Q1 2023 DFW Industrial Market Report

Q1 2023 INDUSTRIAL MARKET REPORT DALLAS/ FORT WORTH

P ro p er t y : Fo r t Wes t Comme rce Ce nte r

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

TABLE OF CONTENTS

05

DFW Industrial Submarket Coverage

07

DFW Industrial Market Experts

08

DFW Trends & Transactions

09

DFW Industrial 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 2023 DFW INDUSTRIAL MARKET REPORT

Q1 2023 DFW INDUSTRIAL MARKET REPORT 05

DFW INDUSTRIAL Submarket Coverage DECATUR

DENTON McKINNEY PONDER

PRINCETON

NORTHWEST DALLAS 7,194,737 SF

FARMERSVILLE FRISCO GREENVILLE

ALLEN JUSTIN

THE COLONY

BOYD

LEWISVILLE

PLANO

FLOWER MOUND

FAR NORTHEAST DALLAS 6,951,357 SF WYLIE

ROANOKE

HASLET

CARROLLTON

ROYSE CITY

SPRINGTOWN GRAPEVINE

KELLER

NORTH FORT WORTH 4,558,020 SF

ADDISON

COPPELL

RICHARDSON

SOUTHLAKE FARMERS BRANCH

GARLAND

DFW AIRPORT 2,257,984 SF

DFW INTERNATIONAL AIRPORT

ROCKWALL ROWLETT

LAS COLINAS

COLLEYVILLE SAGINAW

DALLAS LOVE FIELD AIRPORT

BEDFORD EULESS FORT WORTH MEACHAM INTERNATIONAL AIPRORT

RICHLAND HILLS

HURST IRVING

SOUTH STEMMONS 3,498,698 SF WHITE SETTLEMENT

SUNNYVALE

DALLAS

MESQUITE

FORT WORTH

NORTHEAST/EAST DALLAS 5,429,248 SF FORNEY

GRAND PRAIRIE

TERRELL

ARLINGTON

GREAT SW/ARLINGTON 3,759,054 SF

ALEDO

DALLAS EXECUTIVE AIRPORT

BENBROOK DUNCANVILLE

HUTCHINS

CRANDALL

CEDAR HILL

CRESSON

SOUTH FORT WORTH 5,855,746 SF

DESOTO

SOUTH DALLAS 8,720,435 SF

KAUFMAN

LANCASTER

MANSFIELD

BURELSON

RED OAK

MIDLOTHIAN

WAXAHACHIE

CLEBURNE ENNIS

Q1 2023 DFW INDUSTRIAL MARKET REPORT 07

DFW INDUSTRIAL Market Experts

JIM BRICE

MATT CARTHEY

CANON SHOULTS

JOHN GORMAN

JOSH BARNES

ANDREW GILBERT

Partner, Managing Principal Dallas jbrice@holtlunsford.com 972.280.8306

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

Managing Principal Dallas cshoults@holtlunsford.com 972.280.8328

Senior Vice President Dallas jgorman@holtlunsford.com 214.920.9800

Senior Vice President Dallas jbarnes@holtlunsford.com 972.280.8353

Vice President Dallas agilbert@holtlunsford.com 972.280.8312

GEORGE JENNINGS

THOMAS GRAFTON

MADDY CANTY

KEATON BRICE

WILLIAM WILSON

MITCH CANTWELL

Vice President Fort Worth gjennings@holtlunsford.com 817.632.6151

Vice President Fort Worth tgrafton@holtlunsford.com 817.632.6152

Market Director Dallas mcanty@holtlunsford.com 972.280.8325

Market Director Dallas kbrice@holtlunsford.com 972.421.1956

Market Associate Fort Worth wwilson@holtlunsford.com 817.284.5555

Market Associate Dallas mcantwell@holtlunsford.com 972.265.0133

WALKER FLOYD

TREY GOODSPEED

WESTON PORTER

JON SKIDMORE

Market Associate Dallas wfloyd@holtlunsford.com 972.265.0141

Market Associate Fort Worth tgoodspeed@holtlunsford.com 817.632.6155

Market Analyst Dallas wporter@holtlunsford.com 972.741.6441

Market Analyst Dallas jskidmore@holtlunsford.com 214.442.8942

08 Q1 2023 DFW INDUSTRIAL MARKET REPORT

HLC OUTLOOK The DFW industrial market began 2023 with continued momentum by reporting the 50th consecutive quarter of positive net absorption (more than 12 years). Q1 2023 posted over 8.9M SF of positive net absorption, marking the strongest Q1 absorption figures since 2021.

