2Q 2020 DFW Office Market Brief

Market Brief... Dallas/Fort Worth

OFFICE

2Q2020 Property Pictured Above: Bent Tree at the Parkway | 17230 Dallas North Tollway | Dallas, Texas 75287

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

ALAN ROSE

JACK BEARE

AARON DRAPER

Market Associate - Fort Worth arose@holtlunsford.com 817.632.6155

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

2811 MCKINNEY

NEW LISTING

2811 McKinney: 96,734 SF Class B office building in the Uptown/Turtle Creek Submarket.

7

HLC DFW OFFICE OVERALL MARKET

VACANCY - OVERALL DFW

CONSTRUCTION - OVERALL DFW

25.00%

10,000,000

19.90%

9,000,000 20.00%

18.10%

8,000,000

18.5%

7,000,000

17.3%

15.00%

6,000,000 5,000,000

10.00%

4,000,000

5.00%

2,000,000

3,000,000

1.40%

0.80%

1,000,000 0

0.00% 2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

Direct Vacancy

4Q 18

1Q 19

2Q 19

3Q 19

4Q 19

Sublet Vacancy

1Q 20

2Q 17

2Q 20

3Q 17

4Q 17

Total Vacancy

1Q 18

2Q 18

3Q 18

4Q 18

Delivered Inventory

ABSORPTION - OVERALL DFW

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

Under Construction

OVERVIEW - OVERALL DFW 20.0%

1,600,000

2,000,000

1,500,000

1,100,000

19.0% 1,000,000

600,000

18.0%

500,000

100,000

0 17.0%

(400,000)

(500,000)

(900,000) 2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

16.0%

2Q 20

(1,000,000) 2Q 17

Total Net Absorption

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

Vacancy

Source: CoStar 2Q 2020 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

109

12,670,431

1,906,733

2,046,825

16.2%

(135,032)

0

88,890

$30.48

Dallas CBD

84

29,041,634

6,891,892

7,709,068

26.5%

(242,397)

0

259,230

$26.12

East Dallas

202

8,498,367

1,276,100

1,280,973

15.1%

198,817

0

851,430

$26.99

Far North Dallas

495

53,390,177

9,918,743

11,147,741

20.9%

144,409

506,800

2,369,305

$30.61

Fort Worth CBD

55

8,911,479

1,405,322

1,504,801

16.9%

76,600

0

0

$28.23

Las Colinas

301

37,873,169

6,888,135

7,299,817

19.3%

(941,626)

650,000

211,281

$26.43

LBJ Freeway

168

21,583,284

4,508,929

4,661,289

21.6%

94,636

0

94,160

$23.12

Lewisville/Denton

178

7,877,720

1,139,042

1,148,380

14.6%

(23,597)

116,066

255,432

$24.00

Mid Cities

441

24,101,977

5,480,989

5,750,198

23.9%

(307,468)

68,518

382,712

$24.85

North Fort Worth

65

3,142,397

241,989

251,746

8.0%

(15,749)

16,000

198,800

$26.45

Northeast Fort Worth

54

3,677,564

627,861

627,861

17.1%

(903)

0

0

$20.07

Preston Center

54

4,979,927

601,300

655,383

13.2%

(4,135)

0

297,000

$39.62

Richardson/Plano

387

32,649,952

6,054,663

6,297,101

19.3%

195,814

52,091

434,007

$24.25

South Fort Worth

243

12,116,151

1,228,364

1,544,184

12.7%

(101,940)

83,007

52,531

$24.47

Southwest Dallas

91

4,129,973

644,238

646,819

15.7%

(41,794)

0

73,314

$23.10

Stemmons Freeway

124

13,303,957

3,232,407

3,266,010

24.5%

(4,266)

0

65,000

$18.36

Uptown/Turtle Creek

102

13,841,946

2,028,374

2,200,034

15.9%

(222,663)

0

656,774

$40.28

3,153

291,790,105

54,075,081

58,038,230

19.9%

(1,331,294)

1,492,482

6,289,866

$26.93

Totals

Source: CoStar 2Q 2020 Office Report

8

DALLAS CENTRALINTELLIGENCE BUSINESS DISTRICT SUBMARKET Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

194,506

(436,903)

