4Q 2020 DFW Industrial Market Brief

Market Brief...

Dallas/Fort Worth

INDUSTRIAL

4Q2020 Property Pictured Above: PARC Northeast | Richardson, Texas 76140

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. I.

DFW Airport Northeast/East Dallas Far Northeast Dallas Northwest Dallas South Dallas South Stemmons North Fort Worth South Fort Worth

3

5 5

HLC SUBMARKET COVERAGE

DFW

HLC DFW INDUSTRIAL MARKET EXPERTS

JIM BRICE

MATT CARTHEY

CANON SHOULTS

JOHN GORMAN

JOSH BARNES

ANDREW GILBERT

BEN WALLACE

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

GEORGE JENNINGS

THOMAS GRAFTON

MADDY CANTY

HOGAN HARRISON

KEATON BRICE

BLAKE TROIANI

Market Director gjennings@holtlunsford.com 817.632.6151

Market Associate tgrafton@holtlunsford.com 817.632.6152

Market Associate mcanty@holtlunsford.com 972.280.8325

Market Associate hharrison@holtlunsford.com 817.710.7058

Market Associate kbrice@holtlunsford.com 972.421.1956

Market Analyst btroiani@holtlunsford.com 972.265.0126

7

HLC DFW

HLC OUTLOOK Absorption

vs. Prev. Qtr

2,590,144

3,657,890

8,867,754

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

7.3%

7.0%

6.5%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

12,580,575

16,152,405

18,351,234

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

27,796,644

26,165,660

29,662,643

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

6,033,495

5,174,140

10,051,030

Despite a disruptive year with COVID-19 and political unrest, the Dallas-Fort Worth industrial market showed resilience through the uncertainty of 2020. Following a record-setting start in 1Q 2020, the market finished year-end 2020 in a healthy and stable position. While down from 2019 absorption (25.4M SF), CoStar reported year-end net positive absorption of more than 19.5M SF. Overall, construction outpaced absorption with 28.4M SF of new product delivered and 27.7M SF under construction at year-end. However, significant leasing activity in North Fort Worth and South Dallas have led the charge to allow the overall market vacancy to remain stable at a healthy +/- 7.0%.

COVID-19 will continue to cause short-term uncertainty as landlords and tenants navigate the changing business climate.

However, overall tenant demand and deal flow has remained strong across all sectors including those with primarily small businesses.

As we begin 2021, we expect the overall industrial market will continue to weather the storm better than other asset classes as many of the large 3PL and e-commerce tenants are hiring opposed to laying off employees. Additionally, we expect DFW to outperform other parts of the country as it continues to be the biggest benefactor of large-scale relocation efforts and population growth. The DFW Industrial Capital Markets set record pricing during 4Q 2020 which exemplifies the overall strength of the DFW Industrial market.

8

INDUSTRIAL TRENDS & TRANSACTIONS

vs. 12 Mths Ago

TRENDS DUE TO COVID-19

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 increasingly willing.

Developers are still scouting new land positions and the development pipeline is strong and active.

TRENDS Need For Speed • More spec offices Desire For Flexibility • Requested expansion options and/or phased in occupancy Drive To Increase Efficiency • Increased 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 activity remains strong

TOP LEASE TRANSACTIONS

• Lowes has signed a 648,726 SF lease in 3101 Oak Street with Exeter Property Group.

• Hayes Retail has signed a 584,689 SF lease in 4624 Clover Haven Street with Exeter Property Group.

• Tech Data has signed a 540,040 SF renewal in 5100 Liberty Way with Eaton Vance.

• Curt Manufacturing has signed a 500,422 SF lease in 3535 N Houston School Road with Prologis.

• AMCOR has signed a 269,388 SF renewal in 4200 Fleetwood Road with ML Realty.

• Pregis has signed a 253,900 SF lease in 2901 West Kingsley Road with Stag Industrial.

• FedEx has signed a 156,773 SF lease in 15815 Executive Drive with Bandera Ventures.

• Brilliant Fulfillment has signed a 120K SF lease in 4051 State Highway 121 with Prologis.

• Pegasus has signed a 105,255 SF lease in 2800 Valley View Lane with KKR. • TDU Tires has signed a 84,400 SF lease in 9401 John Carpenter Freeway with Stonelake.

HLC DFW FACTS & FIGURES

Market

Existing Inventory

Vacancy

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.

