Q1 2022 DFW Office Market Report

OFFICE Q1 2022 MARKET REPORT DALLAS/ FORT WORTH

P ro p er t y : Cus ter Co ur t

w w w.h o l t l u n s fo rd .co m

TABLE OF CONTENTS

04

DFW Office Submarket Coverage

05

DFW Office Market Experts

09

DFW Office Facts & Figures

10

Submarket Intelligence

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

04 Q1 2022 DFW OFFICE MARKET REPORT

DFW OFFICE

Submarket Coverage

OTHER SUBMARKETS

TUR

1 FORT WORTH CBD 2 NORTHEAST FORT WORTH 3 PRESTON CENTER 4 UPTOWN/TURTLE CREEK 5 DALLAS CBD 6 STEMMONS FREEWAY 7 LBJ PONDER 8 CENTRAL EXPRESSWAY

DENTON

FAR NORTH DALLAS

McKINNEY PRINCETON

ALLEN/MCKINNEY FRISCO

LEWISVILLE/DENTON

ALLEN

JUSTIN

THE COLONY

BOYD

LEWISVILLE

RICHARDSON/PLANO

NORTH FORT WORTH

PLANO

FLOWER MOUND

WYLIE

ROANOKE

HASLET

CARROLLTON GRAPEVINE

KELLER

COPPELL LAS COLINAS

ADDISON

RICHARDSON

SOUTHLAKE FARMERS BRANCH

DFW INTERNATIONAL AIRPORT

7

GARLAND

ROCKWALL ROWLETT

LAS COLINAS

8

COLLEYVILLE

3

SAGINAW DALLAS LOVE FIELD AIRPORT

BEDFORD EULESS FORT WORTH MEACHAM INTERNATIONAL AIPRORT

RICHLAND HILLS

HURST

WHITE SETTLEMENT

6

IRVING

2

EAST DALLAS

4

MID-CITIES

SUNNYVALE

5

1

DALLAS

MESQUITE

FORT WORTH

FORNEY

GRAND PRAIRIE ARLINGTON

DALLAS EXECUTIVE AIRPORT

BENBROOK DUNCANVILLE

HUTCHINS

CRANDALL

WEST-SOUTHWEST FORT WORTH

CEDAR HILL

DESOTO

LANCASTER

MANSFIELD

SOUTHWEST DALLAS

BURELSON

N

RED OAK

SOUTHEAST FORT WORTH MIDLOTHIAN

WAXAHACHIE

CLEBURNE ENNIS

Q1 2022 DFW OFFICE MARKET REPORT 05

DFW OFFICE

Market Experts

MATT CARTHEY

JOHN DICKENSON

TYLER HOWARTH

DAVID CASON

Partner, Managing Principal Fort Worth mcarthey@holtlunsford.com 817.710.1111

Managing Principal Dallas jdickenson@holtlunsford.com 972.421.1971

Managing Principal Tenant Representation thowarth@holtlunsford.com 972.280.8302

Vice President Fort Worth dcason@holtlunsford.com 817.810.9137

JAKE NEAL

MASON PRITCHER

JACK BEARE

VIC MEYER

Vice President Fort Worth jneal@holtlunsford.com 817.710.1112

Market Director Dallas mpricher@holtlunsford.com 972.280.8320

Market Director Dallas jbeare@holtlunsford.com 972.265.0128

Market Director Fort Worth vmeyer@holtlunsford.com 817.710.1113

HUNTER HEDRICK

MICHAEL BURTON

OLIVIA BARNES

QUINN HANFORD

Market Associate Dallas hhedrick@holtlunsford.com 972.421.1973

Market Associate Fort Worth mburton@holtlunsford.com 817.710.7058

Market Analyst Dallas obarnes@holtlunsford.com 972.265.0135

Market Analyst Dallas qhanford@holtlunsford.com 972.265.0124

JOHN ARMES

JAMIE CLYDE

Market Analyst Dallas jarmes@holtlunsford.com 972.381.3210

Market Analyst Dallas jarmes@holtlunsford.com 972.381.3210

New Listing

LINCOLN LEGACY TWO A 130,371 RSF Class A Office Building located at the southeast corner of Dallas North Tollway and Tennyson Parkway adjacent to Legacy Town Center.

New Listing

CROCKETT CORNER A 7,500 SF Class A Creative Office along the West 7th corridor in West-Southwest Fort Worth.

New Listing

STONELAKE DESIGN DISTRICT Three, newly renovated properties with high-end office space in Dallas’ Design District.

Q1 2022 DFW OFFICE MARKET REPORT 09

Facts & Figures

DFW OFFICE

OVERALL DFW

OVERALL VACANCY

20.0%

20.0%

4,000,000 17.5%

3,000,000

18.0%

14.6%

16.1%

2,000,000

16.0%

13.9%

18.0% 16.0% 14.0% 12.0%

1,000,000

10.0%

14.0% 0 12.0%

8.0% 6.0%

(1,000,000)

10.0%

4.0%

(2,000,000)

8.0%

1.4%

0.7%

2.0% 0.0%

(3,000,000) Q1 19

Q2 19

Q3 19

Q4 19

Q1 20

Q2 20

ABSORPTION

Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

DELIVERIES

Q4 21

Q1 19

Q1 22

Q2 19

VACANCY

Q3 19

Q4 19

Q1 20

Q2 20

Q3 20

DIRECT

OVERALL ABSORBTION

Q4 20

Q1 21

Q2 21

Q3 21

SUBLET

Q4 21

Q1 22

TOTAL

OVERALL CONSTRUCTION 8,000,000

12,000,000

7,000,000

10,000,000

6,000,000 5,000,000

8,000,000

4,000,000 3,000,000

6,000,000

2,000,000 1,000,000

4,000,000

0 (1,000,000)

2,000,000

(2,000,000)

0

(3,000,000) Q1 19

Q2 19

Q3 19

Q4 19

Q1 20

Q2 20

TOTAL NET

Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

Q2 19

Q3 19

Q4 19

Q1 20

ABSORPTION

LEASING ACTIVITY

EXISTING INVENTORY SUBMARKET

Q1 19

Q1 22

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

VACANCY

# BLDGS.

TOTAL RBA

DIRECT SF

TOTAL SF

VAC. %

YTD NET ABSORPTION

YTD DELIVERIES

Dallas CBD

149

35,241,119

8,538,199

9,029,741

25.6%

(435,457)

