2Q 2021 DFW Industrial Market Brief

Market Brief...

Dallas/Fort Worth

INDUSTRIAL

2Q2021 Property Pictured Above: Parc Northeast | Richardson, Texas 75082

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

McKINNEY PONDER

P

FRISCO

NORTHWEST DALLAS 5,194,737 SF

JUSTIN

BOYD

ALLEN

THE COLONY

FAR NORTHEAST DALLAS 4,156,945 SF PLANO

LEWISVILLE FLOWER MOUND

HLC SUBMARKET COVERAGE

ROANOKE

COPPELL

ADDISON

GRAPEVINE

RICHARDSON

DFW ALEDO

CARROLLTON

HASLET

NORTH FORT WORTH 4,008,511 SF

KELLER

SOUTHLAKE

DFW AIRPORT 2,257,984 SF

FARMERS BRANCH

DFW INTERNATIONAL AIRPORT

GARLAND

LAS COLINAS

COLLEYVILLE

FORT WORTH MEACHAM INTERNATIONAL AIRPORT

DALLAS LOVE FIELD

BEDFORD

RICHLAND HILLS

HURST

NORTHEAST/EAST DALLAS 5,544,940 SF

IRVING

EULESS

DALLAS

SOUTH STEMMONS 2,563,484 SF

SUNNYVALE MESQUITE

FORT WORTH

GREAT SW/ARLINGTON 3,448,035 SF ARLINGTON

DALLAS EXECUTIVE AIRPORT

GRAND PRAIRIE

BENBROOK

DUNCANVILLE

LANCASTER

SOUTH FORT WORTH 6,120,307 SF DESOTO CEDAR HILL

RENDON

SOUTH DALLAS 4,551,814 SF

MANSFIELD CRESSON

BURELSON

5

5 MIDLOTHIAN

HLC DFW INDUSTRIAL MARKET EXPERTS

MATT CARTHEY

CANON SHOULTS

JOHN GORMAN

JOSH BARNES

ANDREW GILBERT

BEN WALLACE

GEORGE JENNINGS

THOMAS GRAFTON

Partner, Managing Principal mcarthey@holtlunsford.com 817.710.1111

Managing Principal cshoults@holtlunsford.com 972.280.8328

Senior Vice President jgorman@holtlunsford.com 214.920.9800

Senior Vice President jbarnes@holtlunsford.com 972.280.8353

Market Director agilbert@holtlunsford.com 972.280.8312

Market Director bwallace@holtlunsford.com 972.421.1966

Market Director gjennings@holtlunsford.com 817.632.6151

Market Director tgrafton@holtlunsford.com 817.632.6152

MADDY CANTY

HOGAN HARRISON

KEATON BRICE

BLAKE TROIANI

WILLIAM WILSON

MITCH CANTWELL

WALKER FLOYD

TREY GOODSPEED

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 Associate btroiani@holtlunsford.com 972.265.0126

Market Associate wwilson@holtlunsford.com 817.284.5555

Market Analyst mcantwell@holtlunsford.com 972.265.0133

Market Analyst wfloyd@holtlunsford.com 972.265.0141

Market Analyst tgoodspeed@holtlunsford.com 817.632.6155

7

HLC DFW

HLC OUTLOOK Absorption

vs. Prev. Qtr

8,353,834

10,545,755

5,053,326

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

6.4%

6.9%

6.8%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

19,247,695

15,329,016

16,116,529

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

25,120,685

23,898,777

27,639,320

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

4,923,920

7,170,565

INDUSTRIAL TRENDS & TRANSACTIONS

vs. 12 Mths Ago

9,496,600

The Dallas-Fort Worth industrial market continues to perform at record-setting levels thanks to the loosening of COVID restrictions and increased vaccinations. The continued demand for industrial space has taken hold of the market, allowing rents to climb and concessions to decrease.

The DFW Industrial market built upon a strong 1Q to set a new mid-year high watermark with 18.9M SF of net positive absorption. This represents a new mid-year record and equals the average year-end annual absorption over the last four years. Historically, the market sees ~20M SF of absorption on an annual basis. Mid-year leasing activity was reported at 34.6M SF. Significant leasing activity in DFW Airport and South Dallas have led the charge to allow the overall market vacancy to remain stable at a healthy +/- 6.4%.

At the end of 2Q 2021, absorption outpaced supply even with the delivery of 12.1M SF of new space. The development landscape is at a historic pace with 25.1M SF under construction and new announcements coming soon. We are seeing development span to new areas of the metroplex as large entitled industrial sites are becoming more scarce and the institutional demand continues to increase as capital markets flee other product types.

As we enter 3Q 2021, we expect the overall industrial market will continue strong as many of the large 3PL and e-commerce tenants are hiring and expanding in the DFW market. 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.

TRENDS DUE TO COVID-19

• The continued expansion of E-Commerce fuels the increased demand for industrial space.

• The DFW Industrial market as a whole has returned to pre COVID-19 norm.

• The increase in tenant demand coupled with the influx of new capital has caused developers to scour the market for new land positions now stretching to new markets like Forney and Denton.