Although the under construction figures hit a new high watermark at YE 2022, supply and demand remain relatively healthy. Q1 2023 reported 20M SF of new product delivered and consequently, the overall DFW vacancy rate increased about 100 basis points to 6.3%. Roughly 26% of the new deliveries were pre-leased. Going forward, new construction starts will continue to taper as the capital markets settle towards a new equilibrium. Under construction figures are down from a Q4 2022 historical high of 75M SF to 65.8M SF reported in Q1 2023.

Rental rates are continuing to rise especially in the “Infill” submarkets. Furthermore, with less than 30% of new construction located within the “Infill” submarkets, we expect the substantial rent growth within the city’s core to continue.

The outlying submarkets continue to grow at an unprecedented pace due to land availability, interstate connectivity, capital markets interest and consistent demand from occupiers.

Preleasing activity is still prevalent but concerns over delivery dates have increased due to the continued material shortages and delays. Such delays have encouraged many landlords to increase the amount of spec work including office, lights and levelers in a race to provide “operational” space for incoming prospective tenants.

DFW INDUSTRIAL Trends & Transactions TRENDS

TOP LEASE TRANSACTIONS

Cost Stabilizing •

Shell construction and finish-out costs are beginning to stabilize

Delayed Delivery •

Dock levelers, steel, HVAC, and roofing materials are all significantly delayed

•

Spec work has started to also include dock packages due to extended lead times

•

DSV leased 1,037,316 SF from MetLife/Panattoni at 3701 Midpoint Drive in Lancaster, Texas just south of I-20.

•

Hayes Retail Services has signed a 904,495 SF lease at 11333 County Rd 212 with Stillwater Capital Investments

•

Blue Triton leased 603,328 SF from AEW at 2900 West Drive in Lancaster, Texas just east of I-35 and south of I-20. French Settlement Road in Dallas off Interstate 30.

•

Undisclosed tenant has signed a 581K SF lease at Mark IV Commerce Park with Dalfen.

Rental Rates •

Continue to increase despite increased construction

•

•

Annual increases continue to creep upwards with Landlords testing the waters on every deal

Lennox has signed a 499K SF lease with Weber Gruene located at their DFW Logistics Hub development on Airport land.

•

Lumber Liquidators has signed a 457,363 SF lease at Northlink with TA Realty.

•

Iron Mountain has signed a 400,299 SF lease at Westport Parkway Logistics Center with CT Realty Investors.

•

Flex-N-Gate signed a 395,880 SF lease at 2155 West I-20 with TA Realty.

•

William-Sonoma leased 383,899 SF from Principal Real Estate Investors at 2200 Danieldale Road, in Lancaster, Texas just south of Interstate 20.

•

Forward Air Solutions has signed a 229,200 SF lease with Clarion Partners at 2475 Esters Boulevard in Grapevine.

•

K Power has signed a 215,600 SF lease at Commerce 35 W with Nuveen.

•

Undisclosed Freezer/Cooler tenant leased 205,931 SF from Cold Summit Development at 2800 Cedardale Road in Dallas, Texas east of Dallas Ave south of I-20.

•

Lockheed Martin renewed a 200,346 SF lease at 510 SW 114th with Heller Industrial Parks.

Drive To Increase Efficiency •

Increased car and trailer parking requirements

Increased Attention On Workforce

HLC DEAL

•

Where are they coming from?

•

Better work environment (Ex. HVAC Warehouse)

Pre-Leasing Activity Remains Strong but might be later in construction phase due to uncertain delivery timelines

MARKET TRENDS •

If the market experiences a downturn, we expect concessions to become more favorable for tenants.

As we enter the second quarter of 2023, we expect the overall industrial market to continue strong as tenant demand in the market is still very active. We also 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.

•

Entitlements and building permits continue to be delayed as municipalities are overloaded with requests.