Total RBA

Direct SF

Total SF

Vac. %

DFW Airport

649

85,076,363

6,833,909

7,823,465

9.2%

East Dallas

613

48,229,008

2,979,266

3,074,792

6.4%

1,120

116,867,353

6,666,066

7,115,822

6.1%

Henderson County

18

1,219,296

29,968

29,968

2.5%

North Fort Worth

735

111,112,982

11,172,296

12,058,176

10.9%

Great SW/Arlington

OVERALL DFW

8.0%

4,000,000

2.0%

2,000,000

1.0% 0.0%

0 4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

Absorption

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

Deliveries

4Q 20

Vacancy

VACANCY - OVERALL DFW 10.0% 9.0% 7.3%

Northeast Dallas

1,535

114,227,875

7,011,499

7,906,142

6.9%

Northwest Dallas

1,377

112,465,505

5,520,515

6,048,065

5.4%

27

2,285,834

102,259

102,259

4.5%

NW Dallas Outlying South Dallas

699

104,941,004

7,386,075

8,647,732

8.2%

South Fort Worth

1,449

83,213,140

5,175,138

5,441,989

6.5%

South Stemmons

2,079

115,632,821

6,829,850

7,020,764

6.1%

Totals

10,301

895,271,181

59,706,841

65,269,174

7.3%

6.6%

8.0% 7.0%

6.7%

6.4%

6.0% 5.0% 4.0% 3.0% 2.0%

0.6%

0.2%

1.0% 0.0%

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

Direct

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

Sublet

4Q 20

Total

ABSORPTION - OVERALL DFW 22,500,000 20,000,000 17,500,000

YTD Net Absorption

YTD Deliveries

Under Construction SF

YTD Leasing Activity

DFW Airport

2,941,028

5,182,996

2,450,599

9,711,028

East Dallas

1,860,474

1,405,647

2,234,084

2,446,260

Market

15,000,000 12,500,000 10,000,000 7,500,000 5,000,000 2,500,000 0

Great SW/Arlington

2,010,170

3,045,905

471,316

7,342,975

Henderson County

(581)

0

0

0

North Fort Worth

4,462,913

8,784,064

7,484,290

7,471,530

Northeast Dallas

2,047,987

1,803,089

3,917,538

5,462,786

Northwest Dallas

729,728

1,326,352

1,954,658

7,561,403

NW Dallas Outlying

22,462

56,000

30,000

80,139

South Dallas

3,626,948

2,269,588

4,950,036

9,377,377

South Fort Worth

(170,836)

1,335,668

3,471,041

2,664,142

South Stemmons

1,980,576

3,225,602

833,082

5,203,136

Totals

19,510,869

28,434,911

27,796,644

57,320,776

4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

4Q 19

Total Net

1Q 20

2Q 20

3Q 20

4Q 20

Leasing Activity

CONSTRUCTION - OVERALL DFW 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 4Q 17

1Q 18

2Q 18

3Q 18

4Q 18

1Q 19

Delivered Inventory

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

4Q 20

Under Construction

9 Source: CoStar 4Q 2020 Industrial Report

SUBMARKET INTELLIGENCE GREAT SOUTHWEST/ARLINGTON

HLC OUTLOOK

CANON SHOULTS

MADDY CANTY

Managing Principal cshoults@holtlunsford.com 972.280.8328

Absorption

Despite the disrupting effects of COVID-19, the Great Southwest (GSW) industrial submarket finished 2020 in a stable position. At year-end 2020, GSW reported overall positive absorption of just over 2M SF with 7.3M SF of leasing activity.

GSW reported 4Q 2020 new construction completions of 3,045,905 SF. New construction remains steady with 977,408 SF of new projects under construction. The year-end vacancy rate increased slightly to 6.1% versus 5.3% at 3Q 2020. As we enter 1Q 2021, we still expect short-term uncertainty as the country navigates the business climate due to COVID-19.

However, the DFW Industrial market continues to show resilience despite the overall unknown impacts of COVID-19 and the political climate.

Market Associate mcanty@holtlunsford.com 972.280.8325

vs. Prev. Qtr

TOP LEASE TRANSACTIONS

vs. 12 Mths Ago

152,938

542,750

1,592,817

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

6.1%

5.8%

5.3%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

2,581,097

1,196,764

2,718,140

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

471,316

870,769

3,045,905

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

576,123

-

3,100,000

9.0% 8.0% 2,100,000 7.0% 6.0% 5.0%

1,100,000

4.0%

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

Deliveries

4Q 19

1Q 20

2Q 20

3Q 20

• Cooper Commerce Center | 7005 S Cooper Street – a 205,033 SF spec development with NorthPoint Development

• Rent A Tire has signed a 103,584 SF lease at 2895 113th Street with Wilkerson Group.

• Color Coat has signed a 43,952 SF lease at 2740 Regency Drive with Link Industrial Properties.

• Forum Commerce Center | 2240 Forum Drive – a 129,450 spec development with Johnson Development Associates, Inc

• Solar Life Technology has signed a 34,220 SF lease at 918 113th Street with Sealy & Company.