254,902

386,323

1,244,998

Central Expressway

251

14,531,715

2,431,376

2,655,254

18.3%

(399,176)

30,000

77,189

719,393

Far North Dallas

1,306

71,544,609

14,156,971

15,719,088

22.0%

833,413

1,904,988

0

4,369,333

Fort Worth CBD

121

11,217,220

1,539,761

1,596,142

14.2%

66,321

0

615,062

246,289

Las Colinas

489

44,202,249

7,668,616

8,732,203

19.8%

(230,659)

111,805

0

2,586,620

LBJ Freeway

260

22,933,328

5,101,207

5,565,891

24.3%

(519,496)

107,000

0

1,579,825

2,916

47,411,628

6,005,619

6,236,100

13.2%

93,216

175,640

0

569,077

North Fort Worth

810

8,376,821

525,563

747,729

8.9%

(191,117)

98,017

0

207,373

Preston Center

176

7,322,858

799,761

829,667

11.3%

116,695

297,000

1,447,052

496,938

Richardson/Plano

834

33,997,259

5,574,007

5,961,791

17.5%

277,815

62,100

0

1,541,862

SW Fort Worth

1,179

17,438,234

1,765,762

1,887,826

10.8%

(50,620)

50,439

186,000

899,280

Stemmons

310

16,095,408

3,268,601

3,397,971

21.1%

259,906

0

109,500

404,152

Uptown/Turtle Creek

304

17,918,642

2,794,257

3,076,791

17.2%

200,256

656,453

0

1,118,533

9,105

348,231,090

60,169,700

65,436,194

18.8%

21,097

3,748,344

2,821,126

15,983,673

Mid-Cities

TOTALS

UNDER YTD LEASING CONSTRUCTION SF ACTIVITY

SOURCE: COSTAR 1Q 2022 OFFICE REPORT

10 Q1 2022 DFW OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

DALLAS CBD CURRENT EVENTS Trammell Crow Center on Ross Avenue sold for one of the highest prices ever paid for a Dallas commercial property. While terms of the purchase were not disclosed, brokers estimate the iconic downtown tower and the retail and garage building across the street went for more than $600M. The sale of the 37-year-old high rise comes after the previous owner, JPMorgan Asset Management, spent more than $180M on upgrades.

Regent Properties bought the iconic Trammell Crow Center for a new investment fund.

Law firm Stinson LLP is moving to downtown Dallas. The Kansas City based firm expanded to Dallas in 2018 and will lease 14K SF on the 29th floor of Chase Tower. Stinson is the most recent of several office tenants making the move downtown, including Lerma Advertising, Imaginuity, and Integrity Marketing Group. Gensler will design the law firm’s new workspace.

The Dallas Regional Chamber has decided to keep its offices in the landmark downtown Dallas skyscraper, Ross Tower. The economic development organization just renewed its 25,436 SF lease on the 26th floor of the 45-story high-rise. Built in 1982, Ross Tower has other major tenants including Walter P. Moore & Associates, Frank Recruitment Group, Perkins Coie LLP, Willis Towers Watson, and Munsch Hardt.

Bank of America plaza has leased more than 44K SF in the last six months. The largest leases were by law firm Ziegler, Gardner, Bell PLLC, which leased 7,504 SF of space, and field examination firm 3W Inc., which leased 6,863 SF. The 1.8M SF Main Street skyscraper opened in 1985 and has been owned by Metropolis Investments Holdings since 1998.

Atlanta-based Portman Holdings has purchased the block of land at 2500 Ross Avenue and Routh with plans to develop an office tower. Along with the 400K SF office building, Portman Holdings will build two (2) residential towers with 700 apartments. Los Angeles-based 5+ Design is masterplanning the block and construction could begin as early as next year.

Sterling Bay has plans to build an office high-rise just east of downtown along Indiana Street at Malcolm X Boulevard. Called The Assembly, the 460K SF project was designed

by Dallas’ HKS. Construction is set to begin this summer, at a cost of more than $100M, according to new planning documents filed with the state. The development would deliver in late 2024.

VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(61,647)

(19,367)

118,790

26.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

25.0%

24.8%

24.0%

25.6% U/C SF

25.5% vs. Prev. Qtr

vs. 12 Mths Ago

-

60,230

254,902

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

60,230

194,672

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$27.49

$27.12

$26.98

TOP LEASE TRANSACTIONS

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

23.0%

(200,000) 22.0%

(300,000) (400,000)

21.0%

(500,000)

20.0%

(600,000)

19.0%

(700,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES

• The Richards Group has signed a 101K SF lease in The Stack.

• Fountain Place | 1445 Ross Avenue – 585,395 SF

• Dallas Regional Chamber has signed a 25.4K SF renewal in Ross Tower.

• Renaissance Tower | 1201 Elm Street – 534,390 SF

• Crossplaine Capital Management has signed a 7.3K SF lease in Saint Paul Place.

• Santander Tower | 1601 Elm Street – 324,411 SF

DEALS IN THE MARKET • Plaza of the Americas – a 1,146,524 SF class A two-building project • The Luminary – a 104,119 SF class A office building

NEW DEVELOPMENTS • Field Street District – Future Phase | 1100 McKinney Avenue – a 722K SF class A office district (proposed) • Field Street Tower | 2012 North Field Street – a 534K SF class A office tower (proposed) • 555 South Pearl | 555 South Pearl Expressway – a 486K SF Class B office tower (proposed) • Two Arts Plaza | 1900 Routh Street – a 283K SF class A office tower (proposed)

• Bank of America Plaza | 901 Main Street – 314,729 SF • Two Arts Plaza | 1900 Routh St – 283,153 SF • 1700 Pacific | 1700 Pacific Avenue – 270,822 SF • Bryan Tower | 2001 Bryan Street – 224,916 SF • Chase Tower | 2200 Ross Avenue – 193,102 SF • Harwood Center | 1999 Bryan Street – 186,096 SF • 300 South Pearl Expressway – 183,754 SF • Comerica Bank Tower | 1717 Main Street – 148,025 SF • 2100 Ross Avenue – 136,335 SF

SUBMARKET INTELLIGENCE

Q1 2022 DFW OFFICE MARKET REPORT 11

CENTRAL EXPRESSWAY CURRENT EVENTS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(160,359)

(26,884)

(112,923)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

18.3%

18.0%

16.2%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

Delivered SF -

VITAL STATS 19.0%

200,000

18.0%

150,000

17.0%

100,000

16.0%

50,000

15.0%

0

30,000

14.0%

(50,000)

13.0%

(100,000)

vs. Prev. Qtr

vs. 12 Mths Ago

12.0%

(150,000)

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$34.41

$32.93

$31.86

TOP LEASE TRANSACTIONS • Airspace has signed a 3.3K SF lease in 4131 NCX.