HLC DEAL

•

•

The continued expansion of e-commerce fuels the increased demand for industrial space.

American Pacific Industries signed a 160K SF lease at 957 Heinz Way with LINK.

•

•

3PLs continue to account for a significant portion of the overall positive absorption.

Quorum Ceiling Fan signed a 156,205 SF lease at 401 Railhead Road with Bentall GreenOak.

•

MARKET OBSERVATIONS

•

Sublease listings appear to be on the rise.

Ready Spaces leased 138,716 SF at 11420 Mathis Street with Sealy and Company.

•

Incab America has signed a 134,640 SF lease with Prologis at Heritage Business Park located at 900 S Nolen Drive in Grapevine.

•

ID Logistics has signed a 129,070 SF lease at Fort Worth South Business Park with Majestic Realty.

vs. 12 Mths Ago

•

Cummins Inc. has signed a 128,321 SF lease at Carter Logistics Center with Ares.

•

SMS has signed a 117,843 SF lease at Bridge Logistics new development at 280 E Corporate Drive in Lewisville.

•

Waste Management renewed a 114,688 SF lease at 1915 Meridian with TA Realty.

•

•

With the recent changes in the debt markets, the development wave has slowed down. Continued tenant demand has helped counter this by giving developers confidence in increased rental rates.

Fundamentals of what makes DFW appealing are unchanged. Population growth, lower cost of living, pro-business environment, central location and connectivity will continue to be attractive to businesses and capital markets.

•

Continued tenant demand is evident as shown by very strong Q1 positive absorption figures.

•

New frontier markets are benefiting from established submarkets reaching full capacity in certain size ranges.

Absorption

vs. Prev. Qtr

HLC DEAL

8,987,204

10,818,780

2,650,105

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

6.3%

4.9%

5.6%

Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

•

Allied Stone leased 110,600 SF from EQT/Exeter at 2050 Kestrel Ave in DeSoto, Texas just south of Interstate 20 off Hampton Road.

17,199,144

15,316,322

15,716,033

•

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

Hisun Motors has signed a 109,382 SF lease at Harry McKillop Boulevard with Transwestern Development.

65,838,789

77,564,969

56,614,814

•

Encompass Supply Chain Solutions has signed a 102,708 SF lease with Centerpoint at their Bison Grove project in Lewisville

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

•

20,167,140

9,483,705

7,906,521

Warehouse Plus has signed a 100K SF lease at 3901 E Plano Parkway with Mapletree.

HLC DEAL

Q1 2023 DFW INDUSTRIAL MARKET REPORT 09

DFW INDUSTRIAL Facts & Figures OVERALL DFW

OVERALL VACANCY

8.0%

20,000,000

7.0%

18,000,000 16,000,000

6.0%

14,000,000

5.0%

12,000,000

4.0%

10,000,000

3.0%

8,000,000

2.0% 1.0%

7.0%

6.8%

Q2 20

Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

ABSORPTION

Q4 21

Q1 22

DELIVERIES

Q2 22

Q3 22

Q4 22

Q1 23

6.3%

70,000,000 60,000,000

15,000,000

5.0%

3.0%

4,000,000

2.0% 0.7%

0.5% Q2 20

VACANCY

Q3 20

DIRECT

Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

Q1 22

Q2 22

SUBLET

Q3 22

Q4 22

50,000,000 40,000,000

10,000,000

30,000,000 20,000,000

5,000,000

10,000,000

1.0% 0.0%

EXISTING INVENTORY SUBMARKET

20,000,000

7.0%

4.0%

Q1 19

90,000,000 80,000,000

6.0%

6.3%

0 Q1 20

OVERALL CONSTRUCTION

25,000,000

8.0%

6,000,000

2,000,000

0.0%

OVERALL ABSORPTION 9.0%

Q1 23

Q1 19

Q2 20

Q3 20

Q4 20

Q1 21

TOTAL NET

TOTAL

0

0

Q2 21

Q3 21

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

Q1 19

Q1 23

Q2 20

Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

DELIVERED

LEASING ACTIVITY

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

UNDER CONSTRUCTION

VACANCY

# BLDGS.

TOTAL RBA

DIRECT SF

TOTAL SF

VAC. %

YTD NET ABSORPTION

YTD DELIVERIES

UNDER CONSTRUCTION SF

YTD LEASING ACTIVITY

DFW Airport

1,007

96,231,997

4,660,256

5,245,963

4.8%

851,583

1,751,128

3,440,330

1,054,233

East Dallas

2,031

64,251,043

7,152,372

7,162,560

11.1%

387,852

342,342

8,573,267

1,595,050

Great SW/Arlington

1,951

128,440,181

4,388,981

5,308,466

3.4%

(288,299)

