industrial • 5351 Samuell Boulevard – a 198,109 SF two (2) building spec project with Conor Commercial • 2900 E Plano Parkway – a 176,854 SF two (2) building spec project with Provident • Star Commerce Center II – a 141K SF rear-load spec development with Blue Star Land • Cowboys Merchandising Distribution Center - a 407,918 SF build-to-suit with Blue Star Land • Shiloh Business Center – a 131,960 SF cross-dock spec development with TA Realty

LARGE EXISTING VACANCIES • 3000 Skyline Drive – 753K SF • 4624 Clover Haven Street – 584,089 • 5151 Samuell Boulevard – 442,035 SF • 3605 East Plano Road – 200,640 SF • 915 Enterprise Boulevard – 195,743 SF

SUBMARKET INTELLIGENCE NORTHWEST DALLAS

HLC OUTLOOK

8+ YEARS

CRE EXPERIENCE

Through 1Q 2020, the Northwest Dallas industrial submarket continued to be one of the strongest submarkets in the Dallas-Fort Worth metroplex. The submarket posted a 5.4% vacancy rate at the end of 1Q which is up from the 4.7% rate at year-end 2019.

The last few smaller land sites are tied up as Billingsley, Panattoni, and Longpoint all have either broken ground or plan to break ground this year. All three of the new developments will range from 159K to 178K SF. The size that generates the most demand in Northwest Dallas is between 25K and 100K SF. The three aforementioned developments can be demised to accommodate this ideal range. Eastgroup and First Industrial are currently under construction on the next phase of their developments in Lewisville on Highway 121.

ANDREW GILBERT

Market Director agilbert@holtlunsford.com 972.280.8312

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(157,145)

574,862

140,755

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

5.4%

5.0%

4.7%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

1,740,728

2,192,699

2,545,745

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,529,574

1,456,814

3,279,075

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

307,938

1,235,450

344,945

1270 Champion Circle with ML Realty Partners.

• Wirepath Home Systems has signed a 72,153 SF

HLC Deal

lease in 2901 Trade Center Drive with Prologis.

• Acme Brick Company has signed a 58,296 SF lease in 2244 Luna Road with Billingsley.

• Hanaro OneWay has signed a 55,542 SF lease in 2840 Commodore Drive with Morgan Stanley.

DEALS IN THE MARKET • Stonelake Urban Logistics Portfolio – Stonelake is

VITAL STATS

6.0%

TOP TRANSACTIONS • United Laboratories signed a 131,840 SF renewal in

2,000,000 1,750,000

5.0% 1,500,000 4.0%

1,250,000 1,000,000

3.0% 750,000 2.0%

500,000

selling a 3M SF portfolio across Dallas, Houston and San Antonio with five (5) buildings, a total of 600K SF, in the submarket • DFW Shallay Bay Industrial Portfolio – Fort Capital is selling a 609,639 SF eight (8) building portfolio with 155K SF located in the submarket.

NEW DEVELOPMENTS • Denton Crossing @ I-35 – a 1.2M SF four (4) building project with Ironwood Realty Partners

• First Park 121 – a 1.1M SF five (5) building project with First Industrial

• Point 35/190 – a 178,500 SF development with Longpoint set to break ground in 1Q 2020

• Mercer Business Park – a 175K SF development with Billingsley set for completion in July 2020

• Valley View Crossing – a 159,405 SF development with Panattoni set for completion in 2Q 2020

LARGE EXISTING VACANCIES • 350 Lakeside Parkway – 274,994 SF • 1910 N Josey Lane – 259,900 SF • 2150 Midway Road – 219,808 SF • 2040 McKenzie Drive – 129,611 SF • 1625 Hutton Drive – 118,195 SF

250,000 1.0% 0 0.0%

(250,000) 1Q 17

2Q 17

3Q 17

Absorption

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Deliveries

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Vacancy

Source: CoStar 1Q 2020 Industrial Report

11

SUBMARKET INTELLIGENCE SOUTH DALLAS

HLC OUTLOOK

30+ YEARS

The South Dallas industrial submarket as surveyed is 128M SF and is 8.1% vacant which is 1.5% lower than reported in 4Q 2019. In accordance with the area surveyed, CoStar is reporting 3.5M SF of net absorption for South Dallas in 1Q 2020. South Dallas has 1.9M SF under construction in the I-30, I-20, & I-45 corridors combined. Of that construction, 48% or 923K SF of the new construction is for build-to-suit or design build assignments. The remaining 52% or 1M SF under construction is speculative development. The southern corridors along I-20, I-30, and I-45 continue to produce new opportunities for development. Fortunately, the previous halt of construction by capital sources along I-20 and I-45 assisted the South Dallas submarket these past six months to join the remaining Dallas submarkets with single digit vacancy of 8.1%.