TOP LEASE TRANSACTIONS

• Henry Schein signed a 810,908 SF lease at Alliance Center North 7 with Hillwood.

• Niagara Bottling renewed 630K SF with TA Realty at 7343 Grady Niblo in Mountain Creek.

• Comptree signed a 576,123 SF lease at 1113 W Oakdale Road with Crow Holdings Industrial.

• GSM Outdoors signed a 494,238 SF lease at 2701 Rochelle Road with Brookfield Properties.

• Main Freight signed a 460,248 SF lease at Alliance Northport 2 with Hillwood.

• Kenco leased 458,576 SF from Clarion at 2119 N Interstate 35E.

TRENDS

• Solo Stove signed a 432,320 SF lease at 1001 Mustang Drive with Prologis.

Need For Speed

• MediFast signed a 427,908 SF lease at 820 Exchange with LGE/ Creation.

• 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) TI Requests And Costs Continue To Increase Pre-Leasing activity remains strong

• Averitt Express signed a 401,557 SF lease at 949 W Oakdale Road with Modlo Logistics.

• Rhino Health signed a 400,857 SF lease at W Everman Parkway & I-35 with Majestic Realty.

• Frito Lay leased 392,220 SF from Clarion at 1011 MacArthur off I-30.

HLC Deal

• RSI North America signed a 391,985 SF lease at 1501 Joel East Road with PGIM. • Purina Animal Nutrition signed a 310,292 SF Lease at South Fort Worth Logistics Center with Bandera.

• GoTrg signed a 250,487 SF lease at Carter Logistics Center with Blackcreek Group, LLC.

HLC Deal

• Fedex signed a 186,577 SF lease at 1901 Joel East Road with PGIM.

HLC Deal

• AER Manufacturing renewed their 170K SF lease on Lindbergh Drive in Addison with AEW.

HLC Deal

• Red River Distribution signed a 133K SF lease in Farmers Branch at 3401 Garden Brook Drive with Stonelake.

HLC Deal

• Inteplast Engineered signed a 128K SF renewal at 2875 Market Street with TA Realty.

• Lineage Redistribution signed a 122,500 SF lease at 6445 Will Rogers Boulevard with TA Associates.

HLC Deal

• Progistics signed a 105K SF lease at 660 N Dorothy with Link.

• Future Foam renewed their lease of 100K SF at 8611 Ambassador Row.

HLC Deal

• Elite Fulfillment signed a 88,170 SF lease at 850 S Jupiter with Prologis.

HLC Deal

8

• Hot Shot Services signed a 72,653 SF lease at 3300 Wood Drive with IDI Logistics.

HLC DFW FACTS & FIGURES

OVERALL DFW

8.0%

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%

Market

Existing Inventory # Bldgs.

Total RBA

Vacancy Direct SF

4,000,000

2.0%

Total SF

Vac. %

DFW Airport

657

86,893,727

4,447,570

5,386,243

6.2%

East Dallas

620

49,226,581

4,494,591

4,567,933

9.3%

Great SW/Arlington

1,120

117,241,662

4,057,769

4,248,843

3.6%

Henderson County

18

1,219,296

29,968

29,968

2.5%

North Fort Worth

751

115,147,568

11,644,206

12,314,285

10.7%

Northeast Dallas

1,556

118,750,269

7,880,902

8,260,218

7.0%

Northwest Dallas

1,387

115,001,394

4,589,299

5,276,285

4.6%

NW Dallas Outlying

28

2,315,834

75,300

75,300

3.3%

South Dallas

706

110,603,936

5,990,562

6,438,023

5.8%

South Fort Worth

1,466

85,026,665

6,423,869

6,516,385

7.7%

South Stemmons

2,077

116,014,334

5,589,649

5,825,995

5.0%

Totals

10,386

917,441,266

55,223,685

58,939,478

6.4%

2,000,000

1.0% 0.0%

0 2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

4Q 19

Absorption

1Q 20

2Q 20

3Q 20

4Q 20

Deliveries

1Q 21

2Q 21

Vacancy

VACANCY - OVERALL DFW 10.0% 9.0% 8.0% 6.40%

7.0%

6.40%

6.0%

6.0%

5.9%

5.0% 4.0% 3.0% 2.0% 0.5%

1.0%

0.4%

0.0% 2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

4Q 19

Direct

1Q 20

2Q 20

3Q 20

4Q 20

Sublet

1Q 21

2Q 21

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

4,345,706

1,908,484

957,978

4,545,181

East Dallas

(743,044)

745,997

2,154,805

909,748

Great SW/Arlington

2,919,454

0

623,818

4,680,613

Henderson County

0

0

0

0

North Fort Worth

2,436,930

2,645,574

6,624,670

6,160,815

Northeast Dallas

2,591,459

3,140,260

1,659,195

3,661,503

Northwest Dallas

2,312,373

1,334,748

1,743,516

4,293,454

26,959

0

0

39,713

South Dallas

3,168,553

1,039,360

7,314,851

3,347,150

South Fort Worth

544,509

1,168,062

2,991,412

3,270,574

Market

15,000,000 12,500,000 10,000,000 7,500,000

NW Dallas Outlying

5,000,000 2,500,000 0 2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Total Net