HLC DEAL

• Charette Cosmetics has signed a 3K SF lease in 5445 La Sierra.

HLC DEAL

• SRS Real Estate has signed a 2.3K SF lease in Walnut Glen Tower.

NEW DEVELOPMENTS • The Central – a 500K SF class A office tower (proposed) • Energy Square 4 – a 400K SF class A office tower (proposed) • The Shops at Park Lane – a 352K SF class A office tower (proposed) • The Tower at Preston Hollow Village – a 260K SF class A office tower (proposed)

11.0%

(200,000)

10.0%

(250,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

Q2 21

DELIVERIES

Q3 21

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES • 8080 NCX – 100K SF • Cityplace Tower – 95K SF • Energy Square 2 – 71K SF

The Richards Group building, which overlooks North Central Expressway, has sold to Hunt Realty Investments, Angelo Gordon, and OliveMill Holdings. The partnership bought the tower from SBR Real Estate Holdings LP, a company created by the Richards Group to develop the building. The 250K SF office high-rise was built in 2015 and housed the Richards Group headquarters. Terms of the deal have not been disclosed; however, the building originally cost $45M and was recently valued for taxes at more than $60M.

12 Q1 2022 DFW OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

FAR NORTH DALLAS CURRENT EVENTS Gateway at Legacy, an eight-story office tower in Legacy Business Park, has sold to an affiliate of Lincoln Property Co. Philadelphia based Equus sold the building after spending $2.5M in renovations.

After upgrading to best-in-class amenities and making capital improvements, Equus brought new tenants to the building and the property is now 95.8% leased. JLL marketed the building for sale and terms of the transaction have not been disclosed.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(112,778)

95,959

(1,223,616)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

22.0%

21.7%

21.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,836,467

1,804,081

2,117,239

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

82,350

183,962

301,561

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$33.82

$33.38

$32.13

TOP LEASE TRANSACTIONS • HDR Engineering has signed a 39K SF renewal and expansion in Amber Trail Office Park.

• Buff City Soap has signed a 18.6K SF lease in The Offices at Prestonwood Place.

• Pursuant has signed a 13.4K SF lease in Tollway Towers.

HLC DEAL

• Dallas Insurance Exchange has signed a 13.4K SF renewal in Tollway Towers.

HLC DEAL

• Tesla has signed a 12.5K SF lease in 5800 Democracy Drive.

• Burns & Wilcox has signed a 7.3K SF renewal in Providence Towers.

DEALS IN THE MARKET • The Campus at Legacy – a 394,405 SF class A two-building project • The Princeton – a 377,821 SF class B office building

VITAL STATS 30.0%

1,250,000

750,000 25.0% 250,000

(250,000) 20.0% (750,000)

15.0%

(1,250,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

• 6301 Headquarters | 6301 Headquarters Drive – a 304K SF class A office building (proposed) • The Star - Phase IV | 17 Cowboys Way – a 299K SF class A office building (under construction) • International Business | 6275 W Plano Parkway – a 240K SF class A office building (under construction) • Fourteen555 – South Building | 14545 North Dallas Parkway – a 239K SF class A office building (proposed) • Plaza at Legacy II | 5465 Legacy Drive – a 200K SF class A office building (proposed)

LARGE EXISTING VACANCIES • 5400 Legacy Drive – 1,587,458 SF • 5320 Legacy Drive – 483,743 SF • 6100 Reata Pharmaceuticals - 327K SF • Legacy Commons – 296,433 SF • 6400 Legacy Drive – 227,577 SF

NEW DEVELOPMENTS • The Link at Fields Frisco | Legacy Dr & PGA Parkway – a 2M SF class A office complex (proposed) • The Offices at The Gate | 4205 Dallas Parkway – a 1M SF class A office complex (proposed) • Two Legacy West | 7950 Legacy Drive – a 414K SF class A office building (proposed)

• Liberty Mutual Campus – 208,602 SF

SUBMARKET INTELLIGENCE

Q1 2022 DFW OFFICE MARKET REPORT 13

FORT WORTH CBD CURRENT EVENTS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

115,608

148,201

(47,186)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

14.2%

15.3%

16.3%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$28.07

$28.20

$27.64

TOP LEASE TRANSACTIONS

VITAL STATS 18.0%

200,000

16.0%

150,000

14.0%

100,000

12.0%

50,000

10.0%

0

8.0%

(50,000)

6.0%

(100,000)

4.0%

(150,000)

2.0%

(200,000)

0.0%

(250,000) 1Q 19

2Q 19

3Q 19

4Q 19

ABSORPTION

1Q 20

2Q 20

3Q 20

4Q 20

1Q 21

DELIVERIES

2Q 21

3Q 21

4Q 21

1Q 22

VACANCY

LARGE EXISTING VACANCIES

• Pope Hardwick has signed a 11,259 SF renewal in First on 7th.

• 115 West 7th Street – a 186,684 SF class B vacancy

• An undisclosed tenant has signed a 8,716 SF lease in Frost Tower.

• The Tower Annex – a 68,136 SF class B vacancy

• GJM Partners, Inc. has signed a 8,668 SF lease in the Chase Bank Building.