• Warrior Trail Crossing | 2590 W Warrior Trail – 176,670 SF spec development with USAA Real Estate

DEALS IN THE MARKET • 3301 E Park Row – LaSalle sold a 155,425 SF fully-leased building to Clarion.

LARGE EXISTING VACANCIES • 1113 W Oakdale Road – 576,123 SF • Prologis GSW 54 | 3800 E Avenue E – 492,500 SF • Cooper I-20 Building C | 1131 W Bardin Road – 401,115 SF

(900,000)

• Prologis GSW 60 | 2951 N Great Southwest Parkway – 296,915 SF

4Q 20

Vacancy

Source: CoStar 4Q 2020 Industrial Report

10

• Tellworks has signed a 127,708 SF expansion at 2275 E I-20 with Heitman.

• Oakdale Logistics Center | 949 W Oakdale Road – 401,557 SF

1.0% 0.0% 1Q 18

• 901 W Oakdale Road – a 221,335 SF spec development with Crow Holdings Industrial

100,000

3.0% 2.0%

4Q 17

• AMCOR has signed a 269,388 SF renewal at 4200 Fleetwood Road with ML Realty.

HLC Deal

VITAL STATS

10.0%

• Remington I-30 – a 244,920 SF spec development with Gaff Interests

HLC Deal

713,380

NEW DEVELOPMENTS

• MRC has signed a 138,895 SF lease at 2911 S Great Southwest Parkway with Bixby.

SUBMARKET INTELLIGENCE DFW AIRPORT

HLC OUTLOOK The Dallas-Fort Worth (DFW) Airport industrial submarket ended the year with a 9.2% vacancy rate. The higher vacancy rate, compared to the 7.3% rate in 3Q 2020, is due to new construction delivered in 4Q 2020 which is expected to be leased in 1Q or 2Q 2021. The DFW Airport submarket provided a positive net absorption of 2.9M SF at year-end and provided 5.1M SF of new construction in 2020. There is currently more than 2.4M SF under construction.

ANDREW GILBERT

KEATON BRICE

Market Director agilbert@holtlunsford.com 972.280.8312

Absorption

Rental rates remained strong and are expected to continue to grow in 2021. The bulk warehouse rental rates are increasing into the $5 range and functional shall bay product can range from $6 to $8.50 depending on the finish level. Rental abatements range from two to four months depending on renewal versus new deals and the size of the lease transaction. Tenant improvement costs remained high because of increasing construction costs.

Market Associate kbrice@holtlunsford.com 972.421.1956

vs. Prev. Qtr

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, Fresenius Medical and many others.

vs. 12 Mths Ago

495,330

1,958,349

242,279

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

9.2%

7.8%

7.0%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

1,044,193

4,013,826

2,084,171

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,450,599

4,269,530

4,756,408

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,818,931

1,482,593

211,090

2,000,000

8.0% 1,500,000

7.0% 6.0%

1,000,000

5.0% 500,000

4.0% 3.0%

0

2.0% (500,000)

1.0% 0.0%

(1,000,000) 1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

Deliveries

4Q 19

• • • • • • •

1200 Lakeside – 211,262 SF 500 Airline Drive – 127,268 SF 217 Wrangler – 115,200 SF 2900 Genesis Way – 100,407 SF 3015 N Airfield Drive – 78,647 SF 801 Industrial Boulevard – 78,201 SF 925 Freeport Parkway – 61,250 SF

2,500,000

9.0%

4Q 17

• Brilliant Fulfillment has signed a 120K SF lease in 4051 State Highway 121 with Prologis.

• Pegasus has signed a 105,255 SF lease in 2800 Valley View Lane with KKR. • Costco Innovel Solutions has signed a 94,905 SF lease in 615 Westport Parkway with KKR. • CHEP has signed a 70K SF lease in 500 Enterprise Drive with Clarion Partners.

• WWG, Inc. has signed a 46,251 SF lease in 8101 Tristar Drive with AEW Capital Management.

LARGE EXISTING VACANCIES

HLC Deal

VITAL STATS

10.0%

TOP LEASE TRANSACTIONS

1Q 20

2Q 20

3Q 20

4Q 20

NEW DEVELOPMENTS • DFW Park 161 – a 2.5M SF four (4) building project with Perot Development Company and Invesco • Edmonds Airport Trade Center – a 62,820 SF building at 121 and Edmonds in Lewisville, set for completion in April 2021 • Majestic Airport Trade Center – a 284K SF two (2) building project with Majestics, set for completion in 1Q 2021

HLC Deal

Vacancy

Source: CoStar 4Q 2020 Industrial Report

11

SUBMARKET INTELLIGENCE NORTHEAST/EAST DALLAS

HLC OUTLOOK The Northeast/East Dallas submarket performed well through the challenges of 2020 thanks to a steady pace of activity that rebounded quickly after the initial quarantine. Some of the previously stale listings were leased due to reduced inventory and smaller incubator spaces continued to see significant demand. All eyes should be on the amount of inventory coming online in East Dallas. It will be important to watch the pre-leasing activity for numerous projects as the draw for quality labor continues to be its primary calling card. With increased competition in this area and more developments on the way, we have a close eye on concessions as developers race to capture the highest quality tenants.