2Q 20

3Q 20

4Q 20

1Q 21

2Q 21

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

South Stemmons

1,296,690

112,000

1,050,440

3,667,960

Totals

18,899,589

12,094,485

25,120,685

34,576,711 Source: CoStar 2Q 2021 Industrial Report

2Q 18

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

Delivered Inventory

4Q 19

1Q 20

2Q 20

3Q 20

4Q 20

1Q 21

2Q 21

Under Construction

9

SUBMARKET INTELLIGENCE GREAT SOUTHWEST/ARLINGTON

HLC OUTLOOK

CANON SHOULTS

MADDY CANTY

Managing Principal cshoults@holtlunsford.com 972.280.8328

Absorption

The Great Southwest (GSW) industrial submarket posted strong fundamentals through mid-year of 2021. At 2Q 2021, GSW reported overall positive absorption of 2,919,454 SF with 4.7M SF of leasing activity. GSW reported no new construction completions as of the end of 2Q 2021, and new construction remains minimal when compared to other submarkets with 623,818 SF of new projects under construction. The 2Q 2021 vacancy rate decreased to a record low of 3.6% versus 5.6% at 1Q 2021. This ranks GSW at the top of the major submarkets with the lowest vacancy rate. As we continue into the second half of 2021, we expect the GSW market to only strengthen as tenant demand continues to expand across the DFW market and the supply of large blocks of space in GSW tightens with limited opportunity for additional development.

Market Associate mcanty@holtlunsford.com 972.280.8325

vs. Prev. Qtr

vs. 12 Mths Ago

2,261,730

657,724

(652,881)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

3.6%

5.6%

6.2%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

3,070,539

1,610,074

2,073,112

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

623,818

475,858

605,391

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

401,557

VITAL STATS

8.0%

3,100,000

7.0% 6.0%

2,100,000

5.0% 1,100,000

4.0% 3.0%

100,000

2.0% 1.0%

(900,000)

0.0% 2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Deliveries

2Q 20

3Q 20

4Q 20

1Q 21

2Q 21

Vacancy

Source: CoStar 2Q 2021 Industrial Report

TOP LEASE TRANSACTIONS

NEW DEVELOPMENTS

• Comptree signed a 576,123 SF lease at 1113 W Oakdale Road with Crow Holdings Industrial.

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

• Averitt Express signed a 401,557 SF lease at 949 W Oakdale Road with Modlo Logistics.

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

• JB Hunt expanded to a total of 127,795 SF at 600 109th Street with Mapletree Investments Ltd.

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

• Fidelity Paper signed a 107,082 SF lease at 310 SW 14th Street with Heller Industrial Parks.

• Innovative Soil Solutions renewed their 23,350 SF lease at 710 107th Street with Humphreys Capital.

HLC Deal

DEALS IN THE MARKET • Prime Portfolio – Humphreys Capital is selling a multimarket portfolio with 137,068 SF in the GSW/Arlington submarket.

• National High Growth Logistics Portfolio – KKR is selling a multi-market 15M SF portfolio with six (6) buildings in the GSW market.

• Warrior Trail Crossing | 2590 W Warrior Trail – a 176,670 SF spec development with USAA Real Estate • 4801 & 4751 Collings Street – a two (2) building 148,127 SF spec development with Jackson Shaw • Wildlife 9 | 2401 N Beltline Road – a 147,960 SF spec development with Crow Holdings Industrial • Forum Commerce Center | 2240 Forum Drive – a 129,450 spec development with Johnson Development Associates, Inc.

LARGE EXISTING VACANCIES • 602-604 Fountain Parkway – 231,034 SF • 4949 Amon Carter Boulevard – 211,780 SF • 102 E Interstate 20 – 199,920 SF • 3010 Red Hawk Drive – 162K SF • Prologis GSW 51 | 2750 114th Street – 146,748 SF

10

SUBMARKET INTELLIGENCE DFW AIRPORT

HLC OUTLOOK The Dallas-Fort Worth (DFW) Airport industrial submarket ended 2020 with a 9.2% vacancy rate. The vacancy has seen a big drop due to leasing for big blocks of space in Passport Park and Perot/Invesco’s 161 development which has lowered the vacancy rate to 6.2% at the halfway point in 2021.

ANDREW GILBERT

KEATON BRICE

Market Director agilbert@holtlunsford.com 972.280.8312

Absorption

Rental rates remained strong and are expected to continue to grow throughout 2021. The bulk warehouse rental rates are increasing into the mid $5 - $6 rate range depending on building age. In the 50K - 100K SF range for functional shallow bay product, we are seeing rates from $6.00 up to mid $8.00 depending on the finish level. Rental abatements are still prevalent depending on renewal versus new deals and the size of the lease transaction. Tenant improvement costs remained high because of increasing construction costs.

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.