• Bank of America Tower – a 62,660 SF class A vacancy

DEALS IN THE MARKET

• Frost Tower – a 54,780 SF class A vacancy

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

• Burnett Plaza – a 52,502 SF class A vacancy

• 115 West 7th Street – a 300,347 SF class B office building

• 777 Main – a 47,862 SF class A vacancy

• 500 West 3rd Street – a 234,039 SF class B office building

• Oil & Gas | Star-Telegram Building – a 38,760 SF class B vacancy

An iconic downtown Fort Worth office building may soon become a new hotel. Transwestern Real Estate Services reported Irvingbased hotel company Icon Lodging purchased 110 West 7th Street. The building was most recently owned

by XTO Energy Inc., a subsidiary of ExxonMobil, based in Spring, Texas. Transwestern executed the sale. The 11-story, 101,390 SF office building was constructed in 1910 as the First National Bank of Fort Worth and underwent a major renovation in 2005. It still features original brass doors and bronze and aluminum accents. In 2021, the building was valued at $11M, according to the Tarrant Appraisal District. Icon Lodging’s projects include the Fairfield Inn & Suites downtown, the TownePlace Suites at 3450 West Vickery Boulevard, and a Hampton Inn & Suites in Colleyville.

The owners of Sundance Square, Ed and Sasha Bass, have new plans for the once-popular downtown shopping and dining district that has spiraled to empty storefronts and uncertainty. On Sunday’s Inside Texas Politics, Mayor Mattie Parker was asked whether she has spoken to the Basses about the future of this downtown centerpiece. “I have,” Mayor Parker said. “I’ve spoken to them several times about it.

I’ve also talked to and worked very closely with the leadership of Downtown Fort Worth, Inc.” When asked what the Basses told Parker, the mayor said: “They have a new vision for Sundance Square.

They’re trying to execute on that.

You shouldn’t want me to, nor do I, have any control over private business. I think the number one factor right now is communicating whatever that vision may be to residents and visitors downtown and refocusing those efforts.

Am I frustrated? Sure. Because I get a lot of questions about this.

But I also have to have faith that private businesses, specifically Mr. Bass who has been an incredible visionary for downtown Fort Worth and the entire community, are allowed some time to let that vision come to fruition.” Two years ago, at the beginning of the pandemic, the Basses changed property management in the 35-block district. The relationship between property managers and tenants has spiraled ever since.

COVID exacerbated it.

14 Q1 2022 DFW OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

LAS COLINAS CURRENT EVENTS An upscale multifamily complex with a projected price tag of more than $103M is planned at a highprofile site next to the ExxonMobil corporate headquarters campus in Irving. GFF is the design firm for the project and the scope of work calls for a 364-unit, five story apartment building with 12K SF of amenity space. The estimated cost is $103,205,000, and the project is named “Peregrine.” Last month, ExxonMobil announced its corporate relocation from Irving to a campus north of Houston. The Peregrine project is scheduled to start May 15 and be completed by June 2024.

National home décor retailer At Home is moving its headquarters from Plano to Cypress Waters.

The company’s new build-tosuit office campus will include a 182K SF office building in addition to a 78K SF design center. The build-to-suit deal with At Home allows Billingsley to begin another speculative office building at Cypress Waters. The firm will start construction on a 300K SF office building at 3300 Olympus Boulevard in February.

An aviation company that moved its headquarters from Canada to Irving is working on a new office in Las Colinas. CHC Helicopter, an international helicopter services and maintenance firm, has been in business for seven decades and is now looking at an office in the Urban Towers. The 12K SF office at 222 West Las Colinas Boulevard would open this summer, according to planning documents filed with the state. Interprise Design is the architect for the new space.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(35,645)

(117,290)

(241,485)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

19.8%

19.7%

19.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,641,146

1,161,146

584,682

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

14,850

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$27.38

$27.27

$27.26

TOP LEASE TRANSACTIONS • CVS Caremark has signed a 25.5K SF renewal in 750 West John Carpenter.

• LendingPoint has signed a 16.4K SF lease in 3660 Regent.

HLC DEAL

• Blackhawk Claim Services has signed a 13.3K SF lease in Hills at Decker Court.

VITAL STATS 25.0%

2,000,000 1,500,000

20.0%

1,000,000 15.0% 500,000 10.0% 0 5.0%

(500,000)

0.0%

(1,000,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

DELIVERIES

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES • 6000 Connection – 292K SF • One MacArthur Ridge – 250K SF • Regent Commons – 215K SF • Intellicenter - Dallas – 201K SF • Williams Square West – 190K SF • Horizon Way Business Park – 181K SF

DEALS IN THE MARKET • Fuller Ridge I & II – a 285,656 SF class B office campus • Two Colinas Crossing – a 181,072 SF class A office building

NEW DEVELOPMENTS • Freeport Commons – a 1.2M SF class A office park (proposed) • 9100 Olympus Boulevard – a 250K SF class A office park (proposed) • Las Colinas Corporate Center II – a 200K SF class A office building (proposed) • West Gate at Coppell – a 180K SF class A office building (proposed)

• Browning Place III – 171K SF • Las Colinas Connection – 139K SF • Las Colinas Corporate Center I – 137K SF

SUBMARKET INTELLIGENCE

Q1 2022 DFW OFFICE MARKET REPORT 15

LBJ CURRENT EVENTS

VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

55,506

(46,469)

(170,812)

30.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

25.0%

24.3%

24.5%

21.9%

20.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

15.0%

20,000

12,000

107,000

10.0%

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$25.55

$24.92

$23.61

TOP LEASE TRANSACTIONS • USAA has signed an 11K SF lease in Pinnacle Tower.

• Beacon Oral Specialists has signed a 5K SF lease in Three Forest Plaza.

• Saxony Capital has signed a 4.5K SF lease in Midtown Office Center.

HLC DEAL

• Smile Doctors has signed a 3K SF lease in Lincoln Centre.

• McCauley Bond Agency has signed a 3K SF lease in Midtown Office Center.

