1Q 2021 DFW Office Market Brief

Market Brief... Dallas/Fort Worth

OFFICE

1Q2021 Property Pictured Above: Overton Centre | 4150 & 4100 International Plaza, Fort Worth, Texas 76109

DFW OFFICE MARKET BRIEF 1Q 2021

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

JOHN DICKENSON

GEOFF SHELTON

DAVID CASON

JAMES ENGELS

DAN POND

Partner/Managing Principal - Fort Worth mcarthey@holtlunsford.com 817.710.1111

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

Market Director - Dallas jengels@holtlunsford.com 972.280.8307

Market Director - Dallas dpond@holtlunsford.com 972.380.3641

MASON PRITCHER

JAKE NEAL

MARSHALL MAYS

JACK BEARE

AARON DRAPER

TYLER HOWARTH

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

Market Analyst - Dallas jbeare@holtlunsford.com 972.265.0128

Market Analyst - Dallas adraper@holtlunsford.com 972.381.3219

Managing Principal Tenant Representation thowarth@holtlunsford.com 972.280.8302

HUNTER HEDRICK

CHIMA OGUERI

QUINN HANFORD

SAM SCHMIDT

Market Analyst - Dallas hhedrick@holtlunsford.com 972.421.1973

Market Analyst - Dallas cogueri@holtlunsford.com 972.381.3210

Market Analyst - Dallas qhanford@holtlunsford.com 972.265.0124

Market Analyst - Dallas sschmidt@holtlunsford.com 972.265.0129

3

NEW LISTING

7920 BELT LINE

7920 Belt Line: 185,372 SF Class B office building in the Richardson/Plano Submarket.

4

GRAMERCY CENTER

NEW LISTING

Gramercy Center: 256,155 SF Class B two-building office project in the Far North Dallas Submarket.

5

NEW LISTING

PROMENADE TOWER

Promenade Tower: 221,404 SF Class B office building in the Richardson/Plano Submarket.

6

FOSSIL CREEK PLACE

NEW LISTING

Fossil Creek Place is a 126,000 square foot office park located in the East Northeast Fort Worth submarket.

7

HLC DFW OFFICE OVERALL MARKET

VACANCY - OVERALL DFW

CONSTRUCTION - OVERALL DFW 25.00%

9,000,000

22.2%

8,000,000 18.2%

20.5%

17.2%

20.00%

7,000,000 6,000,000

15.00%

5,000,000 4,000,000

10.00%

3,000,000 2,000,000

5.00% 1.7%

1.0%

1,000,000 0.00%

1Q 18

2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

Direct Vacancy

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

Sublet Vacancy

4Q 20

0

1Q 21

1Q 18

2Q 18

3Q 18

Total Vacancy

4Q 18

1Q 19

2Q 19

3Q 19

Delivered Inventory

ABSORPTION - OVERALL DFW

4Q 19

1Q 20

2Q 20

3Q 20

4Q 20

1Q 21

Under Construction

OVERVIEW - OVERALL DFW

2,000,000

23.0%

1,000,000

22.0%

0

21.0%

(1,000,000)

20.0%

(2,000,000)

19.0%

(3,000,000)

18.0%

(4,000,000)

17.0%

4,000,000 3,000,000 2,000,000 1,000,000 0 (1,000,000) (2,000,000)

1Q 18

2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

4Q 20

1Q 21

(3,000,000) (4,000,000) 1Q 18

Total Net Absorption

2Q 18

3Q 18

4Q 18

1Q 19

Absorption

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

Deliveries

4Q 20

1Q 21

Vacancy

Source: CoStar 1Q 2021 Office Report

Market

Existing Inventory

Vacancy

# Bldgs.

Total RBA

Direct SF

Total SF

Vac. %

YTD Net Absorption

YTD Deliveries

Under Const. SF

Quoted Rates

Central Expressway

109

12,625,410

2,229,668

2,373,580

18.8%

(2,220)

113,600

30,000

$30.80

Dallas CBD

88

29,818,179

7,669,574

8,663,795

29.1%

(449,245)

0

284,600

$25.94

East Dallas

203

8,490,003

1,361,476

1,507,922

17.8%

135,210

148,614

702,816

$27.17

Far North Dallas

507

55,733,598

13,237,729

14,354,361

25.8%

(1,496,229)

0

2,338,047

$31.68

Fort Worth CBD

53

8,317,337

1,646,411

1,749,723

21.0%

(31,511)

0

0

$27.80

Las Colinas

309

38,421,666

7,518,111

8,450,997

22.0%

(416,737)