(22,953)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

26.5%

27.2%

25.7%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

259,230

60,230

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$26.20

$25.12

259,230 Delivered SF Quoted Rates $26.12

VITAL STATS

28.0%

400,000 300,000 200,000

26.0%

100,000 0 (100,000)

24.0%

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

22.0%

(500,000) 2Q 17

3Q 17

4Q 17

1Q 18

Absorption

2Q 18

3Q 18

4Q 18

1Q 19

Deliveries

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

Vacancy

Source: CoStar 2Q 2020 Office Report

CURRENT EVENTS • Downtown Dallas’ largest development – the First

National Bank Tower redo – is still on schedule to reopen later this year. The $450M project is being developed

by Shawn Todd, who said that the 1M SF tower will be completed by September/October. Construction crews are still working, with the recent major milestone of marble being re-applied to the building. The tower, once complete, will house the 219-room Thompson Hotel, 324 luxury apartment units, restaurants, retail, and office space.

• Plano-based Sam Moon Group announced that they are

moving forward with plans for the construction of the JW Marriott hotel at Ross and Harwood Street. Across the street from the Trammell Crow Center, the 283-room, 15-story luxury hotel is set to be built on top of the new 10-story parking garage. Construction is tentatively set to begin in July, and the hotel will take roughly two years to complete. The completion of the project will mark the first JW Marriott in the Dallas-Fort Worth area and a further investment into Dallas’ CBD.

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

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 • Hilltop Securities has signed a 100K SF lease in 717 Harwood.

• LH Holdings Inc. has signed an 8.4K SF renewal in Trammell Crow Center.

• AM RE Syndicate has signed a 7.9K SF lease in Comerica Bank Tower.

• Kenrich Group has signed a 5.7K SF lease in Comerica Bank Tower.

• The Dallas Observer has signed a 4.6K SF lease in 2030 Main Street.

9

CENTRAL INTELLIGENCE EXPRESSWAY SUBMARKET Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

18.0%

(74,787)

(60,245)

(30,330)

16.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

14.0%

16.1%

12.0%

16.2% U/C SF 88,890 Delivered SF Quoted Rates $30.48

15.6% vs. Prev. Qtr

vs. 12 Mths Ago

88,890

-

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$30.79

$29.83

VITAL STATS

200,000 150,000 100,000 50,000 0

10.0%

(50,000) 8.0%

(100,000)

6.0%

(150,000)

4.0%

(200,000)

2.0%

(250,000)

0.0%

(300,000) 2Q 17

3Q 17

4Q 17

1Q 18

Absorption

2Q 18

3Q 18

4Q 18

1Q 19

Deliveries

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

Vacancy

Source: CoStar 2Q 2020 Office Report

CURRENT EVENTS • A 4.19-acre parcel of land is being marketed for sale

along Central Expressway just north of Meadow Road.

The land is zoned for 20 stories and can be utilized for office, hotel, or apartment construction. Dallas architect, Omniplan, has done some preliminary designs of the various buildings that can be constructed on this desirable parcel of land. The project is situated next to the Midtown Park development which has seen tremendous apartment, hotel, and medical growth.

• In March, construction sector employment fell in almost 100 markets across the country. In a normal downturn, the construction industry is partially shielded from the beginning of an economic downturn due to their backlog of work. COVID-19, however, is different as certain activities have completely halted across the country. During March, Dallas-Fort Worth added more than 10K building jobs which was the biggest gain in the country. In year’s past, Dallas has trailed only NYC in construction market health. NYC had an almost 3,500-worker drop in construction employment.

10

TOP LEASE TRANSACTIONS • Sealy & Company has signed a 6.8K SF renewal in One Lincoln Park.

• Buck Molina has signed a 4.5K SF renewal in 4245

HLC Deal

NCX.

• WeInfuse has signed a 2.4K SF lease in Expressway Tower.