CRE EXPERIENCE JOHN GORMAN

Senior Vice President jgorman@holtlunsford.com 214.920.9800

Please note: The area CoStar uses for the South Dallas Submarket differs slightly from the Submarket John covers. Numbers may vary.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

3,262,561

2,151,721

99,654

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

8.4%

10.1%

13.2%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

878,974

1,779,361

2,307,873

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,584,737

2,419,088

4,700,513

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,635,088

1,660,050

0

TOP LEASE TRANSACTIONS • Solar Turbine has signed a 90K SF lease in 2050 Kestrel Avenue with Exeter.

• Eatery Essentialshas signed a 399,971 SF lease in 2425 W Danieldale Road with AEW. • Eaton Corp. has signed a 358,238 SF lease in 9890 Bonnie View Road with NFI.

HLC Deal

DEALS IN THE MARKET • Turnpike Distribution Center – Stonelake is selling a 1,272,837 SF portfolio

• Wintergreen Distribution Center | 1200 W

VITAL STATS 14.0%

3,600,000

12.0%

3,100,000

10.0%

2,600,000 2,100,000

8.0%

1,600,000 6.0% 1,100,000 4.0%

600,000

2.0%

100,000

0.0%

(400,000) 1Q 17

2Q 17

3Q 17

Absorption

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Deliveries

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Vacancy Source: CoStar 1Q 2020 Industrial Report

12

Wintergreen Road – Core 5 Industrial is selling a 754,897 SF building • Intermodal Business Center | 1704 S Interstate 45 – Bradford Companies is selling a 120,960 SF building

NEW DEVELOPMENTS • 1011 MacArthur Boulevard – a 391,470 SF spec development with Trammell Crow Company

• 9186, 9190 & 9280 Van Horn Drive – a 616,043 SF three (3) building project with Trammell Crow Company • 1101 E Pleasant Run – a 450K SF development with Ace Hardware Company

LARGE EXISTING VACANCIES • 3535 N Houston School Road – a 900,043 SF vacancy with Liberty Property Trust • 3300 Cedardale Road | Building 1 – a 776,630 SF vacancy with Morgan Stanley • SouthPointe 20/35 | Building 2 – a 660,312 SF vacancy with Barings • I-35 Logistics Crossing at 2801 N. Houston School Road – 610,086 SF with Crow Holdings • Southwest Distribution Center | 5450 Kiest Boulevard – a 500K SF vacancy

SUBMARKET INTELLIGENCE SOUTH STEMMONS

HLC OUTLOOK

14+ YEARS

At the end of 1Q 2020, HLC’s South Stemmons industrial submarket posted a 3.91% vacancy rate and continues to be one of the strongest performing submarkets in Dallas. Leasing activity is strong throughout the submarket for tenants between 10K and 50K SF. This is due to these tenants relocating to Brookhollow from the Design District and more tenants taking advantage of the infill nature of the submarket. Absorption for 1Q 2020 totaled a negative 36K SF. This is because demand is not as strong for over 50K SF in the Brookhollow submarket as it is for the smaller spaces. Since 2013, rental rates in the submarket have increased 40% for space under 50K SF and, in some cases, renewals have increased more than 50%. Regarding the smaller spaces, renewals have increased up to 100% in some cases. The massive demand for the 10K and 20K SF users in this market is steadily increasing as the need for accessibility and convenience increases. This is a key statistic as this size encompasses the majority of spaces in the submarket.

CRE EXPERIENCE

CANON SHOULTS

Managing Principal cshoults@holtlunsford.com 972.280.8328

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

79,111

1,943,790

(434,878)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

5.1%

4.9%

4.7%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

816,884

3,373,126

1,384,051

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

3,080,292

2,688,822

5,015,954

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

2,378,394

-

VITAL STATS

8.0%

2,850,000

7.0% 2,350,000 6.0% 1,850,000 5.0% 1,350,000

4.0%

850,000

3.0%

350,000

2.0%

(150,000)

1.0% 0.0%

(650,000) 1Q 17

2Q 17

3Q 17

Absorption

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Deliveries

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Vacancy

Source: CoStar 1Q 2020 Industrial Report

TOP TRANSACTIONS • Jenny Beauty Supply Co. has signed a 124,043 SF lease in 2527 Willowbrook Road with Ace Manor Property Management.

• Carcon Industries has purchased a 30,030 SF building at 535 Regal Row. • Stonelake has purchased a 22,402 SF building at 9224 King Arthur Drive.

• Oro Verde has signed a 19,791 SF lease in 5145 Norwood Road with Stonelake.