JOSH BARNES

BEN WALLACE

Senior Vice President jbarnes@holtlunsford.com 972.280.8353

Market Director bwallace@holtlunsford.com 972.421.1966

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(214,778)

195,652

(11,535)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

7.2%

6.6%

7.7%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

1,961,493

1,433,900

2,691,080

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,720,719

487,031

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

487,031

837,862

DEALS IN THE MARKET • 2600 McCree Road – Westmount Realty Capital

VITAL STATS

9.0%

1,800,000

8.0%

1,550,000

7.0%

1,300,000

6.0%

1,050,000 5.0%

800,000

4.0%

550,000

3.0%

300,000

2.0%

50,000

1.0%

(200,000)

0.0%

(450,000) 4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

Deliveries

4Q 19

1Q 20

2Q 20

3Q 20

4Q 20

Vacancy

Source: CoStar 4Q 2020 Industrial Report

12

4624 Clover Haven Street with Exeter Property Group.

• Pregis has signed a 253,900 SF lease in 2901 West Kingsley Road with Stag Industrial.

• TAGG Logistics has signed a 125,832 SF lease in 2850 Marquis with Huntington/Link Logistics.

• ADMC has signed a 98,984 SF lease in 3150 Marquis with Huntington/Link Logistics.

• Apollo Building Products, Inc. has signed a 51,506 SF renewal in 11090-11096 Grader Street with Sealy & Company.

HLC Deal

1,915,282 198,106

TOP LEASE TRANSACTIONS • Hayes Retail has signed a 584,689 SF lease in

has sold a 1M SF building to Scout Capital Partners.

NEW DEVELOPMENTS • Amazon (Forney) BTS – a 1,114,765 SF build-to-suit development with Seefried Properties

• Urban District 30 – a 980,700 SF five (5) building spec project with Urban Logistics Realty

• Forney Logistics Crossing – a 915,013 SF spec project with Stillwater Capital

• East Dallas Logistics Center – a 545,547 SF two (2) building spec project with Dalfen

• East Dallas Commerce Center – a 373,322 SF spec development with IDI Logistics

• 5351 Samuell Boulevard – a 198,109 SF two (2) building spec project with Conor Commercial

LARGE EXISTING VACANCIES • 3737 W Miller Road – 472,200 SF • 1201 Big Town Boulevard – 208,750 SF • 3800 Leon Road – 183,124 SF • 12019 Corporate Drive – 144,824 SF • 1801 S Shiloh – 131,960 SF

SUBMARKET INTELLIGENCE FAR NORTHEAST DALLAS

HLC OUTLOOK Far Northeast Dallas has continued to perform well in the midst of COVID-19. Recently delivered speculative developments are leasing at a healthy rate, thus encouraging additional developments to be planned and sought after. Outer markets such as Frisco and McKinney have gained momentum due to companies wanting to be close to new residential developments. Two AMZL build-to-suit developments in addition to FedEx (in Frisco) were notable deals landed and additional activity has continued across these markets. The hypothesis of pent-up demand has been substantiated and we expect this activity to continue and new developments to be announced.

JOSH BARNES

BEN WALLACE

Senior Vice President jbarnes@holtlunsford.com 972.280.8353

Market Director bwallace@holtlunsford.com 972.421.1966

TOP LEASE TRANSACTIONS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

401,252

489,955

104,815

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

6.8%

7.0%

7.0%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

768,329

1,185,292

558,377

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,992,842

3,084,526

1,097,960

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

297,473

450,362

285,450

VITAL STATS

8.0%

1,000,000

7.0%

850,000

6.0%

700,000

5.0%

550,000

4.0%

400,000

3.0%

250,000

2.0%

100,000

1.0%

(50,000)

0.0%

(200,000) 4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

Deliveries

4Q 19

1Q 20

2Q 20

3Q 20

• FedEx has signed a 156,773 SF lease in 15815 Executive Drive with Bandera Ventures.

• GEA has signed a 76,678 SF lease in 16005 Gateway Drive with Blue Star Land.

• TT Electronics has signed a 67,790 SF lease in 2900 E Plano Parkway with Provident Realty Partners.

• Bean Brothers has signed a 34,285 SF sublease in 801 Klein Road with Invodo.

• Quincy BioSciences has signed a 23,974 SF lease in 1701 E Plano Parkway with Barings Real Estate Advisors.

• Honeywell has signed a 22,089 SF lease in 3801 E Plano Parkway with Exeter Property Group.