HLC DEAL

DEALS IN THE MARKET • Lincoln Centre – a 1,610,273 SF class A office complex • Park Central 7, 8, & 9 – a 845,919 SF class A office complex

300,000 225,000 150,000 75,000 0 (75,000) (150,000) (225,000)

5.0%

(300,000)

0.0%

(375,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

DELIVERIES

Q4 21

Q1 22

VACANCY

NEW DEVELOPMENTS • Park Heritage – 1.15M SF (proposed) • Four Lincoln Centre – 400K SF (proposed) • Park Tower at Dallas Midtown – 376,870 SF (proposed) • The Inwood at Alpha West – 330K SF (proposed)

LARGE EXISTING VACANCIES • Park Central 8 – 225,924 SF • Three Galleria Tower – 133,888 SF • 5525 LBJ – 120K SF • One Lincoln Centre – 100,501 SF • Pinnacle Tower – 98,412 SF • The Crossings II – 75,099 SF • The Hightower – 66,609 SF • Banner Place North – 64,674 SF • Lake Highlands Tower – 56,650 SF

The Dallas-Fort Worth area is one of the top U.S. markets for office deals as more companies push to get their workers back in the office. The surge in North Texas businesses looking at office space follows the decline in office leasing after the COVID-19 pandemic.

With infection levels declining, more businesses are making plans for their future office space needs.

Dallas-Fort Worth Houston, and Boston are the office markets seeing the most tenants searching for space.

16 Q1 2022 DFW OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

MID-CITIES CURRENT EVENTS The company that made its name with the standing desk and adjustable office furnishings dove into the North Texas office market, first renovating buildings in Las Colinas and Southlake. The company formerly known as VariDesk rebranded as Vari to reflect its entire platform of workspace innovation right before the pandemic. While that timing might have been less than ideal, McCann didn’t miss a beat developing Vari’s own headquarters in Coppell—basically its own proof of concept for the idea of a “building-as-a-service.”

“VariSpace Coppell is our first ‘ground up’ office building,” he said. The location, its third in DFW, will serve as Vari’s global HQ. Slated to complete in summer 2022, it will offer a flexible option for Fortune 50 enterprises and fast-growing local companies looking for a suburban location in DFW as a multi-tenant campus. McCann calls VariSpace a “living, breathing ideation lab and showroom for Vari to show building owners and operators a better way to serve their current and prospective tenants and monetize their assets.” The company’s space-as-a-service product, as it turns out, is remarkably well timed. McCann thinks the micro trend of offering fully furnished, move-in-ready space could become a standard across CRE in the near future. McCann is among the experts invited to share their thoughts on the CRE market for our recent DALLAS® magazine that focused on how DFW punches above its weight in commercial real estate. Here’s what he had to say in “View from the Top Tier.”

With COVID-19 in retreat, a resurgence in demand for North Texas office space has developer Granite Properties starting two new buildings. Construction kicked off in December on a 19-story office high-rise in the company’s Granite Park business campus in West Plano.

And next month, Granite Properties will break ground on a second office in its Granite Place development on State Highway 114 in Southlake. “The strategy behind starting our next phase at Granite Park and in Southlake is really a function of our demand,” said senior managing director Will Hendrickson. “As COVID restrictions are being lessened, we are starting to see more and more of our customers coming back to the office. Leasing decisions that have been put on hold are bubbling up.”

Demand for office space in the Dallas-Fort Worth area plunged when the pandemic hit in early 2020 and workers took shelter at home.

But starting late last year and continuing into 2022, more businesses have been recalling employees to the office and are reevaluating their space needs. Leasing agents have seen a surge in activity so far this year. “We are 95% leased at Granite Park,” which is at the southeast corner of the Dallas North Tollway and State Highway 121, Hendrickson said. “Our largest vacancy at Granite Park is only 5,000 square feet. It’s a very similar picture in Southlake,” he said. “We are 100% leased in phase one and we are getting inquires from companies that want space.”

That’s why Granite Properties is starting work on the five-story, 143,500-square-foot Granite Place II building. Located next to the popular Southlake Town Square mixed-use development, the new office building is next door to the first office that opened in 2017.

Dallas-based architect Corgan designed the new building, and DPR Construction is the general contractor. “The building is ideally positioned for companies drawn to Southlake, a suburb nationally recognized for its high quality of life and city-like conveniences, to help attract top talent and grow their business,” Hendrickson said. “We will also be able to accommodate current customers’ expansion needs. “We just closed purchase of the land and will break ground in April,” he said.

“It’s a 10-month construction.” Hendrickson expects the new Southlake building to attract to small and mid-sized office users — the same companies that filled the first phase. “They are looking for that level of quality, and there is pretty limited competition for the customers that want to be in Southlake,” he said.

VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(39,955)

107,484

86,368

16.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

14.0%

13.2%

13.1%

14.6%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

8.0%

-

-

155,560

6.0%

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

4.0%

-

127,640

77,664

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$20.27

$20.39

$21.06

TOP LEASE TRANSACTIONS

200,000 100,000

12.0% 0

10.0%

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

2.0% 0.0%

(400,000) 1Q 19

2Q 19

3Q 19

4Q 19

ABSORPTION

1Q 20

2Q 20

3Q 20

4Q 20

1Q 21

2Q 21

3Q 21

DELIVERIES

4Q 21

1Q 22

VACANCY

NEW DEVELOPMENTS

• Zenith Solar has signed a 14K SF lease in 3101 Pinewood Drive.

• Sola Boulevard – a 280,578 SF Class A Office Building

• An undisclosed Engineering group has signed a 13K SF lease in 910 South Kimbell Avenue.

• 2170 East Lamar Boulevard – a 61,500 SF class A office building

• LHC signed 5,644 SF lease in 700 Highlander.

HLC DEAL

DEALS IN THE MARKET • 9001-9003 Airport Freeway Richland Corporate Center – a 142,425 SF class A office building • 4001 Airport Freeway - DFW West – a 85,900 SF class A office building • 5244 Bear Creek Court – a 33,228 SF class B office building

• 2101 Westpark Court – a 60K SF class A medical office building

LARGE EXISTING VACANCIES • 3120 Sabre Drive – 208,841 SF • 2208 Highway 121 – 58,647 SF • 500 East Border Street – 42,668 SF & 41,863 SF • 2201 North Collins Street – 39,632 SF • 1701 East Lamar – 20,897 SF

SUBMARKET INTELLIGENCE

Q1 2022 DFW OFFICE MARKET REPORT 17

NORTH FORT WORTH CURRENT EVENTS

VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

25,844

(31,101)

82,104

26.0%

250,000

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

24.0%

200,000

8.9%

8.7%

5.5%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

18.0%

0

370,365

267,877

133,966

16.0%

(50,000)

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

14.0%

50,385

22,807

65,951

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$28.38

$28.33

$27.03

TOP LEASE TRANSACTIONS

150,000

22.0%

100,000

20.0%

50,000

(100,000) (150,000)

12.0%

(200,000)

10.0%

(250,000) 1Q 19

2Q 19

3Q 19

4Q 19

ABSORPTION

1Q 20

2Q 20

3Q 20

4Q 20

1Q 21

2Q 21

DELIVERIES

3Q 21

4Q 21

1Q 22

VACANCY

NEW DEVELOPMENTS

• An undisclosed Tenant has signed a 6,300 SF lease at 522 Benson Lane.