505,338

3,122,392

1,699,539

Henderson County

150

2,309,833

57,717

57,717

2.5%

(8,199)

0

4,200

5,750

North Fort Worth

1,491

127,684,555

8,102,016

9,099,555

6.3%

2,166,291

2,522,877

18,236,528

3,619,473

Northeast Dallas

3,163

128,596,519

3,921,595

4,757,170

3.0%

(201,005)

482,149

4,211,557

1,894,034

Northwest Dallas

2,320

127,996,659

5,458,231

6,816,856

4.3%

676,491

2,392,763

4,929,988

2,127,093

NW Dallas Outlying

240

4,190,551

142,864

142,864

3.4%

(2,948)

0

754,745

16,289

South Dallas

1,894

144,567,389

14,110,941

14,660,113

9.8%

4,630,094

10,789,533

15,522,398

3,083,525

South Fort Worth

3,156

95,772,563

4,458,063

5,097,718

4.7%

1,078,443

591,673

5,146,650

987,731

South Stemmons

4,742

138,782,149

7,564,956

8,123,148

5.5%

(303,099)

789,337

1,896,734

1,116,427

TOTALS

22,145

1,058,823,439

60,017,992

66,472,130

6.3%

8,987,204

20,167,140

65,838,789

17,199,144

SOURCE: COSTAR Q1 2023 INDUSTRIAL REPORT

10 Q1 2023 DFW INDUSTRIAL MARKET REPORT

SUBMARKET INTELLIGENCE

GSW/ARLINGTON

CURRENT EVENTS The Great Southwest (GSW) industrial submarket began 2023 in a stable position.

Per CoStar reporting in Q1, GSW reported a negative net absorption of 288,299 SF. This is primarily due to the delivery of 505,338 SF of new construction. GSW posted strong leasing activity numbers of more than 1.7M SF. Additionally, GSW reported a total of 3,122,392 SF of new projects currently under construction.

The Q1 vacancy rate increased slightly to 3.4% versus 3.0% at YE 2022. This ranks GSW second among the major submarkets with the lowest vacancy rates (behind only Northeast Dallas).

Projecting forward to the rest of 2023, we expect the GSW market to remain one of the top-performing submarkets with continued rent growth as tenant demand remains strong across the DFW market. Additionally, GSW remains one of the tightest submarkets for bulk spaces above 200K SF.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(288,299)

331,203

(247,267)

Vacancy 3.4% Leasing Activity 1,141,955 U/C SF

vs. Prev. Qtr 3.0% vs. Prev. Qtr 1,244,170 vs. Prev. Qtr

VITAL STATS

vs. 12 Mths Ago 3.5% vs. 12 Mths Ago 2,047,829 vs. 12 Mths Ago

3,122,392

3,627,730

2,018,308

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

505,338

49,288

957,046

TOP LEASE TRANSACTIONS

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 Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

Q2 21

ABSORPTION

Q3 21

Q4 21

Q1 22

DELIVERIES

Q2 22

Q3 22

Q4 22

Q1 23

VACANCY

NEW DEVELOPMENTS

•

Flex-N-Gate signed a 395,880 SF lease at 2155 West I-20 with TA Realty.

•

Wildlife Commerce Park – a 1M SF three (3) building spec development with Crow Holdings Industrial

•

American Pacific Industries signed a 160K SF lease at 957 Heinz Way with LINK.

•

Shady Grove Logistics Crossing | 3 Building spec development with Scannell/Crow Holdings totaling 999,322 SF

•

Lockheed Martin renewed a 200,346 SF lease at 510 SW 114th with Heller Industrial Parks.