DEALS IN THE MARKET • 600 & 640 Shiloh Road – Trident Capital has sold a 312,003 SF two (2) building portfolio to MDH Partners.

• Shutterfly BTS – Core5 has sold a 237,000 SF build-tosuit building to Spirit REIT.

NEW DEVELOPMENTS • 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 • AMZL (McKinney) BTS – a 248,000 SF build-to-suit development with Stonemont Financial Group • McKinney Airport Center – a 231,192 SF two (2) building spec project with Stonemont Financial Group • AMZL (Frisco) BTS – a 199,281 SF build-to-suit development with Blue Star Land • McKinney Logistics Center – a 193,090 SF spec development with TA Realty • Richardson Logistics Center – a 174,720 SF two (2) building spec project with TA Realty • Prestige Circle – a 27,956 SF spec development with Gillett Commercial

LARGE EXISTING VACANCIES • • • • •

915 Enterprise Boulevard – 195,743 SF 105 W Bethany Drive – 120,000 SF 660 N Dorothy Drive – 105,000 SF 3605 E Plano Parkway – 100,320 SF 1125 E Collins Boulevard – 100,150 SF

4Q 20

Vacancy

Source: CoStar 4Q 2020 Industrial Report

13

SUBMARKET INTELLIGENCE NORTHWEST DALLAS

HLC OUTLOOK

ANDREW GILBERT

KEATON BRICE

Market Director agilbert@holtlunsford.com 972.280.8312

Absorption

Through year-end 2020, the Northwest Dallas industrial submarket continues 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 2020 compared to the 5.4% vacancy rate at the end of 3Q 2020. In the last two years, Northwest Dallas has provided a sub 5% vacancy rate but large tenants like PPG, Ericsson, Furniture of America, and others, have recently left the submarket for new construction near DFW Airport. We do not see this trend continuing due to the submarket’s direct access to Interstate 35 and the fact that it will be completely built out when Longpoint and TA deliver their developments. We should expect the sub 5% vacancy rates to return in 2021.

Market Associate kbrice@holtlunsford.com 972.421.1956

vs. Prev. Qtr

vs. 12 Mths Ago

248,346

117,247

662,131

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

5.4%

5.3%

4.9%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

1,974,391

2,070,869

2,239,690

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,954,658

2,078,108

843,312

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

412,040

566,743

1,235,450

TOP TRANSACTIONS • Lowes has signed a 648,726 SF lease in 3101 Oak Street with Exeter.

• Arrowhead Trim and Stairs has signed a 119,083 SF lease in 13780 Benchmark Drive with DRA Advisors.

• Winnsupply has signed a 66,250 SF lease in 1445 W Belt Line Road with ML Realty Partners.

DEALS IN THE MARKET • 13500 N Stemmons Freeway – a 100K SF building at I-35 and Valley View

VITAL STATS

6.0%

1,700,000

5.0%

1,300,000

4.0%

900,000

3.0%

2.0%

500,000

1.0%

100,000

0.0%

(300,000) 4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

Deliveries

4Q 19

1Q 20

2Q 20

3Q 20

4Q 20

Vacancy

Source: CoStar 4Q 2020 Industrial Report

14

NEW DEVELOPMENTS • 3101 W Oak Street – a 648,726 SF spec development with Exeter Property Group, set for delivery in 1Q 2021 • Denton Crossing @ I-35 | Building 3 – a 398,442 SF development with Scannell, set for delivery 1Q 2021 • Denton Crossing @ I-35 | Building 4 – a 126,890 SF development with Scannell, set for delivery in 1Q 2021 • Point 35/90 – a 176,500 SF spec development with Longpoint Realty Partners, set for delivery in 4Q 2021

• Valwood Trade Center – a 138,975 SF two (2)

HLC Deal

building project, set for delivery in 2Q 2021

• Denton Point I & II – a 130K SF two (2) building

HLC Deal

project, set for delivery in 2Q 2021 • Golden Bear Distribution Center – a 125K SF shallow bay development, set for delivery in 2Q 2021

HLC Deal

LARGE EXISTING VACANCIES • 1725-1745 Hayden Drive – 264,038 SF • 1910 N Josey Lane – 259,900 SF • 2001 Midway Road – 219,808 SF • 1434 Patton Place – 208,668 SF

SUBMARKET INTELLIGENCE SOUTH DALLAS

HLC OUTLOOK

JOHN GORMAN

The South Dallas industrial submarket, as surveyed, is 132M SF and is now 7.3% vacant which is 0.8% lower than reported in 3Q 2020. In accordance with the area surveyed, CoStar is reporting 1,247,799 SF of net absorption for South Dallas in 4Q 2020. South Dallas has 6.2M SF under construction in the I-30, I-20, and I-45 corridors combined. Of that construction, 36% or 2.2M SF of the new construction is for BTS or design build assignments. The remaining 64% or 4M 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 over the past year to finally join the remaining Dallas submarkets with single digit vacancy of 7.3%. However, many expect that single digit vacancy to rise again soon with various developers and projects on the horizon.