• 201 North Rupert Street– a 35,097 SF class A office building for sale

• Bancorp has signed a 5,534 SF lease at 111 NW 24th Street.

• 3349 Golden Triangle – a 27K SF class A office building, set to deliver October 2022

DEALS IN THE MARKET • 201 North Rupert Street – a 35,097 SF class B office building • 8224 White Settlement Road – a 27,716 SF class B office building • 5637 North Tarrant Pkwy – a 23,671 SF class B office building

• 3800 North Tarrant Parkway – a 19K SF class B office building, set to deliver May 2022

LARGE EXISTING VACANCIES • 13650 Heritage Parkway – 164,333 SF • 13601 Heritage Parkway – 68,399 SF • 14600 Heritage Parkway – 50K SF (sublease) • 4700 Alliance Gateway Freeway – 47,644 SF

The commercial real estate sectors hit hardest by the pandemic – office, hospitality and retail – are slowly bouncing back, but with new innovations to reflect changes in the market. That was the consensus at the 2021 Tarrant County Commercial Real Estate Forecast on July 27, presented by the Real Estate Council of Greater Fort Worth. The office market was initially hit hard by the pandemic as the labor force that could do so began working remotely. Now, as workers return to the office, they may find it a different place than the one they left, several speakers said. Companies are beginning to ask employees to come back to the office in many cases, panelists said, although many companies are adopting a hybrid model. “Hybrid is here to say,” said Cannon Camp, senior vice president at JLL in Fort Worth, who presented at the event.

Business and professional services were likely to return more quickly to the office environment while the technology industry, which was already doing remote work prepandemic, was likely to maintain that remote work option for longer, Camp said. But some companies may have to offer the virtual option to keep personnel, he said.Some companies have already adopted a hybrid model. In mid-2021, Capital One announced it will be a hybrid work company with employees spending some time in the office and some working virtually. That will impact the financial services giant’s more than 5,000 employees in the Dallas-Fort Worth area. The in-office experience of the future will likely be more open campuses on large tracts of land with landscaping and walking paths. Amenities will include cafes, workout facilities and lounges, Camp said. Camp noted three new office projects recently announced demonstrate the continued economic strength of the area. The three are: The Crescent Fort Worth project from Crescent Real Estate with 168K SF of office space, The Van Zandt on West 7th Street from Goldenrod Companies with 109K SF of office space, and Hillwood Commons II, a 135,295 SF office project from Hillwood in the AllianceTexas area. All three are expected to open in 2023.

Sticker shock is the word of the day for many office users. Tenant improvements are taking longer and costing more, which could have a range of impacts on the North Fort Worth office market. Pre-pandemic TI costs ranged between $60 to $70 per SF to finish out a shell space. These costs have since jumped to between $80 to $100 per SF, depending on the configuration. TI costs and elongated timelines have contributed to rising rental rates and lengthened lease terms. The usual suspects are to blame. Supply shortages and escalating material pricing are behind the rising costs and longer lead times in tenant improvement. “We’ve seen it go up quite a bit, and landlords generally have not been able to bridge that gap,” said Ryan Matthews, managing director at JLL. Timelines on leases have been extended because of the increased time it takes to finish out space. On the average deal, lease terms jumped from about five years pre-pandemic to about seven years today.

Tenants need to be cognizant of how much term is left on an existing lease before they wind up in a situation where they don’t have time to go through the full lease transaction process and finish out a new space before their existing lease hits its expiration date, Matthews said. According to data provided

by Transwestern, landlords have offered higher tenant improvement allowances to help tenants finish out space. Transwestern analyzed recent leases and found that the average TI package increased $7 per SF or 20% over the last two years.

18 Q1 2022 DFW OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

PRESTON CENTER CURRENT EVENTS After more than two years of construction, Weir’s Plaza has opened its doors fully leased.

Designed by Dallas architect GFF, the high-rise includes 12K SF of retail space along Knox with 250K SF of offices above. The top-class office space has attracted major tenants, including law firm Kirkland & Ellis, Fortress Investment, and Arctos Sports. Weir’s Plaza is one of only three office projects opening their doors north of downtown Dallas this year. With demand for offices rebounding, developers are scrambling to start work on projects to meet expected demand.

The Bluffview Towers have been purchased by Pillar Commercial.

The 200K SF office complex was built in 1985 and has undergone millions of dollars in upgrades since. Bluffview Towers are over 70% leased and major tenants include H-E-B/Central Market, Sewell, and JLB Partners.

Dallas’ Woods Capital is working on two towers that would be built along McKinney Avenue north of Knox Street. The plans include one 180K SF office tower and one residential tower. Demand for office space in the Knox Street area has increased as Class A office space becomes less and less available.

VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

63,619

89,492

(24,270)

14.0%

300,000

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

12.0%

250,000

10.0%

11.3%

12.8%

9.9%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

329,066

329,066

626,066

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

297,000

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$40.40

$39.87

$42.84

COMING TO MARKET • Weir’s Plaza – a 250K SF Class A office building

TOP LEASE TRANSACTIONS • Tolleson Wealth Management has signed a 44K SF lease in 5500 Preston Road.