•

Prologis Great Southwest | Four (4) building spec development with Prologis totaling 742,543 SF

•

MFS Supply signed a 83,142 SF lease at 1460 Avenue S with Nuti-Bon Distribution.

•

•

Waste Management renewed a 114,688 SF lease at 1915 Meridian with TA Realty.

MacArthur Grand Logistics Center – a 602,355 SF development with Brookfield that was pre-leased to Conn’s Furniture

•

GSW Commerce Center at 161 – 2 Building spec development with Molto totaling 464,495 SF

•

2001 E Avenue K – a 200,175 SF spec development with DWS

•

732 Avenue R – a 114,400 SF spec development with Proterra Properties/Longpoint

•

1200 Oakdale Road – a 70,050 spec development with Alliuz

HLC DEAL

HLC DEAL

HLC DEAL

DEALS IN THE MARKET •

Oxford Properties is selling two assets in the GSW submarket: 1375 Ave S and 1169 113th.

LARGE EXISTING VACANCIES

EXPERTS CANON SHOULTS

MADDY CANTY

Managing Principal cshoults@holtlunsford.com 972.280.8328

Market Director mcanty@holtlunsford.com 972.280.8325

•

14900 Trinity Boulevard – 310K SF

•

1600 S Great Southwest Parkway – 298,506 SF

•

410 W Trinity Boulevard – Prologis GSW 48 - 262,854 SF

•

502 Fountain Parkway – 214,684 SF

•

7009 S Cooper Street – Building 3 - 204,565 SF

•

804 Shady Grove Road – 203,430 SF

SUBMARKET INTELLIGENCE

Q1 2023 DFW INDUSTRIAL MARKET REPORT 11

DFW AIRPORT

CURRENT EVENTS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

851,583

(750,503)

405,260

Vacancy

vs. Prev. Qtr

4.8%

3.4%

VITAL STATS 9.0%

4,000,000

8.0%

3,500,000

vs. 12 Mths Ago

7.0%

3,000,000

3.1%

6.0% 5.0%

2,500,000 2,000,000

Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

507,015

929,478

1,889,567

3.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

2.0%

0

3,440,330

4,784,054

4,431,892

1.0%

-500,000

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,751,128

988,925

219,000

TOP LEASE TRANSACTIONS •

Best Lennox has signed a 499K SF lease with Weber Gruene located at their DFW Logistics Hub development on Airport land.

•

Forward Air Solutions has signed a 229,200 SF lease with Clarion Partners at 2475 Esters Boulevard in Grapevine.

•

Incab America has signed a 134,640 SF lease with Prologis at Heritage Business Park located at 900 S Nolen Drive in Grapevine.

•

Encompass Supply Chain Solutions has signed a 102,708 SF lease with Centerpoint at their Bison Grove project in Lewisville

DFW Commerce Center – a 2M SF three (3) building project with CLX on Airfield Drive, set for delivery in Q2 2023

•

Royal 114 – a 430K SF four (4) building project with Archway Properties and Nuveen, set to deliver in Q2 2023

•

Freeport Commerce Center – a 328,175 SF two (2) building project with Alliance Industrial Company, set for completion in Q2 2023

•

Passport 125 – a 125K SF development with Stream Realty Partners at Passport Park, set for completion in Q2 2023

1,000,000 500,000

0.0%

-1,000,000 Q1 20

Q2 20

Q3 20

Q4 20

ABSORPTION

Q1 21

Q2 21

Q3 21

Q4 21

Q1 22

DELIVERIES

Q2 22

Q3 22

Q4 22

Q1 23

VACANCY

•

Valley View Point – ICM Asset Management is under construction on a single building development totaling 120,900 SF on Airport land, set for delivery in Q3 2023

•

DFW Logistics Hub – Three (3) building project totaling 1.5M SF developed by Weber & Company and Gruene Real Estate located on Airport land, set for delivery in Q4 2023

•

DFW Walnut Hill – HLCI has broken ground on their freestanding 145K SF building located at Passport Park on Airport land, set to deliver in Q3 2023

HLC DEAL

•

Mustang Court – Brookfield is kicking off construction on their 3-building development in Southlake totaling 335,401 SF, set for delivery in Q4 2023