DEALS IN THE MARKET • Meadow Park Tower – a 251,755 SF class A office building

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

FAR NORTH DALLAS SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

273,274

(107,537)

21.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

20.0%

20.9%

20.4%

20.4%

19.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

18.0%

2,749,733

1,733,599

vs. Prev. Qtr

vs. 12 Mths Ago

35,000

15,400

vs. Prev. Qtr

vs. 12 Mths Ago

$30.48

$29.24

(128,865)

2,369,305 Delivered SF 471,800 Quoted Rates $30.61

VITAL STATS

22.0%

1,000,000 800,000 600,000 400,000 200,000

17.0% 0

16.0%

(200,000)

15.0%

(400,000)

14.0% 13.0%

(600,000) 2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

Absorption

4Q 18

1Q 19

Deliveries

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

Vacancy

Source: CoStar 2Q 2020 Office Report

CURRENT EVENTS • Toll Hill Office Park, a 248K SF two (2) building office

complex has been purchased by Canada-based Balfour Pacific Capital. Cawley Partners owned the East LBJ buildings for the past five years. The acquisition amount was undisclosed but a five-year, floatingrate structured loan was arranged for the buyer. Toll Hill Office Park is 84% leased with major tenants including Women’s Foodservice Forum, Plexus Group, and Medivisuals, Inc. This deal is Balfour Pacific’s first investment in North Texas.

• Dallas-based Gaedeke Group has finalized plans

for Two Legacy West in Plano. The developer has partnered with architect Gensler’s Dallas office on the new building which will be next to JPMorgan’s Plano campus on Highway 121. The building will be a 17-story tower with 414K SF of office space. Two Legacy West comes after Gaedeke Group delivered One Legacy West, the 14-story tower, in 2017. Construction will start on the project this year and is set to deliver in 2022.

• Czarnowski has signed a 15K SF lease in Legacy West | 5908 Headquarters.

• Texas Golf Association has signed a 7.5K SF lease in Addison Plaza.

• Minimally Invasive Vascular has signed a 4.7K SF lease

HLC Deal

in 17110 N Dallas Parkway.

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

TOP LEASE TRANSACTIONS • Trinity Industries has signed a 150K SF lease in International Plaza II.

• USAA has signed a 124K SF expansion in 5543 Legacy.

• The University of North Texas has signed a 56K SF expansion in Hall Park.

• Keller Williams Realty has signed a 24.9K SF lease in 18333 Preston Road.

• Cognizant has signed a 23K SF sublease in Dominion Legacy Office Center.

• Premier Health Solutions has signed a 17.3K SF

• 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

expansion in Hall Office Park.

• Ebby Halliday has signed a 16K SF lease in Legacy Business Park | 5560 Tennyson.

• ComSovereign has signed a 15.2K SF lease in Five Thousand Quorum.

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)

10.0%

(300,000) 2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

Deliveries

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

Vacancy

Source: CoStar 2Q 2020 Office Report

CURRENT EVENTS

Infrastructure solutions firm, HNTB Corporation, has leased an undisclosed amount of office space in Frost Tower Fort Worth (FTFW). Stream Realty Partners’ Seth Koschak and Cullen Donohue leased the space on behalf of owner Anthracite Realty Partners.

“HNTB’s expansion into Frost Tower in Fort Worth during this unusual time is a testament to the firm’s client-centric business model that has made them successful the past 100 plus years in business,” said Anthracite’s Cody Baker.

The 25-story FTFW opened in 2018 in Fort Worth’s CBD. Sven Sykes, Brad Balke, Daniel Rudd and Billy Vahrenkamp of Colliers International brokered the deal on behalf of HNTB. The developer of a high-tech luxury hotel in downtown Fort Worth believes an investor wants to seize control of two valuable properties by taking advantage of the coronavirus recession. Farukh Aslam, developer of the Sinclair Hotel and the adjacent Sanger office building, accused the investor of “predatory lending” to squeeze his Sinclair Holdings out of the real estate in a court petition this week. The complex financial situation involves multiple channels of credit and investment. Essentially, JM Cox Legacy, under the name Sanger Lender, wants to purchase a $25M Simmons Bank loan that Alsam took out in 2017 to finance the purchase and renovation of the historic Sinclair building at 512 Main Street. JM Cox Legacy is a firm associated with Midlandbased oil company JM Cox Resources where TCU donor and trustee, Kelly Cox, serves as president.

