3Q 2020 DFW Office Market Brief

Market Brief... Dallas/Fort Worth

OFFICE

3Q2020 Property Pictured Above: Summit Office Park | 1200 & 1300 Summit Avenue | Fort Worth, TX 76102

DFW OFFICE MARKET BRIEF 2Q 2020

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

HOLDEN LUNSFORD

Partner/Managing Principal - Fort Worth Managing Partner - Leasing Services mcarthey@holtlunsford.com holdenlunsford@holtlunsford.com 817.710.1111 972.381.3218

JOHN DICKENSON

GEOFF SHELTON

DAVID CASON

Managing Principal - Dallas jdickenson@holtlunsford.com 972.421.1971

Managing Principal - Fort Worth gshelton@holtlunsford.com 817.710.1113

Vice President - Fort Worth dcason@holtlunsford.com 817.810.9137

JAMES ENGELS

DAN POND

MASON PRITCHER

JAKE NEAL

MARSHALL MAYS

Market Director - Dallas jengels@holtlunsford.com 972.280.8307

Market Director - Dallas dpond@holtlunsford.com 972.380.3641

Market Director - Dallas mpricher@holtlunsford.com 972.280.8320

Market Associate - Fort Worth jneal@holtlunsford.com 817.284.5555

Market Associate - Fort Worth mmays@holtlunsford.com 817.632.6150

JACK BEARE

AARON DRAPER

Market Analyst - Dallas jbeare@holtlunsford.com 972.265.0128

Market Analyst - Dallas adraper@holtlunsford.com 972.381.3219

3

NEW LISTING

GREENWAY TOWER

Greenway Tower: 192,912 SF Class B office building in the Las Colinas Submarket.

4

BENT TREE AT THE PARKWAY

NEW LISTING

Bent Tree at the Parkway: 48,000 SF Class B office building in the Quorum/Bent Tree Submarket.

5

NEW LISTINGTHE SQUARE AT CRAIG RANCH

The Square at Craig Ranch: 43,656 SF Class A office building in the Allen/McKinney Submarket.

6

REPUBLIC PLACE

NEW LISTING

Republic Place: 97,909 SF Class B office building in the Richardson/Plano Submarket.

7

HLC DFW OFFICE OVERALL MARKET

VACANCY - OVERALL DFW

CONSTRUCTION - OVERALL DFW

25.00%

21.10%

10,000,000 9,000,000

20.00%

18.00%

8,000,000

19.5%

7,000,000

17.1%

15.00%

6,000,000 5,000,000

10.00%

4,000,000

5.00%

2,000,000

3,000,000 1.60%

0.90%

1,000,000 0

0.00% 3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Direct Vacancy

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Sublet Vacancy

2Q 20

3Q 20

3Q 17

4Q 17

1Q 18

Total Vacancy

2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

Delivered Inventory

ABSORPTION - OVERALL DFW

3Q 19

4Q 19

1Q 20

2Q 20

Under Construction

OVERVIEW - OVERALL DFW 22.0%

1,600,000

2,000,000 1,500,000

1,100,000

21.0%

1,000,000

600,000

500,000

20.0%

100,000

0

(400,000)

19.0%

(500,000)

(900,000)

(1,000,000)

(1,400,000)

18.0%

(1,500,000)

(1,900,000)

(2,000,000)

17.0% (2,400,000)

(2,500,000)

(2,900,000) 3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

16.0%

3Q 20

(3,000,000) 3Q 17

Total Net Absorption

4Q 17

1Q 18

2Q 18

3Q 18

Absorption

4Q 18

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Deliveries

2Q 20

3Q 20

Vacancy

Source: CoStar 3Q 2020 Office Report

Market

Existing Inventory

Vacancy

# Bldgs.

Total RBA

Direct SF

Central Expressway

108

12,664,544

2,222,414

Dallas CBD

85

29,071,307

7,412,093

East Dallas

205

8,603,468

1,521,376

Vac. %

YTD Net Absorption

YTD Deliveries

2,377,740

18.8%

(365,786)

8,266,942

28.4%

(786,107)

1,661,732

19.3%

Total SF

Under Const. SF

Quoted Rates

58,890

30,000

$30.37

0

284,600

$26.01

(162,132)

0

782,816

$22.36

Far North Dallas

500

53,682,272

10,504,316

11,548,436

21.5%

150,661

632,515

2,257,348

$30.64

Fort Worth CBD

54

8,844,255

1,485,274

1,577,545

17.8%

(115,990)

0

0

$27.94

Las Colinas

304

38,060,164

7,197,418

7,917,301

20.8%

(1,467,582)

730,806

453,352

$26.13

LBJ Freeway

169

21,622,378

4,640,742

4,832,010

22.3%

(108,546)

0

107,000

$22.71

Lewisville/Denton

180

7,991,677

1,303,568

1,309,979

16.4%

(39,090)

257,573

76,890

$25.10

Mid Cities

449

24,378,940

5,679,881

5,982,440

24.5%

(219,725)

281,143

273,189

$24.86

North Fort Worth

66

3,169,265

208,232

219,889

6.9%

47,675

47,067

113,800

$25.20

Northeast Fort Worth

55

3,694,580

619,514

619,514

16.8%

9,844

0

0

$20.72

Preston Center

54

4,990,126

615,293

664,214

13.3%

(12,966)