CANON SHOULTS

Senior Vice President jgorman@holtlunsford.com 214.920.9800

Managing Principal cshoults@holtlunsford.com 972.280.8328

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

1,167,553

131,938

2,489,652

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

8.2%

9.4%

9.7%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

2,227,153

2,832,379

2,059,361

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

4,950,036

2,250,441

2,519,588

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

0

573,500

1,576,674

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

TOP LEASE TRANSACTIONS • Curt Manufacturing has signed a 500,422 SF lease in 3535 N Houston School Road with Prologis.

• 3199 Telephone Road – a 1,008,140 SF spec

• Maverick Fulfillment has signed a 51,675 SF lease in

• 3001 Midpoint Drive – a 1,001,455 SF BTS by

• Shock-Gard has signed a 41,340 SF lease in 3951

• E. Cleveland Road – an 800,737 SF spec

3951 Corporate Drive with Clarion Partners.

Corporate Drive with Clarion Partners.

DEALS IN THE MARKET • 3130 N Longhorn Drive - GLF Logistics sold a

14.0%

3,200,000

12.0%

2,700,000

10.0%

2,200,000

8.0%

1,700,000

6.0%

1,200,000

4.0%

700,000

2.0%

200,000

0.0%

development with SouthPort Logistics

• Fisher & Paykel has signed a 211,948 SF lease in 3500 N Houston School Road with CalSTRS.

VITAL STATS

NEW DEVELOPMENTS • 1300 E Fulghum Road – a 1,039,360 SF spec

404,175 SF building to AEW. • 3201 N Houston School Road – Artemis sold 468,300 SF to Lexington. The building is fully leased to Petmate.

• Amazon - Southlink I – Hines sold 1,044,647 SF to KKR. The building is fully leased to Amazon.

• Cedardale Distribution Center – Morgan Stanly sold 776,629 SF to Arcapita. The building is full leased to FedEx.

development with Van Trust

Panattoni with DSV International

development with USAA/Seefried

• 3130 N Longhorn Drive – a 603,378 SF spec development with PME Oakmont

• I-30 MacArthur Boulevard – a 392,220 SF spec development with Trammell Crow Company

LARGE EXISTING VACANCIES • SouthPointe 20/35 – 660,312 SF • 4775 Tinsley Road – 608,939 SF • 2119 N I-35E – 458,588 SF • 4130 Port Boulevard – 403,200 SF • 3535 N Houston School Road – 399,621 SF • 2200 Danieldale Road – 393K SF

(300,000) 4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

Deliveries

4Q 19

1Q 20

2Q 20

3Q 20

4Q 20

Vacancy Source: CoStar 4Q 2020 Industrial Report

15

SUBMARKET INTELLIGENCE SOUTH STEMMONS

HLC OUTLOOK

CANON SHOULTS

Despite the challenges posed by the COVID-19 Pandemic, the South Stemmons industrial submarket continues to be one of the strongest performing submarkets in Dallas-Fort Worth. Leasing activity has continued to be healthy with the submarket reporting 1.98M SF of YTD positive absorption and 5.2M SF of YTD leasing activity. The submarket posted a 6.1% vacancy rate at the end of the 4Q 2020. Rental rates and price per SF continue to rise despite COVID-19 business interruption. The submarket has continued to capitalize on its irreplicable infill location. Location has continued to outweigh functionality for tenant’s who benefit from the close proximity to Dallas CBD, the Medical District, and immediate access to thriving Dallas suburbs.

MADDY CANTY

Managing Principal cshoults@holtlunsford.com 972.280.8328

Market Associate mcanty@holtlunsford.com 972.280.8325

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(86,282)

(723,402)

1,942,939

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

6.1%

5.7%

5.2%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

1,750,533

3,388,414

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,225,302

2,833,382

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,750,000 7.0% 2,250,000 6.0% 1,750,000

5.0%

1,250,000

4.0%

750,000

3.0% 2.0%

250,000

1.0%

(250,000)

0.0%

(750,000) 4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

Deliveries

4Q 19

1Q 20

2Q 20

3Q 20

4Q 20

Vacancy

Source: CoStar 4Q 2020 Industrial Report

16

renewal in 1137 Conveyor with Hines.

• C&R Bindery has signed a 26,558 SF renewal in 2935 Irving Boulevard with Entrada Partners.

• Purvis Industries, Ltd. has signed a 17,508 SF renewal in 4935-4945 Sharp Street with AEW Capital Management.

• Moderno Porcelin has signed a 15K SF lease in 1128 Security Drive with Hines.