HLC Deal

HLC Deal

NEW DEVELOPMENTS • Core 35 Logistics Center – a 388,822 SF two (2) building project with Crow Holdings set for completion in 1Q 2020

LARGE EXISTING VACANCIES • 8801 Ambassador Row – 183,443 SF • 9203 Chancellor Row – 95,549 SF • 7600 Ambassador Row – 66,915 SF • 10155 E Technology Row – 62K SF

DEALS IN THE MARKET • 4900 Singleton Boulevard – a 30.64 acre tract of land with Koch-Glitsch under contract with Bandera • DFW Shallow Bay Portfolio – Fort Capital is selling a more than 600K SF portfolio with two (2) buildings in the submarket totaling over 120K SF • Central Transportation Portfolio – a 217,652 SF two (2) building portfolio with Denley currently under contract with CanTex Capital • 1330 Regal Row – a 250,770 SF building • 415 Regal Row – a 44K SF building 13

SUBMARKET INTELLIGENCE NORTH FORT WORTH

HLC OUTLOOK

8+ YEARS

Over 1Q 2020, North Fort Worth saw the vacancy rate continue to gradually increase to 8.3% from a 2019 fiscal yearend rate of 7.1% which was propelled by the delivery of an additional 2.5M SF to the submarket. Pushing vacancy rate aside, the real indicator of the market’s sustained viability can be found in the year’s 1Q leasing activity which remained strong with more than 2.6M SF of transactions, surpassing all other submarkets in the DFW area during that time. Another positive sign lies within the 1.5M SF of net absorption which came primarily from the lease up of larger, speculative blocks of vacancy that had recently come online. Expect these trends of strong leasing activity, with absorption chasing deliveries, to continue throughout the next couple of quarters as North Fort Worth still has an active 11M SF currently under construction with delivery dates staggered through the year.

CRE EXPERIENCE GEORGE JENNINGS Market Director gjennings@holtlunsford.com 817.632.6151

TOP LEASE TRANSACTIONS Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

1,552,209

1,447,846

1,461,551

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

8.3%

7.5%

8.2%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

2,632,416

712,318

2,197,766

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

12,229,765

7,845,317

vs. Prev. Qtr

vs. 12 Mths Ago

3,329,812

1,958,145

VITAL STATS

10.0%

3,850,000 3,350,000

8.0%

2,850,000 2,350,000

6.0%

1,850,000 4.0%

1,350,000 850,000

2.0% 350,000 0.0%

(150,000) 1Q 17

2Q 17

3Q 17

Absorption

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Deliveries

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Vacancy Source: CoStar 1Q 2020 Industrial Report

14

• AmerCare Royal has signed a 390K SF lease in Speedway Logistics Crossing with Scannell.

• Wesco Aircraft has signed a 349,425 SF lease in 4250 Dale Earnhardt Way with Clarion.

DEALS IN THE MARKET

11,330,794 Delivered SF 2,530,697

• National Distribution Centers has signed a 472,500 SF lease in 4798 Henrietta Creek Drive with J.P. Morgan.

• DFW Shallow Bay Industrial Portfolio – Fort Capital is selling a 609,639 SF eight (8) building portfolio • 5501 Alliance Gateway – St. Croix Capital is selling a 215K SF building

NEW DEVELOPMENTS • Northlink A, B & C – a 1,685,781 SF three (3) building project with Hines • Speedway Logistics Crossing – a 1,594,020 SF three (3) building project with Scannell • Westport 11 – a 1,200,536 SF development with Hillwood • Northwest Commerce Park – a 1,051,240 SF three (3) building project with Stream • Mark IV Commerce Park – a 1,025,500 SF three (3) building project with Crow Industrial • Intermodal Logistics Crossing – a 1,007,000 SF development with NorthPoint Development • Loop 820 & Anderson Boulevard – a 951,316 SF four (4) building development with Carefree Partners

• Westport Logistics Park – a 882,565 SF two (2) building project with CT Realty • Alliance Center North 7 – a 810,908 SF development with Hillwood • Alliance Center North 3 – a 810,908 SF development with Hillwood • 1101 Interstate 35 W – a 707,940 SF development with TCRG Properties • SWC I-35W & Golden Triangle – a 644,989 SF four (4) building project with M2G Ventures • Alliance Northport 2 – a 460,248 SF development with Hillwood • Stanley Black & Decker – a 425K SF development • Southlake/Grapevine project – a 327,219 SF four (4) building project with Frontier Equity

LARGE EXISTING VACANCIES • • • • • • • •

15245 Heritage Parkway – 1,089,642 SF 1511 NE Loop 820 – 1,023,488 SF 2 Haslet County Road – 1,007,000 SF 4901 Henrietta Creek Road – 860,100 SF 401 Westport Parkway – 677,429 SF 2112 Eagle Parkway – 407,800 SF 5650 Alliance Gateway Freeway – 303,458 SF 400 E Industrial Avenue – 299,810 SF