0

434,682

$26.60

LBJ Freeway

170

21,529,852

4,747,062

4,975,235

23.1%

(72,240)

0

107,000

$23.47

Lewisville/Denton

189

8,194,915

1,273,716

1,279,560

15.6%

42,990

15,000

50,183

$25.58

Mid Cities

450

24,894,864

5,248,778

5,545,362

22.3%

137,872

32,058

163,086

$24.87

North Fort Worth

69

3,243,866

217,703

229,360

7.1%

(4,424)

20,000

157,500

$26.59

Northeast Fort Worth

54

3,678,380

566,601

573,979

15.6%

51,283

0

0

$20.88

Preston Center

54

5,030,525

624,634

681,899

13.6%

(23,349)

0

615,632

$42.00

Richardson/Plano

395

33,202,612

6,526,873

7,051,855

21.2%

(506,630)

16,007

276,892

$23.99

South Fort Worth

254

12,754,204

1,557,958

1,703,981

13.4%

(27,147)

0

81,788

$24.84

Southwest Dallas

93

4,246,711

638,382

638,382

15.0%

(6,298)

28,314

0

$23.59

Stemmons Freeway

122

13,222,725

3,450,977

3,482,800

26.3%

(58,259)

0

65,000

$20.08

Uptown/Turtle Creek

101

13,828,193

2,357,504

2,610,326

18.9%

(50,024)

0

1,016,688

$41.09

3,220

297,233,040

60,873,157

65,873,117

22.2%

(2,776,958)

373,593

6,343,914

$27.52

Totals

Source: CoStar 1Q 2021 Office Report

8

DALLAS CENTRALINTELLIGENCE BUSINESS DISTRICT SUBMARKET Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(449,245)

114,654

(438,403)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

29.1%

27.9%

27.2%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

284,600

284,600

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$25.99

$26.20

284,600 Delivered SF Quoted Rates $25.94

VITAL STATS

30.0%

400,000 300,000 200,000

28.0%

100,000 0

26.0%

(100,000) (200,000) (300,000)

24.0%

(400,000) (500,000) 22.0%

(600,000) 1Q 18

2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

Deliveries

1Q 20

2Q 20

3Q 20

4Q 20

1Q 21

Vacancy

Source: CoStar 1Q 2021 Office Report

CURRENT EVENTS • According to Dallas Morning News, Harwood Center, a 36-story office tower in Dallas’ CBD, is threatened with foreclosure. The 800K SF tower, owned by a partnership based out of New York, is currently 70% leased and lenders who hold roughly $90M in debt are seeking foreclosure based on technical default. The foreclosure sale is set for March 2nd. Major tenants in the 1982 vintage building include Jacobs, Omnicom Management, CT Corporation System, the U.S. Department of Education, and Fleishman-Hillard.

TOP LEASE TRANSACTIONS • Estrada Hinojosa has signed a 9K SF lease in Plaza of the Americas.

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

• The Hartford Building – a 189,316 SF class B office building

• Purse Building – a 65K SF class B office building

• A company organized by New York-based Square Mile

Capital Group has taken ownership of Renaissance Tower. In consideration for the cancellation of $100M in debt that Square Mile provided for the building in 2017, they have repossessed the 56-story office tower. The 65% leased, 1.7M SF building has been on the market but without a buyer.

• Headington Cos. has invested in Downtown Dallas for

more than a decade, with investments in assets like the Joule Hotel and luxury retail, and will now be moving its offices to the Forty-Five-Ten and 1608 Main Street buildings. Both buildings are owned by Headington. The company, headed by oil entrepreneur Tim Headington, has spent hundreds of millions in investment in Dallas’ CBD. According to the company, the move is slated for mid-April.

NEW DEVELOPMENTS • 300 Pearl | 300 S Pearl Expressway – 199K SF LARGE EXISTING VACANCIES • Fountain Place | 1445 Ross Avenue – 584,895 SF • Renaissance Tower | 1201 Elm Street – 436,574 SF • Bank of America Plaza | 901 Main Street – 314,729 SF • Thanksgiving Tower | 1601 Elm Street – 240,827 SF • 1700 Pacific | 1700 Pacific Avenue – 231,426 SF • Bryan Tower | 2001 Bryan Street – 224,916 SF • One Main | 1201 Main Street – 162,809 SF

9

CENTRAL INTELLIGENCE EXPRESSWAY SUBMARKET Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(2,220)

(38,553)

(60,245)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

18.8%

18.0%

14.6%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

143,600

129,422

30,000 Delivered SF 113,600 Quoted Rates $30.80

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$31.14

$30.79

VITAL STATS

20.0%

200,000

18.0%

150,000

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)

0.0%

(300,000) 1Q 18

2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

Deliveries

1Q 20

2Q 20

3Q 20

4Q 20

1Q 21

Vacancy Source: CoStar 1Q 2021 Office Report

CURRENT EVENTS • The iconic gold office towers on North Central Expressway,

Campbell Centre, has sold to California-based Fenway Capital. The 20-story, nearly 900K SF office complex has been a standout since the early 1970’s when they were delivered. Since 2016, the towers have been owned by Manhattan-based Haberman & Haberman.