• Neiman Marcus has signed a 12,050 SF renewal in 1128 Security Drive with Hines.

HLC Deal

1,769,455

VITAL STATS

8.0%

9761 Clifford Drive with Link Industrial.

• H. Betti Industries of Texas has signed a 27,900 SF

HLC Deal

833,082

189,752

John Carpenter Freeway with Stonelake.

• Southwest Spirits has signed a 81,633 SF lease in HLC Deal

1,029,835

392,220

TOP TRANSACTIONS • TDU Tires has signed a 84,400 SF lease in 9401

HLC Deal

HLC Deal

DEALS IN THE MARKET • 1330 Regal Row – a 250,770 SF building • 3131 Halifax Street – a 41K SF building • 1340 Manufacturing Street – a 31,365 SF building NEW DEVELOPMENTS • Core 35 Logistics Center | Phase II – a 220,412 SF spec development with Crow Holdings • 9749 Clifford Drive – a 109,200 SF spec development with Link Industrial

LARGE EXISTING VACANCIES • 8401 Ambassador Row – 212,407 SF • 8801 Ambassador Row – 183,443 SF • 3200 Irving Boulevard – 112K SF • 9203 Chancellor Row – 95,549 SF • 1144-1170 Quaker Street – 86,913 SF • 999 Regal Row – 75,862 SF • 3305 Manor Way – 68,300 SF • 7600 Ambassador Row – 66,915 SF

SUBMARKET INTELLIGENCE NORTH FORT WORTH

HLC OUTLOOK

MATT CARTHEY

HOGAN HARRISON

GEORGE JENNINGS

Partner mcarthey@holtlunsford.com 817.710.1111

Market Director gjennings@holtlunsford.com 817.632.6151

Market Associate hharrison@holtlunsford.com 817.710.7058

Looking back on a turbulent 2020, the North Fort Worth industrial submarket seems to have been one of the few investment bright spots. At year-end, net absorption reached just under 4.5M SF, overtaking South Dallas (3.6M SF) as the top performing submarket which it trailed at year-end 2019 by a mere 500K SF. Overall, year-end leasing activity for the submarket also substantiates market vitality with 7.5M SF of deals being transacted, upon which is 2M more feet from the same posting in 2019.

Speculative industrial projects are still delivering at a rapid pace with the submarket bringing 8.7M SF of product online in 2020, 7.5M SF of that being in Alliance alone. This onslaught of continued development explains the third consecutive quarter of double-digit vacancy. However, the market continues to systematically absorb the space and, given early 2021 leasing activity, there is every reason to remain optimistic that North Fort Worth will continue to perform as one of the top markets in the DallasFort Worth Metro.

TOP LEASE TRANSACTIONS Absorption

vs. Prev. Qtr

1,087,182

1,031,626

2,081,175

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

10.9%

10.0%

7.4%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

480,961

844,391

772,318

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

7,484,290

8,769,728

11,019,355

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,273,778

460,346

HLC Deal

DEALS IN THE MARKET

• Interstate Crossing – CBRE is selling a 1,023,488 SF e-commerce building • 5100 Liberty Way – As part of a nationwide, 5 building sale leaseback transaction Tech Data sold its 538,200 SF building to Eaton Vance Investment Managers.

3,875,892

VITAL STATS

12.0%

• Eagle 35 – Trammell Crow sold a 1,089,642 SF building to Southern Glazers.

• RPM Expedite has signed a 219,396 SF expansion in 5457 Sandshell Drive with KKR. • Global Co Pak has signed a 190K SF lease in 2601 Sylvania Cross Drive with Mercantile Partners.

• Shearers’s Foods has signed a 179,183 SF lease in Fossil Creek Crossing.

vs. 12 Mths Ago

4,350,000

NEW DEVELOPMENTS

• Intermodal Commerce Park – a 1.4M SF three (3) building project with Gruene Real Estate Partners • 820 ExChange – a 951,316 SF four (4) building project with Creation Equity/Walton Street • Alliance Center North 7 – a 810,908 SF development with Hillwood • Alliance Center North 3 – a 783,465 SF development with Hillwood • North Quarter 35 – a 644,989 SF four (4) building project with M2G Ventures • Downing Drive & I-35 - approximately 500,000 SF two (2) building front load project with Crow Holdings Industrial • Midway Logistics Park - a 491,000 SF three (3) building project with Stream Realty Partners

3,850,000 10.0% 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) 4Q 17

1Q 18

2Q 18

Absorption

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

Deliveries

4Q 19

1Q 20

2Q 20

3Q 20

LARGE EXISTING VACANCIES • • • • • •

Alliance Westport 11 – 1,022,536 SF Speedway Logistics Center – 795,780 SF Northlink A – 754,473 SF Synergy Crossing – 708,047 SF Westport Parkway Logistics Center – 677,160 SF Mark IV Commerce Park Building 1 – 581K SF