0

297,000

$41.62

Richardson/Plano

392

33,025,601

6,384,926

6,702,901

20.3%

163,676

352,091

162,779

$23.93

South Fort Worth

244

12,115,884

1,284,107

1,664,526

13.7%

(221,498)

83,007

52,531

$24.24

Southwest Dallas

92

4,174,973

628,102

630,683

15.1%

19,342

45,000

28,314

$22.86

Stemmons Freeway

122

13,236,445

3,274,251

3,325,063

25.1%

(117,680)

0

65,000

$20.22

Uptown/Turtle Creek

101

13,827,197

2,201,841

2,429,348

17.6%

(455,130)

0

656,774

$40.77

3,180

293,153,076

57,183,348

61,730,263

21.1%

(3,681,034)

2,488,092

5,641,393

$26.93

Totals

Source: CoStar 3Q 2020 Office Report

8

DALLAS CENTRALINTELLIGENCE BUSINESS DISTRICT SUBMARKET Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(568,894)

219,790

(24,585)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

28.4%

26.5%

25.8%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

284,600 Delivered SF Quoted Rates $26.01

284,600

60,230

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$26.12

$25.66

VITAL STATS

29.0%

400,000 300,000

28.0%

200,000 100,000

27.0%

0 26.0%

(100,000) (200,000)

25.0%

(300,000) 24.0%

(400,000) (500,000)

23.0%

(600,000) 22.0%

(700,000) 3Q 17

4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

Deliveries

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

Vacancy

Source: CoStar 3Q 2020 Office Report

CURRENT EVENTS

The Guild, an Austin-based boutique hotel operator, is opening more than 60 luxury hotel suites in the top level of Thanksgiving Tower. The new hotel suites are set to open at the beginning of September. Hotel guests will utilize the office building elevators to reach the Tower Club located on the 48th floor and, from there, will take a separate elevator to get to their rooms. The rooms range in size from 600 to 1K SF and are fitted with in-unit amenities such as kitchens and laundry rooms. The Guild focuses to attract business travelers who are staying in town for an extended period of time. The Guild was founded in 2016 by Brian Carrico and Chris Herndon. Earlier this year, The Guild received more than $23M in funding backed by Maveron, Convivialite Ventures, ATX Seed Ventures, and Adam Zeplain’s Mark VC.

NEW DEVELOPMENTS • 300 Pearl | 300 S Pearl Expressway – 199K SF LARGE EXISTING VACANCIES • Fountain Place | 1445 Ross Avenue – 584,895 SF • Bank of America Plaza | 901 Main Street – 314,729 SF • Thanksgiving Tower | 1601 Elm Street – 246,821 SF • 1700 Pacific | 1700 Pacific Avenue – 234,441 SF • Bryan Tower | 2001 Bryan Street – 187,996 SF • One Main | 1201 Main Street – 162,809 SF • Comerica Bank Tower | 1717 Main Street – 152,152 SF • Harwood Center | 1999 Bryan Street – 152,030 SF

TOP LEASE TRANSACTIONS • Vincent Serafino has signed a 26.6K SF lease in Comerica Bank Tower.

• Orix USA LP has signed a 10.7K SF expansion in Trammel Crow Center.

• Revtech Ventures has signed a 10.1K SF lease in 311 North Market Street.

• LH Capital has signed an 8.4K SF renewal in Trammel Crow Center.

DEALS IN THE MARKET • Bank of America Plaza – a 1,849,729 SF class A office building

• Purse Building – a 65K SF class B office building • 208 N Market Street – a 62K SF class B office building

9

CENTRAL INTELLIGENCE EXPRESSWAY SUBMARKET VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

20.0%

(230,754)

(74,787)

(81,621)

18.0%

150,000

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

16.0%

100,000

14.0%

50,000

12.0%

0

10.0%

(50,000)

8.0%

(100,000)

6.0%

(150,000)

4.0%

(200,000)

2.0%

(250,000)

18.8%

16.6%

17.1%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

88,890

-

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$30.48

$30.13

30,000 Delivered SF 58,890 Quoted Rates $30.37

200,000

0.0%

(300,000) 3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

Deliveries

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

Vacancy

Source: CoStar 3Q 2020 Office Report

CURRENT EVENTS

The United States Justice Department is attempting to seize the former Electronic Data Systems headquarters in Dallas. The 20-acre Forest Lane office campus has been empty for more than four years since CompuCom Systems moved its offices. 7505 Forest Lane, along with a Louisville, Kentucky skyscraper, were allegedly purchased “using funds misappropriated from PrivatBank in Ukraine and are subject to forfeiture based on violations of federal money laundering statutes.” The case is being investigated by the FBI’s International Corruption Unit, IRS, and U.S. Customs and Border Protection.

TOP LEASE TRANSACTIONS • Carter Arnett has signed a 15.9K SF renewal in Campbell Centre.

• Thomas J. Irons has signed a 2.5K SF lease in 12655 NCX.

• Metro Infectious Disease Consultants has signed a 1.9K SF lease in 7515 Greenville.

• Palo Petroleum has signed a 1K SF lease in Campbell Centre South Tower.