Market Associate kbrice@holtlunsford.com 972.421.1956

vs. Prev. Qtr

vs. 12 Mths Ago

437,698

3,908,008

438,876

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

6.2%

6.6%

8.5%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

2,543,270

2,001,911

2,209,358

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

957,978

725,199

5,572,067

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

140,056

1,768,428

4,000,000

9.0%

3,500,000

8.0%

3,000,000

7.0%

2,500,000

6.0%

2,000,000

5.0%

1,500,000

4.0%

1,000,000

3.0%

500,000

2.0%

0

1.0%

(500,000)

0.0%

(1,000,000) 2Q 18

3Q 18

4Q 18

1Q 19

Absorption

2Q 19

3Q 19

4Q 19

1Q 20

Deliveries

2Q 20

3Q 20

4Q 20

1Q 21

• Solo Stove signed a 432,320 SF lease at 1001 Mustang Drive with Prologis.

• GSM Outdoors signed a 494,238 SF lease at 2701 Rochelle Road with Brookfield Properties.

• Louis Vuitton North America signed a 211,100 SF at 220 N Freeport with Prologis.

• Humana signed a 117,313 SF lease at 3300 SH 161 with Perot/Invesco leaving 39,312 SF still available.

DEALS IN THE MARKET

1,616,489

VITAL STATS

10.0%

TOP LEASE TRANSACTIONS

2Q 21

• Port America – fifteen (15) Shallow Bay buildings totaling 717,735 SF on fee simple land adjacent to DFW Airport.

Stockbridge is the seller.

• Cabot Defender Portfolio – Cabot is selling three (3) buildings located in the Airport Submarket totaling 647,096 SF. • DFW Global Logistics Center – Clarion is selling their four (4) building project on Mustang Drive totaling over 600K SF on Airport ground-lease land.

• KKR Portfolio – KKR is selling a national portfolio which includes two (2) buildings at the Airport submarket, 2800 Valley View and 5101 Statesman which totals 386,159 SF.

• Project Radar Portfolio – Nuveen is selling their portfolio which includes one (1) building at the Airport on Northpoint totaling 300,800 SF. • DFW North Logistics Center – 2400 and 2402 Esters are on the market totaling over 200K SF. • Southlake Business Park - three (3) buildings totaling 182,929 SF in Southlake

HLC Deal

NEW DEVELOPMENTS • Bison Grove Business Park – Hines has broken ground on their four (4) building development on Exchange Circle – Brookfield is developing two (2) buildings totaling 315,463 SF off Freeport Parkway. Expected delivery is 1Q 2022.

• Edmonds and Garden Ridge. The development totals over 880K SF. • Oakbend – Prologis plans to deliver their 175K SF development on Oakbend Drive in 3Q 2022.

LARGE EXISTING VACANCIES • • • •

3150 State Highway 161 – 646,190 SF 1111 N 28th Avenue – 216,834 SF 1555 N Airfield – 113,640 SF 9015 Sterling – 104,239 SF

Vacancy

Source: CoStar 2Q 2021 Industrial Report

11

SUBMARKET INTELLIGENCE NORTHEAST/EAST DALLAS

HLC OUTLOOK The Northeast/East Dallas submarket reported a historic quarter through 2Q 2021. We have seen a drastic increase in activity, tenant optimism, and deals closing. Capital Markets are reacting and have become even more aggressive chasing deals in this area as evidenced by the recent transactions involving Urban District 30 and Skyline Commerce Center. With undeveloped infill sites becoming more scarce, developers are turning their eyes to available land in more outlying markets such as Forney and Terrell, where we are currently tracking over 9.8M SF of spec industrial development in the planning stages.

JOSH BARNES

BEN WALLACE

Senior Vice President jbarnes@holtlunsford.com 972.280.8353

Market Director bwallace@holtlunsford.com 972.421.1966

TOP LEASE TRANSACTIONS • Inteplast Engineered signed a 128K SF renewal at HLC Deal

2875 Market Street with TA Realty.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

647,756

1,592,379

726,907

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

4.9%

5.6%

6.0%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

Jupiter with Prologis.

• Hemasource signed a 71,250 SF expansion at 1201 Big Town Boulevard with KKR.

1,251,538

1,805,647

759,413

vs. Prev. Qtr

vs. 12 Mths Ago

• BioMed Laboratories signed a 69,280 SF at 4401 Samuell Boulevard with Stockbridge.

1,703,450

432,672

2,247,750

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,522,610

• Hot Shot Services signed a 72,653 SF lease at

HLC Deal

3300 Wood Drive with IDI Logistics.

U/C SF

-

• Elite Fulfillment signed a 88,170 SF lease at 850 S

• Multipackaging Solutions signed a 69K SF renewal

HLC Deal

at 2755 Miller Park North with TA Realty.

0

• Speeder Solutions signed a 67,692 SF lease at 1801

HLC Deal

S Shiloh with TA Realty.