Fenway Capital, in partnership with Waterfall Asset Management have teamed up on their second deal in Texas. While deal terms were undisclosed, professionals with knowledge of the deal say the property could have sold for roughly $105M.

10

TOP LEASE TRANSACTIONS • Lincoln Harris has signed a 17.4K SF lease in One Glen Lakes.

NEW DEVELOPMENTS • The Central – a 500K SF class A office tower LARGE EXISTING VACANCIES • Eighty-Eighty Central – 101,019 SF • Cityplace Tower – 90,265 SF • Two Energy Square – 71,078 SF • The Pyramids at Park Lane – 59,016 SF

FAR NORTH DALLAS SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(792,633)

242,767

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

25.8%

23.4%

20.9%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,877,046

2,456,506

vs. Prev. Qtr

vs. 12 Mths Ago

134,992

50,500

vs. Prev. Qtr

vs. 12 Mths Ago

$31.60

$30.48

(1,496,229)

2,338,047 Delivered SF Quoted Rates $31.68

VITAL STATS

26.0%

2,500,000 2,000,000 1,500,000

24.0%

1,000,000 500,000 22.0% 0 (500,000) 20.0%

(1,000,000) (1,500,000)

18.0%

(2,000,000) 1Q 18

2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

Deliveries

1Q 20

2Q 20

3Q 20

4Q 20

1Q 21

Vacancy

Source: CoStar 1Q 2021 Office Report

CURRENT EVENTS • Plano-based Allied BioScience is expanding its

headquarters with a move to One Legacy Circle. The biotech firm moved from the Crescent to Plano in 2015 and has seen rapid growth during the pandemic with national distribution of antimicrobial coatings.

Last summer, the 12-year-old firm had a product that received the first ever federal approval for a single application antiviral product.

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

• Dallas-based Billingsley Co. has released updated plans

for three additional office developments in its Plano business park. The three additional office buildings in the International Business Park development will include more than 600K SF. When completed, the office campus will include 35 buildings that could house up to 21K workers.

TOP LEASE TRANSACTIONS • Catapult Health has signed a 30K SF lease in The

LARGE EXISTING VACANCIES • 5400 Legacy Drive – 1,587,458 SF • 6501 Legacy Drive – 551,430 SF • The Campus at Legacy West – 486,643 SF • 5320 Legacy Drive – 483,743 SF • 7900 Windrose Avenue – 357,500 SF • 5301 Legacy Drive – 296,433 SF • International Plaza II – 233,230 SF • 6400 Legacy Drive – 232,619 SF

Offices Prestonwood Place.

• Allied BioScience has signed a 28K SF sublease in One Legacy Circle.

• Oxefit, Inc. has signed an 8.7K SF lease in 2800 N

HLC Deal

Dallas Parkway.

• Raymond James has signed a 7K SF lease in The Offices Two at Frisco Station.

• TTKA LLC has signed a 5.1K SF lease in Providence Towers.

• All Care Foot & Ankle has signed a 2.6K SF lease in

HLC Deal

17110 N Dallas Parkway.

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) 1Q 18

2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

Deliveries

1Q 20

2Q 20

3Q 20

4Q 20

1Q 21

Vacancy

Source: CoStar 1Q 2021 Office Report

CURRENT EVENTS

According to a news release on April 21, City Place, the fourblock, mixed-use development that some still call “the Tandy Center” in downtown Fort Worth, is up for sale. Located at 100-300 Throckmorton Street, the iconic 550,900 SF property in the north end of downtown is adjacent to Sundance Square.

Newmark Group’s John Alvarado, Gary Carr, Robert Hill, and Chris Murphy are representing the seller, the release says, and Director Chase Tagen and Senior Financial Analyst Mary Claire Houseman are providing transaction support. City Place, built in 1976 as the Tandy Center, served as a mixed-use town center and as the headquarters for RadioShack until 2005. Between 2008 and 2014, City Place was completely renovated and redeveloped, “transforming this downtown Fort Worth landmark into a modern work-play destination,” the release says. Current ownership has also completed $20M in capital and tenant improvements in the past 10 years.