Sanger Lender has the right to purchase the Simmons Bank loan, however, Sanger Lender’s attorneys from Dallasbased Reese Marketos argued in a legal brief accusing Sinclair Holdings of gamesmanship. The purchase would be damaging to Sinclair Holdings, Aslam’s attorneys argued, because he believes Sanger Lender will accelerate the loan and push him into default. The action could cause him to lose control of both properties.

12

TOP LEASE TRANSACTIONS • HNTB Corporation has signed a 6,910 SF lease in Frost Tower.

• Falcon Document Solutions has signed a 5K SF lease in Wells Fargo Tower.

• USHealth has signed a 4,372 SF lease in 300 Burnett Street.

DEALS IN THE MARKET • 210 E 7th Street – a 82,226 SF class B office building • 1500 Houston Street – a 42,400 SF class B office building

• 904 & 1100 Macon Street – a 41,244 SF two (2) building office portfolio

LARGE EXISTING VACANCIES • Bank of America Tower – a 124,604 class A vacancy • 210 E 7th Street– a 82,226 SF class B vacancy • 777 Main – a 80,765 SF class A vacancy • Burnett Plaza – a 54,179 SF class A vacancy • Frost Tower – a 45,872 SF class A vacancy • Oil & Gas/Star-Telegram Building – a 28,351 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) 2Q 17

3Q 17

4Q 17

1Q 18

Absorption

2Q 18

3Q 18

4Q 18

1Q 19

Deliveries

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

Vacancy

Source: CoStar 2Q 2020 Office Report

CURRENT EVENTS • Despite the impact of COVID-19, DART is moving forward

with construction for the expansion of its coverage.

For Las Colinas, that will mean the construction of the new Orange Line stop between the current North Lake College and Irving Convention Center stations.

Construction is expected to be completed early 2021.

• DFW International Airport was the world’s busiest

airport in the month of May. The airport, still operating a fraction of the flights it did earlier in 2020, operated 12,132 flights in the month of May, placing it well ahead of its closest contender, Chicago O’Hare at 8,596 flights

TOP LEASE TRANSACTIONS • Michaels’s has signed a 123,740 SF lease in 3939 W John Carpenter Freeway.

• The American Athletic Conference has signed an 18K SF lease in 545 E John Carpenter.

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

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

LARGE EXISTING VACANCIES • 1925 W John Carpenter Freeway – 403,150 SF • 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 • 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

• Northstar Builders has signed a 6,217 SF lease in 3401 Olympus Boulevard.

• Career Staff has signed a 4,363 SF lease in 6333 N State Highway 161.

• Great Plains Bank has signed a 4,344 SF lease in 6363 N State Highway 161.

DEALS IN THE MARKET • Fuller Ridge I & II – a 285,493 SF two (2) building class B office complex

• 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

13

LBJ SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(159,183)

253,819

10,687

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

23.0%

21.6%

20.9%

23.2%

22.5%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

22.0%

94,160

-

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$22.85

$22.89

94,160 Delivered SF Quoted Rates $23.12

VITAL STATS

24.0%

300,000

23.5%

200,000

100,000

0

21.5%

(100,000)

21.0% (200,000)

20.5% 20.0%

(300,000) 2Q 17

3Q 17

4Q 17

1Q 18

Absorption

2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

Deliveries

4Q 19

1Q 20

2Q 20

Vacancy Source: CoStar 2Q 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) 2Q 17

3Q 17

4Q 17

1Q 18

Absorption

2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

Deliveries

4Q 19

1Q 20

2Q 20

Vacancy

Source: CoStar 2Q 2020 Office Report

CURRENT EVENTS

Goosehead Insurance has expanded its corporate headquarters at The Terraces at Solana, in Westlake Texas. Goosehead has leased an additional 42,308 SF of office space to its existing lease. Gooshead has been at the Terraces at Solana since 2017 and it now occupies a total of 150,454 SF of space.

The Terraces at Solana is a class A office campus, composed of eight (8) buildings totalling 1.1M SF. The campus is owned

by GlenStar out of Dallas. The ownership is currently under construction with a $20M+ renovation to the campus.