LARGE EXISTING VACANCIES • Eighty-Eighty Central – 101,019 SF • Two Energy Square – 98,600 SF • Cityplace Tower – 90,265 SF • The Pyramids at Park Lane – 59,070 SF • 8750 N Central Expressway – 51,517 SF

10

FAR NORTH DALLAS SUBMARKET INTELLIGENCE Absorption

VITAL STATS

vs. Prev. Qtr

vs. 12 Mths Ago

(90,001)

238,287

21.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

20.0%

21.5%

20.9%

20.8%

19.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

18.0%

400,000

17.0%

200,000

(46,505)

2,257,348 Delivered SF 297,782 Quoted Rates $30.64

2,554,873 vs. Prev. Qtr

1,795,638 vs. 12 Mths Ago

284,233

19,500

vs. Prev. Qtr

vs. 12 Mths Ago

$30.61

$29.42

22.0%

1,000,000

800,000 600,000

16.0% 0 15.0% (200,000)

14.0% 13.0%

(400,000) 3Q 17

4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

Deliveries

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

Vacancy

Source: CoStar 3Q 2020 Office Report

CURRENT EVENTS • Missouri-based investor Maxus Properties has purchased

The Tower at Frisco Square. The five story, 175K SF office building is part of the Frisco Square mixed-use development on Main Street. Maxus Properties already operates the Plaza at Frisco Square Apartments nearby and manages 13,500 apartment units and 470K SF of office/industrial space. The Tower at Frisco Square is 94% leased and major tenants include Gearbox Software, Zigatta, Meritize, and Nerdvana.

• The first building in a new Lewisville mixed-use project

has been delivered. Dallas-based Bright Realty has completed construction on the first phase of the 140acre Crown Centre at Castle Hills project on Highway 121. The four-story, 109K SF office building is the first of 30 planned buildings in the development. As planned, the development will include 3M SF of office, 2K apartment units, and 140K SF of retail, restaurants, and hotels. The site for the Crown Centre project is the last remaining undeveloped land in the 5K acre Castle Hills community.

TOP LEASE TRANSACTIONS • Younger Partners has signed a 16.5K SF renewal in

Wellington Centre.

• Homebridge has signed a 10.3K SF lease in Addison Circle One. • Schell Cooley LLP has signed a 5.8K SF renewal in Liberty Plaza II. • Redwood Logistics has signed a 2.3K SF renewal in 5050 Quorum.

• PayVision Online has signed a 1.7K SF lease in Five Thousand Quorum.

• Functional Health Centers has signed a 1K SF lease in Frisco Square.

HLC Deal

DEALS IN THE MARKET • Spectrum Center – a 613,858 SF class A office building • Stanford Corporate Center – a 333,023 SF class A two (2) building office complex

• 2700 Plano Parkway – a 250K SF class B office building • The Atrium at Bent Tree – a 114,333 SF class B office building

NEW DEVELOPMENTS • Hall of Fame Lane – a 350K SF office building • NWC Dallas Parkway & Cowboys Way – a 300K SF office building

• 5301 Headquarters – a 248,662 SF office building • 5844 John Hickman Parkway – a 210,429 SF office building

• 6201 W Plano Parkway – a 171,334 SF office building • 8261 Belleview Drive – a 126,448 SF office building LARGE EXISTING VACANCIES • 5400 Legacy Drive – 722,600 SF • The Campus at Legacy West – 551,430 SF • 5301 Legacy Drive – 296,433 SF • 6400 Legacy Drive – 232,619 SF • International Plaza II – 231,783 SF • 7900 Windrose Avenue – 227,500 SF • 4101 International – 205,750 SF

11

FORT WORTH CENTRAL BUSINESS DISTRICT SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(65,628)

142,228

125,497

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

16.9%

16.1%

17.2%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$28.28

$28.01

Delivered SF Quoted Rates $28.23

VITAL STATS

20.0%

300,000

200,000

18.0%

100,000 16.0% 0 14.0% (100,000) 12.0%

(200,000)

(300,000)

10.0% 3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

1Q 19

Absorption

2Q 19

Deliveries

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

Vacancy

Source: CoStar 3Q 2020 Office Report

CURRENT EVENTS

One of Downtown Fort Worth’s signature buildings is on the market. Burnett Plaza, a 40-story, 1.M SF, class A office tower and parking garage, is being offered by Jones Lange LaSalle.

The building opened in 1983 and is located at 801 Cherry Street.

It is the city’s tallest building at 567 feet and was designed

by Sikes, Jennings, & Kelly Architects from Houston and Fort Worth’s Geren Associates. The building received the Building Owners and Managers Association (BOMA) 2014 International Building of the Year. The BOMA award recognizes quality in buildings and rewards excellence in building management, according to the award announcement. Burnett Plaza is owned by Dallas-based TIER REIT and managed by Behringer, according to the announcement and Tarrant Appraisal District records which indicates the firm has owned the building since 2005. Key companies in the building include Freese & Nichols, Americredit, Huckabee and Basic Energy. The tenant lineup in the building has an average remaining term of 7.9 years. The building offers in-place office rents of $25/SF plus E which is 4% below market rates of $26.00 PSF plus E, according to the JLL flyer on the building. JLL is offering an additional 1.38 acre adjacent site that could be used for development of a residential tower, hotel, or additional office parking.

After nearly $7M in renovations, Winfield Place is on the market in downtown Fort Worth. And now, the 101-year-old building is revamped with innovation. Winfield Place is a 33,064 SF, threestory building that sits at 210 E 8th Street in Fort Worth. It was originally constructed in 1919 as the city’s first parking garage for what was the Winfield Hotel, according to a statement.