On March 1, Fort Worth-based professional consulting firm Freese and Nichols moved about 300 of its almost 1K employees to a new office near Burnett Plaza in downtown Fort Worth, according to a news release. The firm, which operates 24 offices in seven states, said that the move is part of a commitment to support its home city since its founding in 1894.

“At the same time, we’re continuing to build our teams across Texas and the Southeast United States to provide clients with the outstanding, localized service they deserve,” President and CEO Brian Coltharp said in the release. Freese and Nichols works with state and federal governments in water, transportation, aviation, buildings, and energy. Its work includes projects like the Clearfork Main Street bridge in Fort Worth and a program to renew and improve terminals at Dallas-Fort Worth Airport.

12

TOP LEASE TRANSACTIONS • Bighorn has signed a 10,738 SF sublease in 777 Main.

• An undisclosed tenant has signed a 7,370 SF lease in Frost Tower.

DEALS IN THE MARKET • 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 • 110 W 7th Street – a 101,390 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 – an 82,226 SF class B vacancy • Frost Tower – a 54,528 SF class A vacancy • 777 Main – a 54,399 SF class A vacancy • Burnett Plaza – a 52,502 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) 1Q 18

2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

Deliveries

3Q 20

4Q 20

1Q 21

Vacancy

Source: CoStar 1Q 2021 Office Report

CURRENT EVENTS • Tough architectural restrictions that date to the 1980s

have kept flashy company signage off of the top of buildings in Las Colinas. Recently KOA Partners, the owners of 500 East John Carpenter, have scored a victory against these restrictions by securing the first approval for Waco-based home service franchise firm Neighborly to add signage to the top of the building.

• Local developer, T2V Properties, plans to build an 88,100

SF office project at 1410 N Westridge Circle in the Las Colinas Office Center. The building represents Phase II of the project deemed Westridge Park that already consists of a 34,188 SF building that was delivered in December 2019.

TOP LEASE TRANSACTIONS • Builders FirstSource, inc. has signed a 49,992 SF lease in 3100 Olympus Boulevard.

• FleetPride, Inc has signed a 46,736 SF renewal in 600 E Las Colinas Boulevard.

• Pasha Group has signed a 45,228 SF lease in The Urban Towers.

• Sony has signed a 41,958 SF lease in 3501 Olympus Boulevard.

• Cottonwood Financial signed a 39,995 SF lease in

HLC Deal

Cottonwood Office Center.

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

• Crown Plaza Portfolio – a 56,748 SF class B office complex

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

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

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

LARGE EXISTING VACANCIES • Williams Square West – 319,148 SF • Royal Tech Business Park – 296,312 SF • 6000 Connection – 293,890 SF • 1801 Valley View Lane – 208,593 SF • Horizon Way Business Park – 180,788 SF • Williams Square Central – 174,560 SF • 1551 Corporate Drive – 167,667 SF • 2901 Kinwest Parkway – 153,173 SF • 1555 W Walnut Hill Lane – 151,736 SF • 3501 Olympus Boulevard – 145,307 SF • 6031 Connection Drive – 109,478 SF • 8616 Freeport Parkway – 105,778 SF • Park West 2 – 102,980 SF • Tower 1320 – 100,889 SF

DEALS IN THE MARKET • Royal Ridge Office Portfolio – a 506,057 SF class B office complex

• 6555 Sierra Drive – a 247,254 SF class B office building • 200 W John Carpenter Freeway – a 189,776 SF class C office building

• Three Hickory Centre – a 96,592 SF class A office building

• The Overlook – a 95,510 SF class B office building • Carpenter Court – a 76,640 SF class B office building 13

LBJ SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(72,240)

(95,962)

253,819

23.5%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

23.0%

23.1%

22.8%

20.8%

22.5%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

22.0%

107,000

107,000

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

107,000 Delivered SF Quoted Rates $23.47

vs. Prev. Qtr

vs. 12 Mths Ago

23.71

22.88

VITAL STATS

24.0%

300,000 200,000 100,000 0 (100,000)

21.5% (200,000)

21.0%

(300,000)

20.5% 20.0%

(400,000) 1Q 18

2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

Deliveries

3Q 20

4Q 20

1Q 21

Vacancy Source: CoStar 1Q 2021 Office Report

CURRENT EVENTS • Despite the pandemic, commercial real estate

developments accounted for more than $65B in contributions to the Texas economy in 2020. That number is more than any other U.S. State, according to an annual study by a top real estate trade group.