TOP LEASE TRANSACTIONS • Arrow Electronics has signed a 23,228 SF lease in Ballpark Circle with Lexington Realty Trust.

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

• 8555 Airport Freeway – a 125,436 SF class B office building with Zerby Interests

• 1351 E Bardin Road – a 115,490 SF class B office building with Hauck Holdings, LTD

• 3301 Airport Freeway – a 70,949 SF class B office building with SkyWalker Property Partners, Inc.

LARGE EXISTING VACANCIES • 300 Six Flags Drive – 51,540 SF • 8555 Airport Freeway – 47,277 SF • Airport Centre I – 46,052 SF • Brookhollow Riverside – 38,251 SF • 1301 Solana Boulevard – 30,129 SF

• SkyWalker Property Partners has relocated and

expanded its headquarters to Brookhollow Riverside at 2505 N State Highway 360.

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) 2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

Absorption

4Q 18

1Q 19

Deliveries

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

Vacancy Source: CoStar 2Q 2020 Office Report

CURRENT EVENTS

A couple of office/retail buildings in Fort Worth’s Historic Stockyards are receiving a face lift. KRS purchased and began renovating the two buildings in February of this year.

Located at 2341 N. Main Street, the first property features 7,220 SF of divisible space and will serve as a flagship location for Austin-based western brand, Tecovas, who has leased 3,474 SF. The remaining 3,746 SF is available for lease and ideal for a restaurant, café, bar or showroom given the exceptional proximity to Tecovas, according to a Steam news release. Improvements to the property include a renovated building exterior and facade, a new patio area, which will span the full length of the building along Main Street, additional lighting along the exterior and updated landscaping.

“Opening our newest store in Fort Worth not only provides us prime visibility but places the Tecovas brand within walking distance of one of the most unique and iconic destinations in North Texas,” said Paul Hedrick, Founder and CEO at Tecovas.

More news from North Fort Worth’s Historic Stockyards is the development of Mule Alley and the Hotel Drover. The once unused horse and mule barns that formed Mule Alley have been gutted, refurbished, and finished out to house more than a dozen spaces for retail, dining, drinks, and offices as part of a partnership between Majestic Realty Co. and Fort Worth’s Hickman Investments. After years of planning and construction, much of the massive development project is now open or opening soon. Texas-based Lucchese Bootmaker and retail emporium MB Mercantile & Supply are already popular destinations. Local celebrity chef, Marcus Paslay, said his third restaurant, Provender Hall, is scheduled to open in Mule Alley early next month. At the southernmost end of Mule Alley is Hotel Drover which will feature 200 rooms and suites, a signature restaurant, meeting spaces, and a wedding barn starting this October.

16

TOP LEASE TRANSACTIONS • National Truck Finance has signed a 10,230 SF lease in 1880 Santa Fe Drive.

• Design IT Vinyl has signed a 4K SF lease in 12801 Harmon Road.

• Trilogy Aviation Group has signed a 3,024 SF lease in 4200 N Main Street.

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

• 4000 Fossil Creek Boulevard – a 24,389 SF class B office building

NEW DEVELOPMENTS • 12550 Willow Springs Road – a 54K SF class B office building, set to deliver November 2020

• 4701 Boat Club Road – a 31K SF class B office building, set to deliver August 2020

LARGE EXISTING VACANCIES • 2601 Meacham Boulevard – 216,082 SF • 5555 N Beach Street – 163,283 SF • 5501 Alliance Gateway Freeway – 161,336 SF

PRESTON CENTER SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(62,857)

58,722

(423)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

13.2%

11.9%

11.3%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

297,000

118,000

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$39.20

$37.59

297,000 Delivered SF Quoted Rates $39.62

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) 2Q 17

3Q 17

4Q 17

1Q 18

Absorption

2Q 18

3Q 18

4Q 18

1Q 19

Deliveries

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

Vacancy Source: CoStar 2Q 2020 Office Report

CURRENT EVENTS

Dallas-based Bandera Ventures has teamed up with HPI Real Estate Services & Investments to purchase a portfolio of three properties in Douglas Center that total 400K SF. 8333, 8343, and 8303 Douglas Avenue represent one of the largest blocks of office space in Preston Center and the largest of the three properties is the 16-story tower that is 75% leased by BBVA bank. Lionstone Investments, on behalf of the Oregon Public Employee Retirement System, sold the portfolio with JLL brokering the transaction.