VITAL STATS

10.0%

• Pro Door Systems signed a 35,608 SF lease at

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) 2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Deliveries

2Q 20

3Q 20

4Q 20

1Q 21

2Q 21

Vacancy

Source: CoStar 2Q 2021 Industrial Report

12

10401 Miller Road with Link.

DEALS IN THE MARKET • Alcott Logistics Station– a 903,895 SF two (2) building project with Urban Logistics Realty includes a 310,900 SF rear load BTS and a 592,995 SF speculative cross dock.

NEW DEVELOPMENTS • 11333 CR 212– a 904,495 SF spec development by Stillwater Capital in Forney

• 1103 Gateway Boulevard – a 712,900 SF spec development by Hunt Southwest in Forney

• Sunnyvale Business Center – a 643,760 SF spec development by Langford Properties in Sunnyvale

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

• East Dallas Commerce Center – a 373,322 SF spec development by IDI Logistics in Mesquite

• E Scyene Road – a 310,900 SF real load BTS

by Urban Logistics Realy and Jackson Shaw in Mesquite

LARGE EXISTING VACANCIES • 1201 Big Town Boulevard – 208,750 SF • 1455 Republic Parkway – 169,924 SF • 1465 IH-30 – 158,701 SF • 2610 McCree Road – 152,139 SF • 4401 Samuell Boulevard – 143,801 SF

SUBMARKET INTELLIGENCE FAR NORTHEAST DALLAS

HLC OUTLOOK Far Northeast Dallas performed extremely well through 2Q 2021, matching the overall DFW thesis of spaces leasing at historic pace. Outlying markets such as McKinney & Rockwall continue to be the conversation, as developers are being pushed to the outer markets due to land availability. Leasing activity in interior markets (Richardson, Plano, and Allen) and outlying markets (McKinney, Frisco, and Rockwall) are both extremely strong. McKinney is seeing some of the highest rents across all DFW as there are little quality second generation spaces to hold rents down. We expect this activity to continue and additional new developments to be announced as available land sites are being strongly pursued by all.

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

942,129

742,120

329,496

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

5.1%

6.2%

6.0%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

927,156

539,946

724,491

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,555,220

2,531,862

2,425,702

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

631,642

924,670

501,711

VITAL STATS

7.0%

1,000,000 850,000

6.0%

TOP LEASE TRANSACTIONS • Progistics signed a 105K SF lease at 660 N Dorothy with Link.

• Denali Advanced Integration signed a 60K SF lease at 1100 Klein Road with Link.

• Petoskey Plastics signed a 51,408 SF lease at 2182 Airport Drive with Stonemont Financial.

• Hisun Motors signed a 47,250 SF expansion at 1250 Wattley Way with Exeter Property Group.

• Statlab signed a 47,545 SF lease at 320 Wilmeth with ML Realty.

• ASI Computer Technologies signed a 30K SF lease at 1680 N Glenville with Exeter Property Group.

• Lurin Construction signed a 25K SF 1800 10th with Link.

• Fersat signed a 22,527 SF lease at 1001 Los Rios Boulevard with Core 5 Logistics.

• Momentum Glass signed a 21,742 SF lease at 310 Wilmeth Road with ML Realty.

• Trillion Technologies signed a 19,413 SF lease at 2901 Technology with Prologis.

LARGE EXISTING VACANCIES • • • • • •

3827 N McDonald Street (A) – 301,320 SF 915 Enterprise Boulevard – 195,743 SF 4101 E Plano Parkway – 136,210 3827 N McDonald Street (B) – 129,914 SF 105 W Bethany Drive – 103K SF 1125 E Collins – 100,150 SF

HLC Deal

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) 2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Deliveries

2Q 20

3Q 20

4Q 20

1Q 21

2Q 21

Vacancy

Source: CoStar 2Q 2021 Industrial Report

NEW DEVELOPMENTS • Star Business Park – a 277,700 SF two (2) building spec development with Blue Star • McKinney Airport Center – a 231,192 SF two (2) building spec project with Stonemont Financial Group • McKinney Logistics Center – a 193,090 SF spec development with HLCI/TA Realty • Richardson Logistics Center – a 174,720 SF two (2) building spec project with HLCI/TA Realty

HLC Deal

HLC Deal

13

SUBMARKET INTELLIGENCE NORTHWEST DALLAS

HLC OUTLOOK

ANDREW GILBERT

KEATON BRICE

Market Director agilbert@holtlunsford.com 972.280.8312

Absorption

Through 2Q 2021, the Northwest Dallas industrial submarket is off to a booming start. Large leases have taken place and the demand has been outstanding for all deal sizes. EMLS, Network Wireless Solutions, Corradi USA, Elong International and Red River Distribution all absorbed space greater than 100K SF in the first half of 2021. In the past year, the deal velocity slowed down for deals greater than 100K SF, but in 2021 so far, that trend has reversed. The submarket posted a vacancy rate of 4.6% which decreased from 5.4% at the end of 2020. Longpoint and TA are wrapping up their shallow bay developments in Carrollton and Hunt Southwest and TA are under construction in Denton. We expect the Northwest Dallas submarket to produce more strong statistics as we progress in 2021.