2019 saw $54B contributed to the economy, with 2020 exceeding that by $11B despite the pandemic.

Commercial development supported more than 428K jobs last year which is a leader in the nation in addition to construction and investment.

TOP LEASE TRANSACTIONS • Huitt-Zollars has signed a 32K SF lease in Lincoln Centre.

• ATW Corp. has signed a 26K SF lease in Greenhill Towers.

• Direct Holdings has signed a 3.8K SF lease in Three Forest Plaza.

• Krueger Law Group has signed a 3.5K SF renewal in Gateway Tower.

14

NEW DEVELOPMENTS • Park Heritage – 1.15M SF • Four Lincoln Centre Proposed – 400K SF • Park Tower at Dallas Midtown Proposed – 376,870 SF • The Inwood at Alpha West Proposed – 300K SF LARGE EXISTING VACANCIES • Crosspoint Atrium – 123,171 SF • 5525 LBJ – 111,999 SF • One Lincoln Centre – 99,494 SF • Pinnacle Tower – 98,412 SF • Three Galleria Tower – 88,084 SF • Element Towers East – 81,637 SF • Park Central 8 – 80,563 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

-

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

vs. Prev. Qtr

vs. 12 Mths Ago

$24.07

$22.46

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) 1Q 18

2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

Deliveries

1Q 20

2Q 20

3Q 20

4Q 20

1Q 21

Vacancy Source: CoStar 1Q 2021 Office Report

CURRENT EVENTS • A new six-floor, 152-room Hilton Garden Inn hotel

located at 2240 Bass Pro Court has opened. Inside the 52-acre multi-use community known as SilverLake Crossing, the new hotel will be adjacent to two other hotels in operation since 2013, Courtyard by Marriott and TownSuites by Marriott, creating Grapevine’s first tri-branded hotel. The “hotel campus” will boast two lobby bars, multiple dining options and over 20K SF of meeting space.

• The owner of Golf Center of Arlington has submitted plans to build a boutique hotel adjacent to the existing center. The plans call for a four-story, 85,207 SF structure that will serve as a resort for those seeking entertainment as well as people looking to improve their golf game.

TOP LEASE TRANSACTIONS • GBS Enterprises has signed a 12,841 SF lease in 9151 Grapevine Highway.

• Suveto has signed a 10,700 SF lease in 1000 Texan Trail.

• Northstar Dermatology has signed a 6,433 SF lease in 8165 Precinct Line Road.

• ABC Legal Services has signed a 5,243 SF lease in 700

HLC Deal

Highlander.

DEALS IN THE MARKET • Richland Corporate Centre – a 142,425 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

NEW DEVELOPMENTS • Charles Schwab Campus – a 616,999 SF class A complex

• 2102 E State Highway 114 – a 103K SF class A office building

• 2170 E Lamar Boulevard – a 61,500 SF class A 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 • 1500 Solana Boulevard | Building 6 – 123,861 SF • 950 E State Highway 114 – 66,707 SF • 8555 Airport Freeway – 47,277 SF • 2208 Highway 121 – 46,052 SF • 500 E Border Street – 42,668 SF & 41,863 SF • 3400 William D Tate Avenue – 40,738 SF

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) 1Q 18

2Q 18

3Q 18

4Q 18

1Q 19

Absorption

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

Deliveries

4Q 20

1Q 21

Vacancy Source: CoStar 1Q 2021 Office Report

CURRENT EVENTS

Developer Hillwood is adding to its already sizable holdings north of Fort Worth. A company set up by the developer and investor purchased an office building in Westlake near the company’s Circle T Ranch. The building previously housed temporary offices for Charles Schwab which just built a new headquarters campus in Westlake. The 130K SF building on Roanoke Road in Westlake was built in 2001. The building is south of State Highway 170 and just down the road from Schwab’s massive new headquarters campus off State Highway 114. The first three buildings with 700K SF of space in the Schwab campus opened more than a year ago. Schwab rented the smaller building in 2015 to house up to 500 temporary workers. The Rolling Hills Office Center building was sold by Lexington TNI Westlake LP, a unit of New York-based Lexington Realty Trust. Hillwood’s CT Westpark No. 1 Ltd bought the building and Comerica Bank provided funding for the purchase.