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

TOP LEASE TRANSACTIONS • Ameriprise Financial has signed an 11K SF lease in The Terraces at Douglas Center.

• Amegy Bank has signed a 4.4K SF lease in 3100 Monticello.

• Rimrock Energy has signed a 4.1K SF lease in One Preston Center.

• Camber Energy has signed a 2.8K SF lease in Highland Park Place.

• Dr. Tomlin has signed a 2.8K SF lease in Preston Commons East Tower.

• Rubicon Representation has signed a 2.2K SF lease in Preston Commons Bank Tower.

• Greystone has signed a 1.7K SF lease in Highland Park Place.

17

RICHARDSON/PLANO/ALLEN/MCKINNEY SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

39,842

155,972

38,010

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

19.3%

19.4%

19.2%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

434,007

368,098

vs. Prev. Qtr

vs. 12 Mths Ago

52,091

-

vs. Prev. Qtr

vs. 12 Mths Ago

$24.20

$24.17

434,007 Delivered SF Quoted Rates $24.25

VITAL STATS

22.0%

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) 2Q 17

3Q 17

4Q 17

1Q 18

Absorption

2Q 18

3Q 18

4Q 18

1Q 19

Deliveries

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

Vacancy Source: CoStar 2Q 2020 Office Report

CURRENT EVENTS • Pillar Commercial, a Dallas-based Commercial Real

Estate firm, has sold 2703 Telecom for an undisclosed amount. The 121K SF office building in Richardson has been purchased by Goldenberg & Associates and was facilitated by Colliers International’s Capital Markets Team.

• New Jersey-based Opex Corporation has acquired

the former AdvoCare office and warehouse building located at 2801 Summit Avenue. The warehousing automation firm purchased the Plano building for its expansion into North Texas. Opex Corp will be building its first operation in the Dallas area on the more than 150K SF seven-acre property. Terms of the deal were not disclosed.

TOP LEASE TRANSACTIONS • DebtBlue has signed a 30K SF lease in 1125 E Campbell Road.

• GuideIt has signed a 19.4K SF extension in Bank of America Plano Tower.

• USMD PPM has signed a 10.6K SF expansion in the Medical Office Buildings of Plano.

• EXFO America has signed an 8.2K SF renewal in The Points at Waterview.

• Bracane Company, Inc. has signed a 3.4K SF renewal in

HLC Deal

CityView Corporate Center.

• Dupre Logistics has signed a 1.6K SF renewal in

HLC Deal

Woodcreek Plaza.

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) 2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

Deliveries

4Q 19

1Q 20

2Q 20

Vacancy Source: CoStar 2Q 2020 Office Report

CURRENT EVENTS

The Fort Worth ISD Board of Education trustees approved the first sales of surplus property, identified after a yearand-a-half long strategic study of inefficient and underused district facilities. The three properties will net a total of $11,514,180 which includes The Fort Worth ISD Professional Development Center at 3150 McCart Avenue, 840 Cooks Lane, and 3 acres at 168 Northwest Corner of Wichita Street and I-20.

“This is the initial phase of the sale of outdated, inefficient facilities that no longer serve the needs of our children or educators,” said Superintendent Kent P. Scribner. “Their sale can and will support a brighter future for public education in Fort Worth. Our goal is to do the right thing for both our students and our taxpayers.”

The facility, located at 3510 McCart Avenue, now functions as the District’s Professional Development Center. Employees who work there and students who attend class there will be relocated to another facility. The other two properties approved for sale are vacant parcels of land.

An increase in homes to the west of Fort Worth could substantially increase activity in Fort Worth’s West-Southwest submarket.

“The Walsh development, near the Fort Worth-Aledo border, is adding 388 new homes this year,” said Seth Carpenter, vice president of development at Republic Property Group, the Walsh developer. “The activity in the neighborhood, which today is home to 1,100 people but eventually could be 50,000-strong, is an indication that demand for single-family housing is still high in North Texas. Real estate professionals at Walsh haven’t noticed a decrease in the number of prospective buyers visiting the west Fort Worth development in recent weeks.”

a developer and landlord, Trident is not only surviving the coronavirus pandemic but they are thriving.