Market Associate kbrice@holtlunsford.com 972.421.1956

vs. Prev. Qtr

vs. 12 Mths Ago

1,105,480

1,206,893

323,702

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

4.6%

5.3%

5.0%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

2,268,881

2,024,573

2,314,236

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,743,516

1,390,123

2,553,201

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

287,580

1,047,168

18,581

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

(300,000)

0.0% 2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Deliveries

2Q 20

3Q 20

4Q 20

1Q 21

2Q 21

Vacancy

Source: CoStar 2Q 2021 Industrial Report

14

TOP TRANSACTIONS • AER Manufacturing renewed their 170K SF lease HLC Deal

on Lindbergh Drive in Addison with AEW.

• Red River Distribution signed a 133K SF lease in

HLC Deal

Farmers Branch at 3401 Garden Brook Drive with Stonelake.

• Sealed Air renewed their 80,272 SF lease at 1430 Bradley in Carrollton with ATCAP Partners.

• Soprema Roofing signed a 63K SF lease at Longpoint’s new development in Carrollton at 2643 N Interstate 35.

• MDHC signed a 57,361 SF lease with Link Industrial at 2107 Hutton in Carrollton.

HLC Deal

DEALS IN THE MARKET • Halliburton Site – 66 acres on Belt Line Road in Carrollton, currently marketed as a redevelopment opportunity • KKR Portfolio – twenty (20) buildings in DFW are included in the portfolio. Nicholson, Vantage and Hutton Court are the three (3) buildings located in NW Dallas.

NEW DEVELOPMENTS • I-35 Convergence – a 250,080 SF spec development with Hunt Southwest, set for delivery in 4Q 2021 • Point 35/90 – a 176,500 SF spec development in Carrollton with Longpoint Realty Partners, set for delivery in 4Q 2021 • Denton Point I & II – a 130K SF two (2) building project in Denton with HLCI/TA, set for delivery in 3Q 2021 • Golden Bear Distribution Center – a 125K SF shallow bay development in Carrollton with HLCI/ TA, set for delivery in 3Q 2021 • Live Oak Logistics Park – a three (3) building, 230k SF shallow bay development located off of 121 and being developed by Link.

HLC Deal

LARGE EXISTING VACANCIES • 2001 Midway Road – 219,808 SF • 1701 Valley View – 92,720 SF • 1605 Lakeway Drive – 87,624 SF • 1434 Patton Place – 80,440 SF

SUBMARKET INTELLIGENCE SOUTH DALLAS

HLC OUTLOOK

JOHN GORMAN

South Dallas Industrial submarket as surveyed is 134M SF and is now 5.6% vacant which is 0.8% lower than reported in 1Q 2021. In accordance with the area surveyed, CoStar is reporting 2,258,108 SF of net absorption for South Dallas in 2Q 2021. South Dallas has 10.7M SF under construction in the I-30, I-20, & I-45 corridors combined. Of that construction, 21% or 2.2M SF of the new construction is for Build-to-Suit or Design Build assignments. The remaining 79% or 8.4M SF under construction is speculative development. For the past 12 months the South Dallas submarket of I-30, I-20 and I-45 averaged a single digit vacancy rate of 6.65% which allowed it to align with the remaining Dallas submarkets that have enjoyed single digit vacancy for quite some time. However, many expect that single digit vacancy to rise again soon with various developers and the projects under construction and on the horizon.

CANON SHOULTS

Senior Vice President jgorman@holtlunsford.com 214.920.9800

Managing Principal cshoults@holtlunsford.com 972.280.8328

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

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

1,269,667

1,898,886

-245,155

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

5.8%

6.3%

9.0%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

2,286,063

1,061,087

2,337,051

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

7,314,851

6,668,330

9,368,723

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,039,360

0

0

TOP LEASE TRANSACTIONS • Niagara Bottling renewed 630K SF with TA Realty at 7343 Grady Niblo in Mountain Creek.

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

• Frito Lay leased 392,220 SF from Clarion at 1011

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

• Site One leased 337,931 SF from Cabot at 1200 W

• E Cleveland Road – 800,737 SF spec development

• DIAB leased 265,248 SF from Bradford at 220 E

• 9900 Bonnie View Road – 626,439 SF expansion by

• Yita leased 141,750 SF from Dogwood at 2170

• 2900 West Drive – 603,378 SF spec development

Interstate 35E.

MacArthur off I-30.

Wintergreen Road off I-45.

Danieldale Road south of I-20.

French Settlement Road off I-30.

• Supply Chain Management leased 140,807 SF from

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 (300,000)

0.0% 2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Deliveries

2Q 20

3Q 20

4Q 20

1Q 21

2Q 21

Vacancy

spec development by Xebec

• Kenco leased 458,576 SF from Clarion at 2119 N

HLC Deal

VITAL STATS

NEW DEVELOPMENTS • Southport Parkway | Buildings 1 & 2 – 2,126,880 SF

Clarion at 3901 Corporate Drive off I-20.

• Unique Loom leased 139,971 SF from AEW at 2777

HLC Deal

W Danieldale Road south of I-20.

DEALS IN THE MARKET • 3001 Midpoint Drive – DSV International is selling their 1,001,455 SF design build.