200,000 150,000

8.0%

100,000 6.0%

50,000

4.0%

0

2.0%

(50,000)

0.0%

(100,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

Q2 21

DELIVERIES

Q3 21

Q4 21

Q1 22

VACANCY

NEW DEVELOPMENTS • 8111 Douglas – a 318K SF class A office building

LARGE EXISTING VACANCIES • Bluffview Towers – West – 70,214 SF • 8343 Douglas at Douglas Center – 64,278 SF

SUBMARKET INTELLIGENCE

Q1 2022 DFW OFFICE MARKET REPORT 19

RICHARDSON/PLANO/ALLEN/MCKINNEY CURRENT EVENTS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

112,644

251,956

(295,622)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

17.5%

17.7%

18.3%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

229,392

275,392

56,100

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

54,000

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$23.65

$23.76

$23.90

TOP LEASE TRANSACTIONS

VITAL STATS 19.0%

400,000

18.0%

200,000

17.0%

0

16.0%

(200,000)

15.0%

(400,000)

14.0%

(600,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

DELIVERIES

Q4 21

Q1 22

VACANCY

NEW DEVELOPMENTS

• Stonebriar Financial Group has signed a 52.4K SF lease in Granite Park Six.

• Palisades Central – a 1M SF class A office complex (proposed)

• Smart Autocare has signed a 41K SF lease in 1125 East Campbell.

• The Campus at CityLine – 600K SF class A office complex (proposed)

• Review Wave, LLC has signed a 35K SF lease in 300 East Davis.

• Legacy Central 5 – a 300K SF class A office building (proposed)

• Dog Star has signed a 4.9K SF lease in CityView Corporate Center.

• One Heritage Creekside – a 250K SF class A office building (proposed)

HLC DEAL

• Cross Architects has signed a 3K SF lease in CityView Corporate Center.

HLC DEAL

• FNR Solutions has signed a 2.9K SF lease in Promenade Tower.

HLC DEAL

DEALS IN THE MARKET • Lakeside Campus – an 870,860 SF class A two-building office complex • 3400 CityLine – a 313K SF class A office building

LARGE EXISTING VACANCIES • 601 Data – 423K SF • 2200 George Bush – 177K SF • Lookout Park I – 156K SF • 3400 CityLine – 142K SF • The Tower Lakeside Campus – 104K SF • Creekview I – 101K SF

HLC DEAL Avatar Financial Group is providing $30M in financing to upgrade CityView Corporate Center in Plano. Built in the 1980s, the property includes a 10-story tower and two four-story buildings with almost 300K SF. CityView Corporate Center is owned by Dallas investor MoxieBridge and is leased by Holt Lunsford Commercial. The office center is just west of where developers are spending $1B to turn the former Collin Creek Mall into a new mixeduse project with housing, retail, offices, and entertainment venues.

A Dallas-based real estate investor has snapped up two office buildings in Richardson’s Telecom Corridor. Built in 1983, the Greenway Plaza office campus includes almost 150K SF of space.

Tenants in the properties include Sherwin Williams, Qualcomm and American United Life Insurance.

Harrier Partners LP, an affiliate of Dallas real estate investor EY Ventures, bought the buildings from local owners that held the property for more than a decade.

Plano’s International Business Park has landed another tenant. QBE Insurance is leasing more than 20K SF in 6400 International Parkway.

The office is scheduled to open this spring and is being designed by Dallas’ Entos Design. International Business Park includes 11 buildings with 1.4M SF and houses more than 100 businesses.

A Washington, D.C. property investor is seeking tenants to kick off a new Plano office project. PRP Real Estate disclosed its plans last fall for office space in the $3B Legacy West development.

The 300K SF building is in the works near FedEx’s office at Headquarters and Legacy drives.

PRP Real Estate has owned the FedEx building since 2017 and the project would more than double the amount of space on the site.

Dallas architect HKS has drawn up plans for the project and the Headquarters Drive building is one of several new office projects in the hunt for tenants.

20 Q1 2022 DFW OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

SOUTHWEST FORT WORTH CURRENT EVENTS A rapidly growing community west of Fort Worth will soon become home to a $35M medical office park aimed at improving healthcare access in the area. Willow Park is the second-largest city in Parker County, an area that saw its population increase by 27% between 2010 and 2020, according to the U.S. Census Bureau. The 8.5-acre site acquired by real estate investment firm Velocis is located in the Interstate 20 corridor between Fort Worth and Weatherford, where a network of doctors has emerged to meet growing demand for medical care in the community. “Our building is there to serve what I would call an underserved community,” Velocis co-founder and partner Mike Lewis told Bisnow. “The doctors are telling us that they have the patients, but the patients are driving to Fort Worth. This is giving an opportunity to serve them in their community instead of them going elsewhere for healthcare.” According to census data, 86% of residents in Parker County were insured as of 2020. This high rate of healthcare coverage, along with the diverse mix of ages in the community, was appealing to Velocis.“It’s a very stable community with good incomes,” Lewis said. “It’s not an area that you would go in and build and worry about patients not being able to afford healthcare.”

Sticker shock is the word of the day for many office users. Tenant improvements are taking longer and costing more, which could have a range of impacts on the Fort Worth office market. Pre-pandemic TI costs ranged between $60 to $70 per SF to finish out a shell space. These costs have since jumped to between $80 to $100 per SF, depending on the configuration. TI costs and elongated timelines have contributed to rising rental rates and lengthened lease terms. The usual suspects are to blame. Supply shortages and escalating material pricing are behind the rising costs and longer lead times in tenant improvement.

“We’ve seen it go up quite a bit, and landlords generally have not been able to bridge that gap,” said Ryan Matthews, managing director at JLL. Timelines on leases have been extended because of the increased time it takes to finish out space. On the average deal, lease terms jumped from about five years pre-pandemic to about seven years today. Tenants need to be cognizant of how much term is left on an existing lease before they wind up in a situation where they don’t have time to go through the full lease transaction process and finish out a new space before their existing lease hits its expiration date, Matthews said.

VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(69,516)

(22,459)

(927)

12.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

10.0%

10.8%

10.5%

10.6%

8.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

6.0%

168,034

151,651

91,944

4.0%

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

24,834

-

4,500

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$26.46

$25.90

$25.59

TOP LEASE TRANSACTIONS • Marsh McLennan has signed a 23,837 SF lease in First Cash Plaza.

HLC DEAL

• An Undisclosed Tenant has signed a 11,822 SF lease in 3880 Hulen Street.