4Q 20

Vacancy

Source: CoStar 4Q 2020 Industrial Report

17

SUBMARKET INTELLIGENCE SOUTH FORT WORTH

HLC OUTLOOK The South Fort Worth industrial submarket posted a 4Q 2020 vacancy of 6.5%, a figure up from 5.7% in 3Q 2020. This increased vacancy stems from two second generation buildings totaling 790K SF becoming available for lease. We expect to see this vacancy rate continue to increase in 1Q 2021 and 2Q 2021 due to the delivery of several new construction projects, such as Black Creek Group’s 569K SF three (3) building project and Majestic’s 489,150 SF two (2) building project at its Fort Worth South Business Park. Industrial Realty Group’s 212,175 SF building at the northwest corner of I-35 and I-20 is also set for completion in 2Q 2021.

MATT CARTHEY

THOMAS GRAFTON

Partner mcarthey@holtlunsford.com 817.710.1111

Market Associate tgrafton@holtlunsford.com 817.632.6152

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(622,276)

(143,191)

(95,884)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

6.5%

5.7%

4.8%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

TOP LEASE TRANSACTIONS

721,448

697,778

1,795,610

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

3,471,041

1,542,615

1,275,247

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

80,421

1,058,844

It is worth noting that South Fort Worth is the only submarket in Dallas-Fort Worth where deliveries have outpaced net absorption YTD. We do not believe that this trend will carry into 2021 as the bulk of the new product was delivered late in 2020, coupled with a significant uptick in leasing velocity and overall deal volume that we saw in 4Q 2020. All optimism aside, South Fort Worth will see a sizable second wave of speculative development that will be delivered in the second half of 2021. These projects include Jackson Shaw’s three (3) building 562,670 SF spec development, 46 Ranch Logistics Park; Bandera Ventures two (2) building 954,960 SF development; Ascendant Commercial’s 858,420 SF crossdock; VanTrust’s 670,914 SF crossdock; Clarion & Crow Holdings Capital’s first two (2) buildings in Carter Park East topping out at 874,300 SF; and IDI’s two (2) building 374,874 SF shallow bay project. All of these developments are already moving dirt or will begin in 1Q 2021.

60,000

• Mexus Plastics has signed a 64,328 SF lease in 1400 Everman Parkway with TCRG Properties.

• APC has signed a 53,296 SF lease in 1851 Will Rogers with PGIM. • Madelinetosh signed a 29,815 SF lease in 4000 Lubbock with TCRG Properties.

HLC Deal

DEALS IN THE MARKET VITAL STATS

8.0%

1,250,000 1,050,000

7.0%

• 33131 W Bolt Street – 136,570 SF building • 600 S 2nd Street – 81,154 SF building • 1213 Antler Drive – 73,651 SF building

850,000 6.0%

650,000

5.0%

450,000

4.0%

250,000 50,000

3.0%

-150,000 2.0%

-350,000

1.0%

-550,000 -750,000

0.0% 4Q 17

1Q 18

2Q 18

3Q 18

Absorption

4Q 18

1Q 19

2Q 19

3Q 19

Deliveries

4Q 19

1Q 20

2Q 20

3Q 20

4Q 20

Vacancy

Source: CoStar 4Q 2020 Industrial Report

18

NEW DEVELOPMENTS • South Fort Worth Logistics Center – a 954,960 SF two (2) building project with Bandera Ventures • Carter Park East – master planned park, which includes two (2) buildings totaling 874,300 SF in the first phase with Clarion and Crow Holdings Capital.

• Fort Worth 1-35 Logistics Center | Building 3 – a 858,420 SF development by Ascendant Commercial • Fort Worth Logistics Hub | Building 1 – a 670,914 SF crossdock developed by VanTrust • Carter Logistics Center – a 569K SF three (3) building project with Black Creek Group

• 46 Ranch Logistics Park – a 562,669 SF three (3) building project with Jackson Shaw • Fort Worth South Business Park | Buildings 2 & 3 – a 489,494 SF two (2) building project with Majestic Realty • Southwest Crossing Logistics Center – a 212,175 SF development with Industrial Realty Group • South Fort Worth Commerce Center - a two (2) building 374,874 SF shallow bay project • AMZL Build-To-Suit - A 200,000 SF BTS for Amazon developed by Hillwood • Granite Village Creek - a 605,489 SF cross-dock with Forefront Development

HLC Deal

LARGE EXISTING VACANCIES • • • • •

7550 Oak Grove Road – 498,475 SF 2200 Heritage Parkway – 459,868 SF 1501 Joel East Road – 391,985 SF 1701 Joel East Road – 293,705 SF 6601 Oak Grove Road – 264,125 SF

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