• 1610 N Goode Road – a 698,880 SF spec

development by Scannell off Interstate 45

development by Van Trust

Panattoni for DSV International

by USAA/Seefried NFI

by PME Oakmont

LARGE EXISTING VACANCIES • 4130 Port Boulevard – 403,200 SF (2nd generation space)

• 3535 N Houston School Road – 399,621 SF spec remaining with Prologis

• 2200 Danieldale Road – 393K SF with CalSTRS (2nd generation space)

• 220 E Danieldale Road – 385,472 SF with Bradford (2nd generation space)

Source: CoStar 2Q 2021 Industrial Report

15

SUBMARKET INTELLIGENCE SOUTH STEMMONS

HLC OUTLOOK

CANON SHOULTS

The South Stemmons industrial submarket continues to be one of the strongest performing submarkets in Dallas-Fort Worth. Leasing activity has continued to remain healthy with the submarket reporting 1.6M SF of leasing activity, as well as 615,244 SF of positive absorption for 2Q 2021. The submarket posted a 5.0% vacancy rate at the end of 2Q 2021, which has slightly improved from the 5.4% vacancy rate posted at 1Q 2021. Rental rates and price per SF continue to rise across the board. The submarket has continued to capitalize on its irreplicable infill location, and 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

615,244

0

2,643,630

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

5.0%

5.5%

5.2%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

2,034,758

1,762,006

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,050,440

1,053,240

1,085,442

vs. Prev. Qtr

vs. 12 Mths Ago 2,643,630

2,750,000 7.0% 2,250,000

6.0%

1,750,000

5.0%

1,250,000

4.0% 3.0%

750,000

2.0%

250,000

1.0%

(250,000)

0.0%

(750,000) 2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Deliveries

2Q 20

3Q 20

4Q 20

1Q 21

2Q 21

Vacancy

Source: CoStar 2Q 2021 Industrial Report

16

7600 Ambassador Row with Stonelake.

• Cain Food Industries renewed their lease of 42K SF at 4801 Sharp Street.

• Designer Delivery renewed their lease of 31,474 SF at 1110 Inwood Road.

NEW DEVELOPMENTS • Core 35 Logistics Center | Phase II – a 220,412 SF

VITAL STATS

8.0%

8611 Ambassador Row.

• Jarrell Enterprises signed a 66,915 SF lease at

HLC Deal

Delivered SF

-

HLC Deal

HLC Deal

1,633,202

112,000

TOP TRANSACTIONS • Future Foam renewed their lease of 100K SF at

spec development with Crow Holdings Industrial

• Stadium Logistics Center | 2201 Chemsearch

Boulevard – a 329,358 SF development with CT Realty Investors

LARGE EXISTING VACANCIES • 8401 Ambassador Row – 219,175 SF • 10850 Harry Hines Boulevard – 182,558 SF • 4001 Irving Boulevard – 130K SF • 3200 Irving Boulevard – 112K SF • 10155 E Technology Boulevard - 103,680 SF • 3305 Manor Way – 68,300 SF • 1144-1170 Quaker Street – 68,201 SF

SUBMARKET INTELLIGENCE NORTH FORT WORTH

HLC OUTLOOK

MATT CARTHEY

Absorption

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

vs. Prev. Qtr

vs. 12 Mths Ago

1,662,612

1,980,585

2,993,938

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

10.7%

11.6%

10.5%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

3,029,706

3,131,109

3,068,485

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

6,624,670

6,084,657

8,122,445

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

664,989

1,980,585

2,993,938

4,850,000 4,350,000

12.0%

3,850,000 10.0%

3,350,000 2,850,000

8.0%

2,350,000 6.0%

1,850,000 1,350,000

4.0%

850,000 2.0%

350,000

0.0%

(150,000) 2Q 18

3Q 18

4Q 18

Absorption

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

Deliveries

2Q 20

TOP LEASE TRANSACTIONS

• Henry Schein signed a 810,908 SF lease at Alliance Center North 7 with Hillwood.

• Main Freight signed a 460,248 SF lease at Alliance Northport 2 with Hillwood.

• MediFast signed a 427,908 SF lease at 820 Exchange with LGE/Creation.

• CSG signed a 153,550 SF lease at Mark IV Commerce Center with Dalfen.

• Challenger Manufacturing signed a 125,139 SF lease at Northlink with Hines.

• City Electric Supply signed a 99,366 SF lease at Speedway Distribution Center with IDI.

DEALS IN THE MARKET

VITAL STATS

14.0%

The North Fort Worth submarket continues its positive trajectory in terms of net absorption with a 2Q 2021 posting of approximately 2M SF, bringing the year to date total to 2.7M SF which is 85% of the entire 2020 absorption number.

Shallow-bay product continues to shine in North Fort Worth with less than 2% of the vacancy rate coming from second generation space and the remainder being from recently delivered product. The Alliance cluster remains in stride with notable leases to big-box vacancy being signed in 2Q, Henry Schein (810K SF), MainFreight (460K SF), Challenger Manufacturing (125K SF) and City Electric Supply (99K SF). Even with the positive momentum in leasing activity/absorption expect to see the total vacancy rate continue to stagnate as the submarket awaits another 6.6M SF to be delivered by the end of the calendar year.