“It’s a real testament to the community and people of Fort Worth that have a vested interest in supporting and sustaining all of our businesses during this difficult time,” said Rishel.

Trident’s next project in the works will be near TCU on Berry Street in the West-Southwest submarket.

TOP LEASE TRANSACTIONS • HCA has signed a 29,547 SF renewal in Overton HLC Deal

Centre.

• Ritchie Bros. Auctioneers has signed a 15,637 SF lease

HLC Deal

in Summit Office Park.

• Cobb Fendley & Associates has signed a 9,423 SF lease

HLC Deal

in One Ridgmar Centre.

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

• 1902 Windsor Place – a 2,500 SF class A medical office building, set to deliver September 2020

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

• One Ridgmar Centre – a 56,225 SF class A vacancy • Western Place I – a 19,871 SF class B vacancy

Kyle Bryson and Wallace Owens formed Trident Group in 2017. Their first endeavor produced Wishbone & Flynt and its side-door speakeasy, The Amber Room, which both debuted in January on Bryan Avenue in Fort Worth. Trident currently has no less than four new concepts in the works. As 19

STEMMONS SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

1,268

(5,534)

34,148

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

24.5%

24.6%

23.7%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

17,946

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$17.97

$17.03

65,000 Delivered SF Quoted Rates $18.36

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) 2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

Deliveries

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

Vacancy

Source: CoStar 2Q 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 VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(37,975)

(184,688)

(86,558)

16.0%

300,000

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

14.0%

200,000

15.9%

15.6%

16.9%

12.0%

100,000

vs. 12 Mths Ago

10.0%

0

U/C SF 656,774 Delivered SF Quoted Rates $40.28

vs. Prev. Qtr 656,774

602,589

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$40.65

$39.74

18.0%

400,000

8.0%

(100,000)

6.0%

(200,000)

4.0%

(300,000)

2.0%

(400,000)

0.0%

(500,000) 2Q 17

3Q 17

4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

Deliveries

4Q 19

1Q 20

2Q 20

Vacancy Source: CoStar 2Q 2020 Office Report

CURRENT EVENTS • Dallas-based Trammell Crow Co. has announced its

plans for a new office/retail tower in Uptown, 2401 McKinney. The current site for the development is two acres on McKinney Avenue between Maple and Fairmount, currently occupied by Truluck’s and Gold’s Gym. The building plans call for 670K SF of office and 15K SF of retail. Crow Co plans to start construction 1Q 2021 with a delivery in mid-2023.

• Cincinnati-based Law Firm, Frost Brown Todd, is

consolidating two smaller offices in Dallas into one location in Rosewood Court. The new 30K SF lease comes after the firm began operation in Dallas in 2015 and has been expanding since. Frost Brown Todd now has more than 12 locations across the country. The 30K SF deal is the second largest deal signed at Rosewood Court this year.

• The new Uptown 23Springs office tower project plans

to begin construction in 2021. The new project will be situated at the corner of Cedar Springs and Maple and will be replacing the three (3) building Cedar Maple office complex. The tower will take almost three years to complete once construction begins. The office building is planned to be 623K SF and will be one of the largest new towers to be added in Dallas’ booming Uptown market. The building is being designed by GFF and will be constructed by DPR Construction. In addition to the office tower, two separate 16K SF retail buildings will be constructed on site. Amenities planned for the project include an underground parking garage, an upscale restaurant and multiple casual fast food restaurants.

TOP LEASE TRANSACTIONS • Frost Brown Todd has signed a 30K SF lease in Rosewood Court.

• Scottish Rite has signed a 21.4K SF lease in Parkside Tower.

• Stifel Financial Corp has signed a 20K SF lease in Harwood No. 10.

• Lurin has signed a 13K SF lease in Harwood No. 10.

• Presidium Group has signed an 11.3K SF expansion in Citymark on the Katy Trail.

DEALS IN THE MARKET • 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