New homes in North Fort Worth are selling at a record pace and causing prices to jump as homebuilders face skyrocketing demand and an inventory squeeze. According to the HomeUSA.com News Home Sales Index, the 12-month moving average for days on market, or DOM, dropped from 95 days to 81.3 days in the last six months, with the threemonth average at 70.2 days. It’s the fastest sales pace of new homes since Dallas-based HomesUSA started reporting days-on-market data in 2017.

“With so many companies relocating to Texa, and more millennials beginning to buy homes, the demand is going to continue creating an inventory squeeze and buyers can expect higher prices,” Caballero said. “Low interest rates and multiple other factors are spurring the DFW new home market.”

16

TOP LEASE TRANSACTIONS • Northstar Dermatology has signed a 6,433 SF lease in 8165 Precinct Line Road.

• Truly Title has signed a 2,424 SF lease in 4324 Heritage Trace Parkway.

• Brightstar Care has signed a 1,425 SF lease in 7720 Rufe Snow Drive.

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

• 2301 Eagle Parkway – a 73,747 SF class A office building

• 534 N Main Street – a 49,183 SF class B office building • 8224 White Settlement Road – a 27,716 SF class B office building

NEW DEVELOPMENTS • 12600 Willow Springs Road – a 54k SF class A office building, set to deliver October 2022

• 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 • 3575 Lone Star Circle – 43,560 SF

PRESTON CENTER SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(23,349)

(7,621)

47,878

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

13.6%

13.1%

11.7%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

297,000

297,000

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$40.98

$39.20

615,632 Delivered SF Quoted Rates $42.00

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) 1Q 18

2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

Deliveries

1Q 20

2Q 20

3Q 20

4Q 20

1Q 21

Vacancy Source: CoStar 1Q 2021 Office Report

CURRENT EVENTS • Sherry Lane Place has been purchased by CBRE Global

Investors. The 20-story more than 300K SF office tower is on Sherry Lane east of the Tollway and contains the popular Park Cities Club. Sherry Lane Place has been owned since 2006 by a partnership in New York and President George Bush previously had an office in the building. The building is 97% leased and major tenants include Bank of Texas, Hunt Southwest Real Estate, Park City Club, Raymond James, Regus, and Energy Spectrum Capital.

• Two of the largest real estate brokerage firms in the

world are shedding office space in Dallas-Fort Worth, putting more than 145K SF of space on the sublease market. CBRE listed space at 8080 Park Lane and 2100 Ross Avenue. CBRE inherited the space at 8080 Park Lane in January 2015 when it acquired UCR to expand its retail platform. Meanwhile, JLL has placed more than 65K SF of space, spanning several floors at Douglas Center in Preston Center, on the sublease market.

TOP LEASE TRANSACTIONS • Dottid has signed a 5.5K SF lease in 8333 Douglas Center.

NEW DEVELOPMENTS • 8111 Douglas – a 318K SF class A office building • Weir’s Plaza – a 297K SF class A office building • Terminal at Katy Trail – a 72K SF class A office building

LARGE EXISTING VACANCIES • 8343 Douglas at Douglas Center – 64,278 SF • Preston Commons West Tower – 61,228 SF • 5956 Sherry Lane – 31,398 SF • 5950 Sherry Lane – 23,138 SF • Preston Commons East Tower – 19,943 SF

17

RICHARDSON/PLANO/ALLEN/MCKINNEY SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(506,630)

147,818

172,561

400,000

vs. Prev. Qtr

vs. 12 Mths Ago

21.2%

19.7%

19.3%

20.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

19.0%

177,811

331,039

vs. Prev. Qtr

vs. 12 Mths Ago

Delivered SF 16,007 Quoted Rates $23.99

-

52,091

vs. Prev. Qtr

vs. 12 Mths Ago

$23.95

$24.07

500,000

21.0%

Vacancy

276,892

VITAL STATS

22.0%

300,000 200,000 100,000 0 (100,000) (200,000)

18.0%

(300,000) (400,000)

17.0%

(500,000) 16.0%

(600,000) 1Q 18

2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

Deliveries

3Q 20

4Q 20

1Q 21

Vacancy Source: CoStar 1Q 2021 Office Report

CURRENT EVENTS • McKinney-based Thakkar Developers is pitching its plans

for the first phase of a 1M SF office development in Allen. The development is part of the 80-acre, “Avenue” mixed-use project at 121 and Alma Road. Plans show the developer will kick the project off with a 125K SF office building that is expected to break ground in the second quarter of this year. Along with office and retail, the mixed-use development plans call for single family and multifamily residential. Previous plans called for a sports stadium but have since been revised to include more office space.