After the renovations in 2016, the space became an open, modern office environment. But its most transformative aspect lies where you least expect it — in the elevator. Per Transwestern Real Estate Services (TRS), the exclusive sales agent for Winfield Place, the showpiece of the original building was the car lift which carried vehicles to various levels of the parking garage.

That space is still an operational elevator but now it serves as a glassed-in conference or boardroom for tenants. TRS describes it as a way to have a meeting space on each floor with the press of a button.

12

TOP LEASE TRANSACTIONS • An undisclosed Tenant has signed a 6,688 SF lease in One City Place.

• An undisclosed Tenant has signed a 4,197 SF lease in Cantey Hanger.

• An undisclosed Tenant has signed a 4,187 SF lease in Bank of America Tower.

DEALS IN THE MARKET • 801 Cherry Street – a 1,024,600 SF class A office building

• 307-309 W 7th Street - a 439,802 SF class B office building

• 115 W 7th Street – a 300,347 SF class B office building • 210 E 7th Street – a 82,226 SF class B office building LARGE EXISTING VACANCIES • 115 W 7th Street – a 186,684 SF class B vacancy • Bank of America Tower – a 124,604 class A vacancy • 210 E 7th Street– a 82,226 SF class B vacancy • Frost Tower – a 61,898 SF class A vacancy • 777 Main – a 54,399 SF class A vacancy • Burnett Plaza – a 54,179 SF class A vacancy • Oil & Gas | Star-Telegram Building – a 42,381 SF class B vacancy

LAS COLINAS SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

31,185

(972,811)

(125,303)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

19.3%

18.5%

17.1%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

508,281

2,087,028

vs. Prev. Qtr

vs. 12 Mths Ago

250,000

-

vs. Prev. Qtr

vs. 12 Mths Ago

$26.51

$26.15

211,281 Delivered SF 400,000 Quoted Rates $26.43

VITAL STATS

25.0%

2,000,000 1,500,000

20.0% 1,000,000 15.0%

500,000 0

10.0%

(500,000) 5.0% (1,000,000) 0.0%

(1,500,000) 3Q 17

4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

4Q 19

Deliveries

1Q 20

2Q 20

3Q 20

Vacancy

Source: CoStar 3Q 2020 Office Report

CURRENT EVENTS • Gemini Rosemont, current owners of the 19-story Summit

at Las Colinas Tower, have announced that they have kicked off a major renovation of the property. Renovations will include upgrading all common areas, along with the addition of a 2,500 SF tenant lounge including an indoor firepit and multiple eating areas.

• Construction was recently completed on the more than $13M renovation of landmark Irving hotel, The Omni Las Colinas. Built in the 1980s, the 421-room high-rise hotel received renovations that included a new resort style pool and lounge area, three new eateries, and upgrades to the common areas.

TOP LEASE TRANSACTIONS • Vistra Energy has signed a 403,150 SF lease in 1925 W John Carpenter.

• Caliber Home Loans has signed a 159,320 SF lease in 3401 Olympus Boulevard.

• KAI Architects has signed a 12,648 SF sublease in Riverside Commons.

• Cadent Medical Solutions has signed a 12,609 SF lease

NEW DEVELOPMENTS • 2999 Olympus Boulevard – a 322K SF class A office development

• 3489 State Highway 121 – a 150K SF class A office development

• 1801 Wittington Place – a 103K SF class B office development

LARGE EXISTING VACANCIES • Williams Square West – 335,331 SF • 6000 Connection – 293,890 SF • 1801 Valley View Lane – 208,593 SF • 3501 Olympus Boulevard – 200K SF • 1605 Lyndon B Johnson Freeway – 170,848 SF • 2901 Kinwest Parkway – 153,173 SF • 1555 W Walnut Hill Lane – 151,736 SF • Cottonwood Office Center – 118,480 SF • 6031 Connection Drive – 109,478 SF • 8616 Freeport Parkway – 105,778 SF • Park West 2 – 102,980 SF • 4000 Horizon Way – 100K SF

in 1707 Market Place Boulevard.

DEALS IN THE MARKET • The Overlook – a 95,510 SF class B office building • 1901 Gateway Drive – a 78,840 SF class B office building

• 450 E John Carpenter Freeway – a 58,276 SF class B office building

• 1329 W Walnut Hill Lane – a 54,018 SF class B office/ flex building

• Regent Place – a 46,911 SF class B office building

13

LBJ SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(203,182)

(159,183)

77,644

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

22.3%

21.4%

22.8%

U/C SF 107,000 Delivered SF Quoted Rates $22.71

vs. Prev. Qtr

vs. 12 Mths Ago

107,000

-

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$23.12

$22.93

VITAL STATS

23.5%

300,000

23.0%

200,000

22.5%

100,000

22.0% 0 21.5% (100,000)

21.0%

(200,000)

20.5% 20.0%

(300,000) 3Q 17

4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

4Q 19

Deliveries

1Q 20

2Q 20

3Q 20

Vacancy

Source: CoStar 3Q 2020 Office Report

CURRENT EVENTS • California based brokerage firm, Marcus & Millichap, has

acquired Metropolitan Capital Advisors. Metropolitan Capital Advisors is a 30-year-old commercial real estate finance firm in Dallas, focusing on debt and equity placement on behalf of real estate investors, and will continue to operate as Marcus & Millichap Capital Corp. The acquisition is expected to be part of a services and geographical expansion into the southwest United States by Marcus & Millichap.