• Concept Connections has signed a 10,550 SF renewal in 4201 Bridgeview.

HLC DEAL

DEALS IN THE MARKET • 3880 Hulen Street – a 69K class B office building • 101 South Jim Wright Freeway – a 55K SF class B office building • 108 South Freeway – a 41,427 SF class C office building • 111 Boland Street – a 40,080 SF class A office building

250,000 200,000 150,000 100,000 50,000 0 (50,000) (100,000)

2.0%

(150,000)

0.0%

(200,000) 1Q 19

2Q 19

3Q 19

4Q 19

ABSORPTION

1Q 20

2Q 20

3Q 20

4Q 20

1Q 21

2Q 21

DELIVERIES

3Q 21

4Q 21

1Q 22

VACANCY

NEW DEVELOPMENTS • The Van Zandt – 111,228 SF class A office building set to deliver December 2023 • 1320 Hemphill Street – a 48,594 SF class A office building set to deliver December 2022 • Triune Centre – a 30K SF class A office building set to deliver December 2022 • 4000 Bryant Irvin – a 18,194 SF class A office building set to deliver May 2022

LARGE EXISTING VACANCIES • 405 West Loop 820 – a 101,043 SF class B vacancy • Western Place II – a 69,257 SF class B vacancy • One Ridgmar Centre – a 51,038 SF class A vacancy • Western Place I – a 21,407 SF class B vacancy

SUBMARKET INTELLIGENCE

Q1 2022 DFW OFFICE MARKET REPORT 21

STEMMONS CURRENT EVENTS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

178,348

(70,534)

(191,550)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

21.1%

22.2%

22.7%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$20.77

$20.88

$20.37

NEW DEVELOPMENTS • West Love | 1345 Mockingbird Lane – a 600K SF class A office building (proposed) • West Love | 2345 Mockingbird Lane – a 250K SF class A office building (proposed) • The Design District Tower – a 243,100 SF class A office building (proposed) • 1333 Oak Lawn Avenue – a 122,768 SF class A office building (proposed) • 1400 West Mockingbird Lane – a 66,504 SF class A office building (proposed) • 111 Glass Street – a 30K SF class B office building (proposed)

VITAL STATS 24.0%

200,000 150,000

22.0%

100,000 50,000

20.0%

0 (50,000)

18.0%

(100,000) (150,000)

16.0%

(200,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

DELIVERIES

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES • Pegasus Park – 152,071 SF • The Connection at 8600 – 101,530 SF • 8777 North Stemmons – 76,968 SF

After suffering declines in office space demand from the pandemic, the Dallas-Fort Worth area was one of the country’s top leasing markets in the final months of 2021. The D-FW area had the third-highest net office leasing in the nation, behind Boston and San Jose. More than 150M SF of office space was under construction nationwide at the end of 2021. The D-FW area ranked fifth nationally for new developments, with 6.2M SF of new office space on the way.

22 Q1 2022 DFW OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

UPTOWN CURRENT EVENTS Billions of dollars in high-rise building projects are in the works along Field Street connecting downtown with Uptown. Woods Capital plans to begin construction later this year on the first of two towers in their $1B mixed-use project. The development will begin with a new office building and residential high-rises. Hunt Realty Investments also plans to begin construction on its Field Street development which will include office, residential, and retail space. In addition to these projects, Stonelake Capital Partners, Harwood International, and Hillwood Urban all have plans to develop properties along the Field Street thoroughfare.

Construction has begun on the Quadrangle development in Uptown. The project was originally set for an opening late this year, but the pandemic delayed the start. Omniplan is designing the project, which has been rebranded as The Quad. The new 335K SF office building will include a club on the top floor and an amenity center with a tenant lounge, a conference center and a terrace overlooking downtown Dallas and Uptown. At the corner of the block next to the office tower, there will be a group of retail “bungalows” with 15K SF of space for retail and restaurant tenants.

The development will also include several outdoor areas, which are more important since the advent of COVID-19.

Dell’s MSD Partners is providing construction loans for the $100M Quadrangle project in Uptown.

Built in 1966 as a Southwesternstyle compound of unique shops and small office spaces, the mixeduse project on Routh Street near Turtle Creek has gone through several renovations. The new development is set to open Q1 2024 and the Quadrangle is one of two major Dallas real estate developments Dell’s MSD Partners is backing.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

118,995

206,048

(43,656)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

VITAL STATS 700,000 18.0%

17.2%

17.9%

15.5%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

14.0%

834,076

494,914

1,016,367

12.0%

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

10.0%

-

656,453

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$40.80

$41.17

$41.39

TOP LEASE TRANSACTIONS • Bank of the Ozarks has signed a 120K SF lease in 23 Springs.

• Houlihan Lokey has signed a 74.8K SF lease in The Link at Uptown.

• Newmark Knight Frank has signed a 40K SF lease in The Link at Uptown.

• S2 Capital has signed a 25K SF lease in Harwood No. 14.

• Shearman and Sterling has signed a 23K SF lease in The Link at Uptown.

• Accordion Partners has signed a 5K SF lease in Parkview at 1920 McKinney.

• Essential Realty Partners has signed a 4K SF lease in Park Place on Turtle Creek.

NEW DEVELOPMENTS • 2401 McKinney – a 673K SF office building (proposed) • 2323 Cedar Springs Road – a 623K SF office building (proposed) • Harwood XII – a 542K SF office building (proposed) • Victory Center | 2371 Victory Avenue – a 466K SF office building (proposed) • Harwood No. 14 – a 360K SF office building (under construction) • The Quad | 2699 Howell Street – a 340K SF office building (under construction) • 2727 Turtle Creek – a 260K SF office building (proposed) • McKinney & Lemmon – a 82K SF office building (proposed) • The Fairmount Building – a 63K SF office building (proposed)

575,000 450,000

16.0%

325,000 200,000 75,000 (50,000) (175,000)

8.0%

(300,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

DELIVERIES

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES • Parkside Tower – 111,728 SF • 2501 Cedar Springs – 110,415 SF • The Centrum – 108,021 SF • The Link at Uptown – 74,805 SF • 2401 Cedar Springs – 57,118 SF • 1845 Woodall Rodgers – 51,468 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