TOP LEASE TRANSACTIONS • Affinity Health Partners has signed a 13.9K SF lease in HLC Deal

Central 500.

• RMS Engineers has signed an 8.9K SF lease in Canyon Creek Corporate Center.

• SandsRX has signed a 7.2K SF relocation in Cityview

HLC Deal

Corporate Center.

• Itecs Outsourcing has signed a 1.2K SF lease in Central

HLC Deal

500.

18

DEALS IN THE MARKET • 2601 Telecom – a 100,310 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 • Waterview 190 North – 230,987 SF • Waterview 190 South – 230,987 SF • 3400 Cityline – 215,132 SF • Fossil Headquarters – 211,195 SF • Creekview Corporate Center II – 209,600 SF • 2200 George Bush – 176,831 SF • 1125 E Campbell – 168,968 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) 1Q 18

2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

Absorption

3Q 19

4Q 19

1Q 20

2Q 20

Deliveries

3Q 20

4Q 20

1Q 21

Vacancy Source: CoStar 1Q 2021 Office Report

CURRENT EVENTS

On March 24, Transwestern Real Estate Services (TRS) announced FW Waterside Office LLC has sold 4060 Bryant Irvin Road, a two-story, class A office building comprising 28K SF to a Fort Worth-based investor. Transwestern’s Kirk Kelly and Jack Huff facilitated the transaction on behalf of the seller. Theron Bryant, also of Transwestern, represented the buyer. The sale price was not disclosed.

“Our client seized the opportunity to buy this well-located, modern asset occupied by a high-quality tenant,” Bryant said. “Based on our research, we are confident the Fort Worth office market will continue to recover in 2021 and in time return to pre-pandemic levels.”

Located in the 63-acre Waterside lifestyle center in southwest Fort Worth, 4060 Bryant Irvin Road is within walking distance of the Trinity Trails System and benefits from the mixed-use development’s premier retailers, restaurants, and free public amenities. Waterside features approximately 750 multifamily units, a 158K SF retail center, and plans for an additional 20 single family homes, an office property, and a hotel.

With no fanfare, the White Settlement Road bridge near downtown opened to traffic Friday, more than six years after Fort Worth dignitaries gathered for an explosive ceremony to kick start construction of Panther Island. Construction crews dragged barricades off the roadway just before 4 p.m. but little was said about the bridge’s opening. The seemingly perpetually-delayed bridge had become a bane for businesses in the area that were cut off from downtown.

TOP LEASE TRANSACTIONS • D&M Auto Leasing has signed a 7,495 SF expansion at 1400 W 7th Street.

• Ritchie Brothers has signed a 5,756 SF expansion at

HLC Deal

Summit Office Park.

• LJA has signed a 5,196 SF lease at 3017 W 7th Street.

DEALS IN THE MARKET • 101 Nursery Lane – a 58,051 SF class A office building • 200 Bailey Avenue – a 43,463 SF class B office building • 930 W 1st Street – a 26,174 SF class B office building NEW DEVELOPMENTS • 1320 Hemphill Street – a 48,594 SF class A office building, set to deliver January 2022

• 4000 Bryant Irvin – a 18,194 SF class A office building, set to deliver December 2021

LARGE EXISTING VACANCIES • 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 • 1300 Summit Avenue – a 15,543 SF class B vacancy

“The entire area is excited for that bridge to open,” Steve Metcalf, president of the White Settlement Road Development Task Force, said. “We’re fired up.”

Of the three bridges under construction for the $1.17B Panther Island project, White Settlement is the only one without an obvious detour, forcing downtown motorists who want to reach Metcalf’s Dealer Alternative, 2701 White Settlement Road, or nearby Angelo’s BBQ to take a long route down West Seventh Street.

19

STEMMONS SUBMARKET INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(58,259)

36,738

(3,351)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

26.3%

25.9%

25.7%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

65,000

41,907

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

vs. Prev. Qtr

vs. 12 Mths Ago

$20.19

$17.98

65,000 Delivered SF Quoted Rates $20.08

VITAL STATS 28.0%

500,000 400,000

27.0%

300,000 200,000

26.0% 100,000 0

25.0%

(100,000) 24.0%

(200,000) 1Q 18

2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

Absorption

3Q 19

4Q 19

Deliveries

1Q 20

2Q 20

3Q 20

4Q 20

1Q 21

Vacancy

Source: CoStar 1Q 2021 Office Report

CURRENT EVENTS • Almost one year into the Pandemic, more than 200 DFW commercial properties financed with Mortgage-Backed Securities are red-flagged by analysts. Dozens of other bank-financed properties are also being scrutinized because of reduced income or missed payments.