• Dallas-Fort Worth is being negatively impacted by

COVID-19 with net leasing in the metroplex down by 150K SF in 1Q 2020. After a strong 2019, with more than 3.5MM SF of net leasing in DFW, the first quarter saw a decline in office activity due to COVID-19 and shelterin-place orders putting some leasing deals on hold or delay.

TOP LEASE TRANSACTIONS • FPT Operating Co. has signed a 27.6K SF lease in 4 Park Central.

• Sedgwick Claims Management Service has signed a 9.6K SF lease at 2711 Lyndon B Johnson Freeway.

• Futu Clearing has signed a 4K SF lease in Park Central 7.

• Tee & Gee has signed a 3.4K SF renewal in Crosspoint

HLC Deal

Atrium.

• Gamma Healthcare has signed a 2.4K SF expansion in

HLC Deal

Prism at Midtown.

14

NEW DEVELOPMENTS • No new developments are currently under construction.

However, four have been proposed:

• Park Heritage – 1.15M SF • Four Lincoln Centre – 400K SF • Park Tower at Dallas Midtown – 376,870 SF • The Inwood at Alpha West – 300K SF LARGE EXISTING VACANCIES • Crosspoint Atrium – 123,171 SF • 5525 LBJ – 111,092 SF • Pinnacle Tower – 98,412 SF • Three Galleria Tower – 88,084 SF • LBJ Tower – 80,578 SF

MIDINTELLIGENCE CITIES SUBMARKET Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(308,744)

1,276

(50,730)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

23.9%

22.5%

16.6%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

379,667

336,217

vs. Prev. Qtr

vs. 12 Mths Ago

53,518

-

vs. Prev. Qtr

vs. 12 Mths Ago

$24.07

$22.46

382,712 Delivered SF 15,000 Quoted Rates $24.85

VITAL STATS

26.0%

400,000 200,000

24.0%

0 (200,000)

22.0%

(400,000) (600,000)

20.0%

(800,000) (1,000,000)

18.0%

(1,200,000) (1,400,000)

16.0%

(1,600,000) 3Q 17

4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

Deliveries

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

Vacancy

Source: CoStar 3Q 2020 Office Report

CURRENT EVENTS • VariSpace’s second DFW location, the West Kirkwood

Boulevard Campus, has signed its first lease, inking an 80K SF deal with Microsoft. Since acquiring the previously vacant campus style building last fall, Varispace has been hard at work renovating and implementing the same flexible office leasing strategy that was successful for them at their first location in Las Colinas.

• Delta Hotels by Marriott has announced the grand opening of the new Dallas Southlake hotel to be on track for completion mid November 2020. The much anticipated hotel, owned by RREAF Holdings and managed by Aimbridge Hospitality, is excellently located at the intersection of State Highway 114 and White Chapel Boulevard in Southlake, Texas. The hotel will feature 240 guestrooms, complimentary Wi-Fi throughout, hydration stations, chef-inspired grab-andgo food market, 24-hour elite pantry, a premium fullservice fitness center, luxurious outdoor pool and lounge area, and a heightened culinary experience curated by celebrity chef Dean Fearing.

DEALS IN THE MARKET • 4001 Embarcadero Drive – a 246,060 SF class A office building

• 1351 E Bardin Road – a 115,490 SF class B office building

• 3400 William D Tate – a 56,520 SF class B office building

LARGE EXISTING VACANCIES • 1 Kirkwood Boulevard – 379,898 SF • 2200 W Airfield Drive – 310,350 SF • 1500 Solana Boulevard | Building 2 – 124,735 SF • 1500 Solana Boulevard | Building 1 – 124,661 SF • 1500 Solana Boulevard | Building 5 – 123,861 SF • 950 E State Highway 114 – 66,707 SF • 1500 Solana Boulevard | Building 6 – 51,296 SF • 8555 Airport Freeway – 47,277 SF • 3400 William D Tate Avenue – 40,738 SF • 1301 Solana Boulevard | Building 2 – 34,188 SF

TOP LEASE TRANSACTIONS • Microsoft has signed a 80K SF lease in 1 Kirkwood Boulevard.

• Int’l Association of Machinist & Aerospace Workers has signed a 6,875 SF lease in 1521 N Cooper Street.

• Southlake Vein Care has signed a 3,700 SF lease in 620 N Kimball.

• Carnegie Homes has signed a 3,450 SF lease in 1701 E Lamar Boulevard.

15

NORTH FORT WORTH SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(27,093)

11,344

74,041

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

8.0%

6.7%

11.5%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

166,800

76,800

vs. Prev. Qtr

vs. 12 Mths Ago

-

200,000

vs. Prev. Qtr

vs. 12 Mths Ago

$26.11

$24.69

198,800 Delivered SF 16,000 Quoted Rates $26.45

VITAL STATS

20.0%

250,000 200,000

16.0% 150,000 12.0%

100,000 50,000

8.0%

0 4.0% (50,000) 0.0%

(100,000) 3Q 17

4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Deliveries

2Q 20

3Q 20

Vacancy Source: CoStar 3Q 2020 Office Report

CURRENT EVENTS

The coronavirus pandemic has stymied foot traffic in the Fort Worth Stockyards in the same way downtown has seen a dramatic drop in commerce. Both districts survive on tourism, which has taken a hit. For example, hotel occupancy rates fell to about 25% during the height of the pandemic before rebounding to around 50%, according to Visit Fort Worth. But Craig Cavileer, executive vice president of Majestic Realty Co. and Stockyards Heritage Development Co., is optimistic that Mule Alley, the much anticipated redevelopment of historic horse and mule barns south of East Exchange, will thrive. It opened in June and boasts boutique shops alongside a blend of homegrown cuisine and popular chain restaurants.