•

Skyway Logistics Center – Box Investment Group has broken ground on their freestanding 84K SF development in Irving just east of DFW Airport

•

Airport Corporate Center – Leon Capital Group is under construction at 4500 N Belt Line on their 60,400 SF building, set to deliver Q2 2023

HLC DEAL

NEW DEVELOPMENTS •

1,500,000

4.0%

The Dallas-Fort Worth (DFW) Airport industrial submarket started off 2023 with a vacancy rate of 4.8% at the end of 1Q 2023. This is a slight uptick compared to the 3.4% vacancy rate due to new delivered product at Passport Park and Highway 121 which will likely be leased in the second or third quarter of this year. The sweet spot size remains in the 200K - 500K SF size range as there are only two options readily available in that size today. Expect rates to continue to rise as Passport Park and Highway 121 become fully built out with minimal options available.

The bulk of warehouse rental rates are increasing into the $7.50 - $8.00 range, dependent on building age. In the 50K to 100K SF range, for functional shallow bay product, we are seeing rates from $8.50 to $9.50 depending on the finish level and age. 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, McKesson and many others.

EXPERTS ANDREW GILBERT

KEATON BRICE

Vice President agilbert@holtlunsford.com 972.280.8312

Market Director kbrice@holtlunsford.com 972.421.1956

12 Q1 2023 DFW INDUSTRIAL MARKET REPORT

CURRENT EVENTS

SUBMARKET INTELLIGENCE

EAST DALLAS

The East Dallas submarket ended Q1 with the highest vacancy rate across DFW. While alarming, it is important to understand that it consists of three distinctly different micro-markets. Central East Dallas, East Dallas/Mesquite and Forney/Terrell each tell a different story so the data must be examined closely.

Central East Dallas includes primarily older buildings on the outskirts of Dallas’ CBD. Reporting a vacancy rate of 15.5%, it should also be noted that the overall availability rate for this micro-market is only 4.9% currently. The broader view by those focused on institutional-grade industrial projects should not be influenced too heavily by this micro-market. Much of it has been previously redeveloped or is planning to be redeveloped as opposed to new industrial development. Crow Holding has a proposed project on the far east side of this pocket which will compete more with the East Dallas/Mesquite submarket.

East Dallas/Mesquite holds the “bread and butter” of the submarket. While reporting an 11.1% vacancy rate, it is important to note that a 753K SF former data center accounts for 3.0% of the micro-market. With several new buildings being recently delivered and a few new subleases, there are now more options in the 200-400K range than we have seen in the past 2 years. There are little to no options available in the nearby NE Dallas/ Garland submarket which should push all leasing activity in these size ranges to this pocket. Leasing activity still remains steady but this pocket should be watched closely with more deliveries on the way.

Forney/Terrell is the new frontier and is seeing a significant amount of speculative development due to land availability, compared to the other established micromarkets. As speculative projects have been completed, Hayes Retail has been the most active tenant in the market, absorbing the first 2 projects to be delivered.

With the development activity consisting mostly of 500K+ buildings and the newness of the overall micro-market, the vacancy figures have the potential to make some large swings in the future, if delivered vacant. However, we have seen a continued stream of new prospects come to the market and expect a few more leases to sign in 2Q. We expect this corridor to remain active as it provides excellent access to critical supply chain arteries and the labor required to operate.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

387,852

1,587,053

71,230

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

11.3%

9.2%

10.0%

vs. Prev. Qtr

vs. 12 Mths Ago

8.0%

1,595,050

2,082,008

653,563

6.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

4.0%

8,573,267

7,781,774

4,546,852

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

342,342

344,637

494,743

•

Hayes Retail Services has signed a 904,495 SF lease at 11333 County Rd 212 with Stillwater Capital Investments

DEALS IN THE MARKET •

Premier Dallas Infill – a 631,166 SF six (6) building portfolio with TA Realty located in Garland

•

Forney Logistics Crossing – a 904,495 SF building portfolio with Stillwater Capital in Forney