According to the Dallas Morning News, properties facing scrutiny include Great Wolf Lodge, Mesquite’s Town East Mall, and The Colonnade in Addison. Many investors across the country are awaiting commercial foreclosures to acquire properties through auction but, to-date, commercial foreclosures have been much rarer than in previous downturns. Lenders are proving more willing to work with ownership groups to find solutions than in the past, leading to red-flagged assets avoiding foreclosure thus far.

20

TOP LEASE TRANSACTIONS • UT Southwestern Medical Center has signed a 180K SF lease in Pegasus Park.

• Meraki Marketing has signed a 3.2K SF lease in 8700 N

HLC Deal

Stemmons.

NEW DEVELOPMENTS

No new developments are currently under construction.

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

LARGE EXISTING VACANCIES • 1430 & 1440 Empire Central Drive – 320K SF • Pegasus Park – 152,071 SF • 9999 Technology Boulevard W – 150,272 SF • 8777 N Stemmons – 102,594 SF • The Connection at 8600 – 101,530 SF

SUBMARKETUPTOWN INTELLIGENCE Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(50,024)

(130,954)

(184,488)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

18.9%

18.5%

15.6%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

656,774

656,774

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

1,016,688 Delivered SF Quoted Rates $41.09

vs. Prev. Qtr

vs. 12 Mths Ago

$41.34

$40.65

VITAL STATS

20.0%

400,000

18.0%

300,000

16.0%

200,000

14.0%

100,000

12.0%

0

10.0% (100,000)

8.0%

(200,000)

6.0% 4.0%

(300,000)

2.0%

(400,000)

0.0%

(500,000) 1Q 18

2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

Absorption

3Q 19

4Q 19

1Q 20

2Q 20

Deliveries

3Q 20

4Q 20

1Q 21

Vacancy Source: CoStar 1Q 2021 Office Report

CURRENT EVENTS • The closing of The Crescent complex this quarter was

one of the largest commercial property transactions on record. A fund represented by Crescent Real Estate bought more than 1M SF of office and retail space in the acquisition and obtained one of the largest recent commercial notes to finance the deal. Goldman Sachs and Deutsche Bank provided $465M in financing for the acquisition.

• Trammell Crow Company’s planned development at 2401

McKinney is moving ahead on-schedule. The plans for the 27-story office tower, announced last year, called for 670K SF of office space and 15K SF of retail in addition to underground parking. The two-acre site next to the Crescent, that is currently occupied by Truluck’s and Gold’s Gym, will retain Truluck’s as the anchor tenant for the retail project. Trammell Crow hopes to begin construction this year.

• Construction has begun on the 360K SF Harwood No. 14

building. Dallas-based Harwood International released plans for the building last summer and the building finally kicked-off this quarter. Law firm Haynes and Boone has already signed a lease to anchor the building with 125K SF and will move from Victory Park when the project is slated to deliver in 2023. Harwood No. 14 will be the largest building in the Harwood District and is the first such project to break ground in Uptown since the start of COVID-19.

• Los Angeles-based Canyon Partners is opening an office

in the Harwood District north of downtown. Canyon Partners is a 30-year-old investment advisor with offices in Hong Kong, London, New York, Seoul, Shanghai, and Tokyo. Canyon Partners will be taking nearly a full floor in the 10-story, 176K SF building. Other major tenants in the building include Winstead PC, which occupies more than five floors, and Accudyne Industries.

TOP LEASE TRANSACTIONS • Canyon Partners has signed a 13K SF lease in Harwood No. 2.

• Duane Morris has signed a 10K SF sublease in The Crescent.

• Slack Davis Sanger has signed a 5.9K SF lease in 3500 Maple.

• Skin Pharm TX has signed a 3.6K SF lease in 3131 Turtle Creek.

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

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

NEW DEVELOPMENTS • 2323 Cedar Springs Proposed – a 623,610 SF office building

• Harwood XII Proposed– a 541,640 SF office building • 2371 Victory Avenue – 466K SF office building • Parkside Terraces – a 425K SF office building • 3001 Turtle Creek – a 366,181 SF office building • 2601 Victory Avenue – a 364,733 SF office building • The Quad – a 335K SF office building • The Link – a 292,041 SF office building LARGE EXISTING VACANCIES • Parkside Tower – 111,728 SF • 2501 Cedar Springs – 110,415 SF • The Centrum – 106,523 SF • 2401 Cedar Springs – 69,471 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