“I have been impressed with the resilience of the Stockyards,” Cavileer said. “But I’m sure looking forward to the day we get everything back to normal.”

Mitch Whitten, vice president of marketing and strategy for Visit Fort Worth, called Mule Alley “a shot in the arm” for the city’s economy, and “a gift,” saying that while it may seem odd to open a major development during a pandemic, the timing could not have been better.

“It’s true that the Stockyards have fared better than other districts so far,” Whitten said. “While citywide hotel rates reached a high of 57% in the last weekend of August, a spot check of the Stockyards hotels earlier this summer showed some were sold out. Outside of big events at Dickies Arena or the Convention Center, the Stockyards is Fort Worth’s biggest attraction.”

Plano-based developer and builder, Green Brick Partners, has teamed up with Arizona-based, Taylor Morrison Homes to plan a more than 2,500-home community in north Fort Worth. Green Brick and Taylor Morrison have bought nearly 900 acres near the U.S. Highway 287 near the Sendera Ranch community. The two firms plan to break ground in early 2021 on a new residential community named Madero.

16

“We are thrilled to continue expanding our presence in Fort Worth and to provide homebuyers a fantastic opportunity to live in such close proximity to attractive amenities, including Eagle Mountain Lake, while maintaining easy access to major employment centers in Fort Worth,” Jed Dolson, chief operating officer of Green Brick Partners, said in a statement. “In addition to its ideal location, Madero will feature a wealth of amenities which we are certain will set us apart from the competition.”

TOP LEASE TRANSACTIONS • ResourceOne has signed a 7,062 SF lease in 187 Coy Road.

• Jungle Fitness has signed a 2,840 SF lease in 213 Rupert Street.

• Sens-iPlay has signed a 2,504 SF lease in 9800 N Beach Street.

DEALS IN THE MARKET • 1301 Solana Boulevard - a 360,883 SF class A office building

• 100 N University Street – a 105,851 SF class B office building (Under Contract)

• 8224 White Settlement Road – a 27,716 SF class B office building

NEW DEVELOPMENTS • Alta Vista Road & N Beach Street – a 48K SF class A office building, set to deliver June 2021

• 3800 N Tarrant Parkway – a 29K SF class B office building, set to deliver February 2021

LARGE EXISTING VACANCIES • 5555 N Beach Street – 163,283 SF • 2601 Meacham Boulevard – 162,845 SF • 5501 Alliance Gateway Freeway – 161,336 SF

PRESTON CENTER SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(8,831)

(52,013)

112,426

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

13.3%

13.1%

11.1%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

297,000

297,000

vs. Prev. Qtr

vs. 12 Mths Ago

297,000 Delivered SF Quoted Rates $41.62

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$39.62

$41.38

VITAL STATS

16.0%

150,000

100,000

14.0%

50,000 12.0% 0 10.0% (50,000) 8.0%

(100,000)

6.0%

(150,000) 3Q 17

4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

Deliveries

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

Vacancy Source: CoStar 3Q 2020 Office Report

CURRENT EVENTS

Sherry Lane Place, a class A office tower in Preston Center, is being marketed for sale. The 20-story, 301K SF building is nearly 99% leased. The building has been owned since 2006 by a New York-based investment partnership including J.P. Morgan Asset Management. Major Tenants of the building include Bank of Texas, Raymond James and Associates, and Unity Hunt.

TOP LEASE TRANSACTIONS • Simmons Bank has signed a 15.2K SF relocation in The HLC Deal

Berkshire.

• Mercy Health has signed a 1.5K lease in The Berkshire.

HLC Deal

DEALS IN THE MARKET • Sherry Lane Place – a 301,891 SF class A office building

NEW DEVELOPMENTS • Weir’s Plaza – a 297K SF class A office building LARGE EXISTING VACANCIES • 8343 Douglas at Douglas Center – 21,337 SF • 8333 Douglas at Douglas Center – 20,046 SF • Preston Commons East Tower – 19,943 SF • Preston Commons West Tower – 19,704 SF • Bluffview Towers West – 18,203 SF

17

RICHARDSON/PLANO/ALLEN/MCKINNEY SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(81,041)

58,948

277,205

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

20.3%

19.3%

18.3%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

462,779

368,098

162,779 Delivered SF 300,000 Quoted Rates $23.93

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$24.13

$23.98

VITAL STATS

22.0%

800,000 600,000

21.0%

400,000

20.0%

200,000 19.0% 0 18.0%

(200,000)

17.0%

(400,000)

16.0%

(600,000) 3Q 17

4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

4Q 19

Deliveries

1Q 20

2Q 20

3Q 20

Vacancy Source: CoStar 3Q 2020 Office Report

CURRENT EVENTS • Developer VanTrust Real Estate has announced plans to HLC Deal

build a new four-story office building in McKinney. The 115K SF McKinney Corporate Center II will be built in the Craig Ranch development next to a similar building VanTrust previously built that is fully leased. McKinney Corporate Center II is the second office project announced in the past week in the 121 corridor.

• Kaizen Development Partners is partnering with the

McKinney Economic Development Corp. to develop a speculative office project in Craig Ranch on 121.