NEW DEVELOPMENTS •

HLC DEAL

Gateway Crossing Logistics Park – a 1,762,886 SF three (3) building project in Forney with Principal and Holt Lunsford Commercial Investments (a 1,024,549 SF cross-dock, a 473,397 SF cross-dock, and a 264,940 SF cross-dock) Innovation Ridge Logistics Park – a 1,137,650 SF three (3) building project in Forney with Lovett (a 817,538 SF cross dock, a 175,092 front load, and a 145,020 SF front load)

•

Platform 80/20 – a 942,659 SF two (2) building project in Forney with Intrepid Equity (a 512,223 SF cross-dock and a 430,436 SF cross-dock)

•

20 East Trinity Pointe | Phase I – a 1.8M SF three (3) building project in Forney with Stream Realty Partners

EXPERTS

•

JOSH BARNES

Mesquite 635 – a 555,790 SF three (3) building spec project in Mesquite with LGE (a 239,918 SF front load, a 159,728 SF rear-load, and a 156,144 SF rear load)

•

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

•

Landmark Sunnyvale – a 316,297 SF spec development in Mesquite with Landmark Companies

•

Mesquite Airport Logistics Center | Phase II – a 1.3M SF three (3) building project in Mesquite with Dalfen

2,000,000

12.0%

11.1%

TOP LEASE TRANSACTIONS

2,500,000

14.0%

Leasing Activity

•

Senior Vice President jbarnes@holtlunsford.com 972.280.8353

VITAL STATS 16.0%

1,500,000 1,000,000 500,000 0

2.0% 0.0%

-500,000 Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

ABSORPTION

Q4 21

Q1 22

DELIVERIES

Q2 22

Q3 22

Q4 22

Q1 23

VACANCY

•

635 Military Parkway – a 532,972 SF three (3) building development in Mesquite with Huntington Industrial Partners

•

1220 Data Drive – a two (2) building project located in Rockwall with Seefried Industrial Properties

LARGE EXISTING VACANCIES •

3000 Skyline Drive – 753K SF

•

5351 Samuell Boulevard – 260,600 SF

•

1130 E Kearney Street – 244,200 SF

•

2401 E Meadows Boulevard – 216K SF

•

5151 Samuell Boulevard – 211,234 SF

•

4401 Samuell Boulevard – 186,720 SF

•

S Buckner Boulevard – 102,206 SF

•

100 N Sam Houston – 81K SF

SUBMARKET INTELLIGENCE

Q1 2023 DFW INDUSTRIAL MARKET REPORT 13

NORTHEAST DALLAS Absorption

vs. Prev. Qtr

CURRENT EVENTS VITAL STATS

vs. 12 Mths Ago

(201,005)

1,511,348

512,204

7.0%

2,500,000

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

6.0%

2,000,000

3.0%

2.8%

3.8%

5.0%

Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

1,670,901

1,663,023

1,479,885

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

4,211,557

3,647,180

865,835

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

482,149

1,345,347

648,776

TOP LEASE TRANSACTIONS •

Hisun Motors has signed a 109,382 SF lease at Harry McKillop Boulevard with Transwestern Development.

1,500,000

4.0% 1,000,000 3.0% 500,000

2.0%

0

1.0% 0.0%

-500,000 Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

Q2 21

ABSORPTION

Q3 21

Q4 21

Q1 22

DELIVERIES

Q2 22

Q3 22

Q4 22

Q1 23

VACANCY

•

McKinney Trade Center | Phase 2 – a 171,400 SF spec development in McKinney with ML Realty

•

•

Warehouse Plus has signed a 100K SF lease at 3901 E Plano Parkway with Mapletree.

Perimeter Road – a 297,628 SF two (2) building spec project in Garland with Core 5

•

•

Blovelight has signed a 74,758 SF lease at 1102 S Jupiter Road with Reserve Capital.

Jupiter Road – a 194,029 SF two (2) building spec project in Garland with SRS Industrial

•

•

Power Distributors has signed a 72K SF lease at 10421 Sanden Drive with Cobra Caps.