3Q 20

4Q 20

1Q 21

2Q 21

Vacancy Source: CoStar 2Q 2021 Industrial Report

• Lone Star Commerce Center – a 380K SF three (3) building project with Forefront Commercial

• Westside 35 – approximately 500K SF two (2) building front load project with Crow Holdings Industrial • Midway Logistics Park – a 491K SF three (3) building project with Stream Realty Partners • Champions Circle Business Park – a 361,040 SF three (3) building project with Hopewell • Basswood 35 – a 237,390 SFD SF two (2) building project with EastGroup • Air Commerce Logistics Center – a 114,400 SF project with Holt Lunsford Commercial Investments

HLC Deal

LARGE EXISTING VACANCIES • • • • • •

Speedway Logistics Crossing – 795,780 SF Northlink A – 754,473 SF Synergy Crossing – 708,047 SF Elizabeth Creek Gateway | Building D – 702K SF Westport Parkway Logistics Center – 677,160 SF Mark IV Commerce Park | Building 1 – 581K SF

NEW DEVELOPMENTS

• Intermodal Commerce Park – a 1.4M SF three (3) building project with Gruene Real Estate Partners • Alliance Center East 1 – a 1,240,584 SF single building project with Hillwood.

• 114 Logistics Park – a 1,004,400 SF single building project with Logistics Property Company.

• Mecham Commerce Center – a 1,311,911 SF four (4) building project that will kick off with a 334,751 SF crossdock facility

17

SUBMARKET INTELLIGENCE SOUTH FORT WORTH

HLC OUTLOOK The South Fort Worth industrial submarket posted a 2Q 2021 vacancy of 7.7%, a figure up from 7.0% in 1Q 2021. This increased vacancy stems from the delivery of Majestic’s 489,150 SF two (2) building second phase at its Fort Worth South Business Park and Industrial Realty Group’s 212,175 SF building at the northwest corner of I-35 and I-20.We expect to see this vacancy figure stagnate through the next quarter with absorption matching new deliveries.

MATT CARTHEY

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 already have slabs poured with a few of them having their panels tilted.

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

513,877

30,632

(233,540)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

7.7%

7.0%

4.3%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

2,274,472

996,102

768,187

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,991,412

4,110,974

2,816,366

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,168,062

-

• Rhino Health has signed a 400,857 SF lease at W Everman Parkway & I-35 with Majestic Realty.

• RSI North America has signed a 391,985 SF lease at 1501 Joel East Road with PGIM. • Purina Animal Nutrition has signed a 310,292 SF Lease at South Fort Worth Logistics Center with Bandera.

• GoTrg has signed a 250,487 SF lease at Carter Logistics Center with Blackcreek Group, LLC. • Fedex has signed a 186,577 SF lease at 1901 Joel East Road with PGIM. • Lineage Redistribution has signed a 122,500 SF lease at 6445 Will Rogers Boulevard with TA Associates.

HLC Deal

HLC Deal

HLC Deal

22,800

DEALS IN THE MARKET

VITAL STATS

8.0%

TOP LEASE TRANSACTIONS

1,750,000

7.0% 1,250,000 6.0% 5.0%

750,000

4.0%

• • • •

3131 W Bolt Street – a 136,570 SF building 800 S 6th Avenue – a 75,511 SF building 5703 Crawford Lane – a 74K SF building 9001 South Freeway – a 70,269 SF building

NEW DEVELOPMENTS • Risinger Park South – a 1,101,060 SF three (3) building project with TCRG Properties • South Fort Worth Logistics Center – a 954,960 SF two (2) building project with Bandera Ventures • Carter Park East – the first phase of the master planned park, which includes two (2) buildings totalling 874,300 SF with Clarion & 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 • Granite Village Creek – a 605,489 SF cross-dock with Forefront Development • 46 Ranch Logistics Park – a 562,669 SF three (3) building project with Jackson Shaw • South Fort Worth Commerce Center – a two (2) building 374,874 SF shallow bay project with IDI Logistics • AMZL Build-To-Suit – A 200K SF BTS for Amazon developed by Hillwood

HLC Deal

250,000

3.0% 2.0%

-250,000 1.0% -750,000

0.0% 2Q 18

3Q 18

4Q 18

1Q 19

Absorption

2Q 19

3Q 19

4Q 19

1Q 20

Deliveries

2Q 20

3Q 20

4Q 20

1Q 21

2Q 21

Vacancy

Source: CoStar 2Q 2021 Industrial Report

18

LARGE EXISTING VACANCIES • • • • • • •

1101 Everman Parkway – 301,995 SF 1701 Joel East Road – 293,705 SF 6601 Oak Grove Road – 264,125 SF 7300 Oak Grove Road – 231,333 SF 5500 South Freeway – 213,546 SF 5200 South Freeway – 212,175 SF 7550 Oak Grove Road – 184,722 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