The 200K SF office project is part of the District 121 mixed-use development at the corner of Alma and 121.

Construction is set to start 1Q 2021 on the eight-story office building with delivery set for early 2022. Kaizen is currently finishing construction on One Bethany West on 75 in Allen and is building the Link at Uptown, a 300K SF project in Uptown, on Akard Street.

TOP LEASE TRANSACTIONS • Perdure Petroleum has signed a 17.2K SF lease in Office Campus at Allen.

• Ovivo USA has signed a 4.8K SF expansion in

HLC Deal

Harrington Place.

• Angel Oak Home Loans has signed a 3.7K SF lease in the McKinney Green Building.

18

DEALS IN THE MARKET • 7920 Belt Line – a 185,372 SF class B office building NEW DEVELOPMENTS • No new developments are currently under construction.

However, four have been proposed:

• CityLine – 2M SF • 7 CityLine – 417K SF • Legacy Central 5 – 300K SF • One Heritage Creekside – 250K SF LARGE EXISTING VACANCIES • 601 Data – 423,123 SF • 465 Independence Parkway – 251,347 SF • Legacy Central 2 – 228,230 SF • Creekview Corporate Center II – 209,600 SF • 2200 George Bush – 176,831 SF • Campbell Glenn II – 175,525 SF • Lookout Park I – 156,219 SF

SOUTHWESTINTELLIGENCE FORT WORTH SUBMARKET Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(102,759)

819

10,879

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

12.7%

11.5%

10.3%

U/C SF 52,531 Delivered SF 55,695 Quoted Rates $24.47

vs. Prev. Qtr

vs. 12 Mths Ago

108,226

104,100

vs. Prev. Qtr

vs. 12 Mths Ago

27,312

-

vs. Prev. Qtr

vs. 12 Mths Ago

$24.23

$24.20

VITAL STATS

14.0%

200,000

13.0%

150,000

12.0%

100,000

11.0%

50,000

10.0%

0

9.0%

(50,000)

8.0%

(100,000)

7.0%

(150,000) 3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Deliveries

2Q 20

3Q 20

Vacancy Source: CoStar 3Q 2020 Office Report

CURRENT EVENTS

Origin Bank has announced the relocation of its 7th Street banking center to a new building, located at 3200 West 7th Street. Less than 1K feet from its previous location, the new banking center offers business and personal banking customers easy access to the services they need, the bank said in an announcement.

“We are excited to share our new 7th Street location with our loyal Fort Worth customers,” Warrie Birdwell, North Texas president of Origin Bank, said. “Since opening in Fort Worth over 10 years ago, we have developed strong relationships with the local community. This new banking center is a celebration of our ongoing commitment to serve their needs.”

Origin Bank entered the Fort Worth market in August 2009 with its original 7th Street location. The new banking center houses an experienced, knowledgeable retail team and offers banking services in Spanish courtesy of bilingual banker, Rocio Moreno. The 7th Street team is led by Celeste Vereen, banking center manager, as well asBrooke Frasier, Parker Platt, and Rocio Moreno.

Plans for a new luxury hotel in Fort Worth’s Cultural District are moving forward. Bowie House would bring 120 luxury hotel rooms to a lot on the northeast corner of Camp Bowie Boulevard which is currently vacant. Developer Jo Ellard said the property would also include 11 townhomes that wrap around the north and west sides serving as a buffer to the adjoining neighborhood. The city council unanimously approved the zoning change September 16th after a roughly 30-minute discussion, including the presentation from Ellard and public comments from both supporters and neighbors in opposition.

TOP LEASE TRANSACTIONS • Concept Connections has signed a 10,550 SF lease in HLC Deal

4201 Bridgeview Drive.

• Nickel City Fort Worth has signed a 7,308 SF lease in 212 S Main Street.

• Lillis Energy has signed a 6,486 SF lease in FirstCash.

HLC Deal

DEALS IN THE MARKET • 1212 Lancaster Avenue – a 89,632 SF class B office building

• 101 Nursery Lane – a 58,051 SF class A office building • 200 Bailey Avenue – a 43,463 SF class B office building NEW DEVELOPMENTS • 464 Bailey Avenue – a 23,031 SF class A office building, set to deliver October 2020

• 4374 W Vickery Boulevard – a 10,309 SF class A office building, set to deliver November 2020

LARGE EXISTING VACANCIES • Pier 1 Imports Building – a 173,498 SF class A sub-lease vacancy

• 4055 International Plaza – a 53,013 SF class A vacancy • One Ridgmar Centre – a 36,796 SF class A vacancy • Western Place I – a 19,871 SF class B vacancy

“There was not a single hotel within Camp Bowie boundaries,” Wade Chappell, executive director of Camp Bowie District, Inc., said. “We are hungry for one and the tax base will definitely benefit. Our shop owners and property owners are all eager to get more folks in town and spend their tourism dollars here.”

19

STEMMONS SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(69,905)

(41,941)

(25,280)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

25.1%

24.9%

24.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

115,091

50,091

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$18.36

$17.59

65,000 Delivered SF Quoted Rates $20.22

VITAL STATS 26.0%

500,000 400,000 300,000

25.0%

200,000 100,000 24.0% 0 (100,000) 23.0%

(200,000) 3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

Absorption

4Q 18

1Q 19

2Q 19

Deliveries

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

Vacancy

Source: CoStar 3Q 2020 Office Report

CURRENT EVENTS • Mockingbird Towers, located at Stemmons and

Mockingbird, has sold to Boston-based Albany Road Real Estate Partners. Caddo Holdings sold the two buildings which are almost 450K SF and are each twelve stories.