SUBMARKET INTELLIGENCE SOUTH FORT WORTH

HLC OUTLOOK The South Fort Worth industrial submarket posted a 1Q 2020 vacancy of 4.4%, a figure down from 5.5% in 4Q 2019, which is the lowest 1Q vacancy rate out of all major industrial DFW submarkets. This decrease in vacancy is due to no new deliveries yet in 2020 coupled with the fact that the submarket had a large portion of its new construction leased. Spec developments owned

by Cabot, Majestic, and Hunt Southwest are all 100% leased. Everman Trade Center, a 457K SF four (4) building project, is 56% leased with leases out that will push the project to 60% leased.

18+ YEARS CRE EXPERIENCE MATT CARTHEY

Partner mcarthey@holtlunsford.com 817.710.1111

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

610,376

(232,148)

194,027

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

4.4%

5.2%

3.9%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

477,246

1,535,344

827,028

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

HLC Deal

Southwest Drive with Hickman Companies.

• RW Solutions has signed a 21,404 SF lease in 7524

1,487,422

893,603

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

120,000

TOP LEASE TRANSACTIONS • Novinium, Inc. has signed a 25K SF lease in 9300 HLC Deal

2,546,403 -

The South Fort Worth submarket also had an incredible 1Q start with more than 610K SF of absorption, a figure up 4.5 times from 1Q 2019. The market is also incredibly active on the development front. Crow Holdings and Rob Riner Companies are delivering 1,058,844 SF in a four (4) building spec project, while Black Creek Group has pads poured on its 569K SF three (3) building project located on the southwest corner of Joel East and Oak Grove. Finally, the latest groundbreaking is Majestic’s 489,150 SF two (2) building project at its Fort Worth South Business Park. The two newest announcements in the submarket are Jackson Shaw’s three (3) building 562,670 SF spec development, 46 Ranch Logistics Park, and Ascendant Commercial’s 858,420 SF crossdock. Both developments will not begin dirt work till late 2020. While there is still upward of 5.2M SF of proposed development in the pipeline, we don’t expect these sites to be put in production in the near future as Majestic, Mereken Land, Carter Foundation, Hillwood, and TCRG control most of the developable tracts and are currently holding for build-to-suits before building on a speculative basis.

Jack Newell Boulevard with Edificio Building

• Easy Ice has signed a 15K SF lease in 1300 S Forum

457,745

Way with Floyd Ventures.

• OFG, LLC has signed a 12K SF lease at 3333 E Loop

HLC Deal

VITAL STATS

6.0%

1,250,000

820 S with Johnson Properties, LLC.

1,050,000 5.0%

850,000 650,000

4.0%

450,000 3.0%

250,000 50,000

2.0%

-150,000 -350,000

1.0%

-550,000 0.0%

-750,000 1Q 17

2Q 17

3Q 17

4Q 17

Absorption

1Q 18

2Q 18

3Q 18

4Q 18

Deliveries

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Vacancy

Source: CoStar 1Q 2020 Industrial Report

DEALS IN THE MARKET • 3131 W Bolt Street – a 136,570 SF building • 600 S 2nd Avenue – a 81,154 SF building • 4709 Edgewood Terrace – a 48,988 SF building • 3535 Alice Street – a 43,280 SF building

NEW DEVELOPMENTS • Carter Distribution Center FED – a 1,058,844 SF HLC Deal

four (4) building project with Rob Riner Companies and Crow Holdings Capital • Joel East and Oak Grove Road – a 569K SF three (3) building project with Black Creek Group • Fort Worth South Business Park | Buildings 2 and 3 – a 489,150 SF two (2) building project with Majestic Realty • 501 Easy Drive – a 173,603 SF building expansion with Klein Tools

LARGE EXISTING VACANCIES • 7550 Oak Grove Road – 471,847 SF • 301 E Risinger Road – 148,450 SF • 1400 W Everman Parkway – 145K SF • 6633 Oak Grove Road – 135,141 SF (Sublease) • 6445 Will Rogers Boulevard – 122,500 SF (Sublease) • 8300 South Freeway – 106,308 SF • 301 E Risinger Road – 71,850 SF 15

DALLAS

5950 Berkshire Lane Suite 900 Dallas, Texas 75225 T 972.241.8300 F 972.241.7955

FORT WORTH

1200 Summit Avenue Suite 300 Fort Worth, Texas 76102 T 817.710.1110 F 817.810.9017

www.holtlunsford.com

HOUSTON

11451 Katy Freeway Suite 300 Houston, Texas 77079 T 713.850.8500 F 713.850.8550