Mockingbird Towers are 78% leased and major tenants include Covance Clinical Research, YKK Corporation, and JetSuite. Albany Road owns other office assets in the Metroplex, including the Centerpoint Office Complex in Arlington and Hillcrest Tower in East LBJ.

• Texas, the nation’s most populous non-disclosure state, had

multiple record-breaking office tower sales by Price/SF in 2019. Property taxes in Texas are decided by municipality and based on values determined by appraisers. On average, Texas’ property taxes are the sixth highest with an average effective rate of 1.83%. A reform bill passed earlier this year capped year-over-year property tax increases at 3.5%, but that limit is suspended if there is a state of disaster. In NNN buildings, those property tax increases are passed along to tenants who are already struggling with the burden of COVID-19.

20

TOP LEASE TRANSACTIONS • Modo Networks has signed a 5.1K SF renewal in HLC Deal

Eldorado Towers.

• Bellini Italian Cafe has signed a 3.1K SF lease in 921 N Riverfront.

• White’s Executive Services has signed a 763 SF lease in

HLC Deal

1220 Riverbend.

DEALS IN THE MARKET • 1600 Viceroy – a 214,341 SF class A office building NEW DEVELOPMENTS

No new developments are currently under construction.

However, three have been proposed: • 2345 Mockingbird Lane/West Love – 1.1M SF • The Design District Tower – 243,100 SF • 2122 W Mockingbird Lane – 158K SF

LARGE EXISTING VACANCIES • Pegasus Place/The Tower – 518,656 SF • 1430 & 1440 Empire Central Drive – 320K SF • 9999 Technology Boulevard W – 150,272 SF • Comerica Service Center – 142,600 SF • The Connection at 8600 – 101,530 SF

SUBMARKETUPTOWN INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(229,307)

(41,335)

314,855

18.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

16.0%

17.6%

15.9%

15.2%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

656,774

656,774

656,774 Delivered SF Quoted Rates $40.77

vs. Prev. Qtr

vs. 12 Mths Ago

-

310,548

vs. Prev. Qtr

vs. 12 Mths Ago

$40.28

$40.17

VITAL STATS

20.0%

400,000 300,000 200,000

14.0%

100,000

12.0%

0

10.0% (100,000)

8.0%

(200,000)

6.0%

(300,000)

4.0%

(400,000)

2.0% 0.0%

(500,000) 3Q 17

4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

4Q 19

Deliveries

1Q 20

2Q 20

3Q 20

Vacancy

Source: CoStar 3Q 2020 Office Report

CURRENT EVENTS • Ohio-based BakerHostetler has signed a 19.6K SF lease

in Harwood No. 10. BakerHostetler recently opened a Dallas office with more than 12 lawyers. Harwood No. 10, a 22-story high-rise, is now more than 90% leased.

The new Uptown Dallas office tower is on McKinnon Street near the entrance to Dallas North Tollway. Other major tenants in the building include CyrusOne, Reed Smith, Stifel, NGP Energy Capital, and Lurin Capital.

• JP Morgan Asset Management is marketing The Crescent for sale. The three-building office complex was just remodeled for roughly $30M and is estimated to trade at over $700M which would be the highest price ever paid for an office project in North Texas. The office buildings have over 1M SF of office space and are 94% leased. Major tenants include Houlihan Lokey, McKool Smith, Dorsey & Whitney, and UBS Wealth Management.

• Dallas-based Harwood International has landed its anchor Tenant for a new 27-story office tower. Dallas law firm Haynes and Boone will lease 125K SF in the building starting in late 2023. The new building, called Harwood No. 14, will be the tallest office tower north of downtown. The tower will be built off Harry Hines Boulevard at Hunt Street near Victory Park. The building will include a 13K SF rooftop garden, a two-story lobby, fitness center, multipurpose center, nine level parking garage, and roughly 12K SF of retail for restaurants on the ground floor.

• Dallas-based Hillwood’s new Victory Commons office building is underway in Victory Park. The 15-story, 365K SF building is the largest office project under construction on the north side of the Central Business District. Victory Commons and the 39-story Victor apartment tower are being developed on two of the last vacant sites in the 75-acre Victory Park development. Hillwood has revised some features to include automatic doors and fresh-air features as a response to the COVID-19 pandemic. The project is set to deliver in November of 2021.

TOP LEASE TRANSACTIONS • BakerHostetler has signed a 19.6K SF lease in Harwood No. 10.

• American Board of Obstetrics and Gynecology has

signed a 17.5K SF lease in Quadrangle Office Tower.

• Commerce Bank has signed an 8.9K SF lease in The Crescent.

DEALS IN THE MARKET • The Crescent Office Towers – a 1,260,916 class A office complex

• 2626 Cole – 120,599 SF class B office building NEW DEVELOPMENTS • Harwood XII – a 541,640 SF office building • 2601 Victory Avenue – a 364,733 SF office building • The Link – a 292,041 SF office building LARGE EXISTING VACANCIES • 2401 Cedar Springs – 198,817 SF • Parkside Tower – 111,728 SF • 2501 Cedar Springs – 110,415 SF • The Centrum – 95,049 SF • 1919 McKinney Avenue – 62,632 SF

21

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