751 S International Road – a 69,780 SF spec project in Garland with Cohen Asset Management

•

1515 Corporate Crossing – a 301,120 SF spec development in Rockwall with Stream Realty Partners and Westcore

•

Wylie Business Center – a 274,416 SF spec development in Wylie with Lovett

DEALS IN THE MARKET •

Premier Dallas Infill – a 631,166 SF six (6) building portfolio owned

by TA Realty

•

Miller Park – a 281,643 SF building being sold in a portfolio owned

by TA Realty

NEW DEVELOPMENTS •

Frisco Trade Center – a 576,368 SF three (3) building spec project in Frisco with Dalfen

•

McIntyre Road – a 525,636 SF three (3) building spec project in McKinney with Becknell Industrial

•

McKinney National | Phase 2 – a 481,158 SF three (3) building spec project in McKinney with Transwestern Development

•

Lookout Logistics Center – a 359,169 SF three (3) building spec project with Crow Holdings Industrial

•

McKinney Airport Trade Center | Phase 1 – a 320K SF three (3) building spec project in McKinney with Greystar

•

M-75 Commerce Center – a 304,576 SF spec development with CA Ventures

•

Central Circle Logistics Park – a 172,640 SF two (2) building spec project in McKinney with Stonelake

HLC DEAL

HLC DEAL

LARGE EXISTING VACANCIES •

3838 W Miller Road – 200K SF

•

350 Cypress Hill Drive – 150,898 SF

•

18325 Waterview Parkway – 136K SF

•

2855 Marquis Drive – 127,204 SF

•

201 Range Drive – 123,271 SF

•

1125 E Collins Boulevard – 100,354 SF

Northeast Dallas consists of three primary areas that are unique in their tenant base, maturity and overall landscape. It is important to examine each micromarket separately as it is rare to see tenants consider space from one to the next. NE Dallas/Garland, Plano/ Richardson, and Allen/McKinney/Frisco as a whole reported one of the lowest vacancy rates in the overall market and are well-positioned for the future.

NE Dallas/Garland is the oldest and most mature micro-market consisting of supply chain companies as well as manufacturing. Posting a 2.3% vacancy rate is proof of the pressure that exists for tenants to find space here. The last few sites are currently under construction and the focus has shifted to covered land plays and redevelopment. With close proximity to the core population of DFW, rental rate growth is still expected here as it has not quite reached the marks of other comparable submarkets such as Valwood and South Stemmons.

Plano/Richardson has certainly continued to experience an identity shift as it no longer relies solely on the tech industry. As DFW has grown, this area has transformed and attracted a more diverse tenant base focused on fulfilling supply chain needs while still remaining attractive to tech companies because of the proximity to skilled labor. A 5.1% vacancy rate consists primarily of specialized flex space and the majority of leasing activity is focused on the few new developments in the area.

Allen/McKinney/Frisco is the newest micro-market and is seeing the most development activity due to the availability of land. With 2.2M SF under construction from Frisco to McKinney, development is slightly outpacing demand however, leasing activity has remained steady with 11 new leases signed during the second half of 2022 totaling over 775K and another wave coming in the first half of 2023. We expect this area to remain attractive for investors and tenants due to continued population growth.

EXPERTS JOSH BARNES Senior Vice President jbarnes@holtlunsford.com 972.280.8353

14 Q1 2023 DFW INDUSTRIAL MARKET REPORT

SUBMARKET INTELLIGENCE

NORTHWEST DALLAS

CURRENT EVENTS Through Q1 2023, the Northwest Dallas industrial submarket continues to be one of the strongest-performing submarkets in DFW. Valwood is a haven for building supply companies as well as 3PL’s with direct access to I-35. Billingsley, Longpoint, Panattoni, and TA Realty have leased their recent developments in Valwood. The Metropolitan/Addison submarket is extremely tight from a vacancy standpoint as there are no more available sites for development. Lastly, as developers move north to track down sites in Denton and Sanger, Highway 121 is now centrally located in the DFW market and an extremely desirable location for users. The Northwest Dallas submarket started the year off with a 4.3% vacancy rate which will stay along that number in Q2 2023 as the final wave of developments on Highway 121 deliver, which will be leased soon after delivery.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

676,491

912,052

(1,065,828)

VITAL STATS 6.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

5.0%

4.3%

3.6%

4.6%

4.0%

Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

3.0%

1,924,330

2,455,121

2,851,774

2.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

4,929,988

7,144,686

6,661,980

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,392,763

480,499

370,042

TOP LEASE TRANSACTIONS

Market Director kbrice@holtlunsford.com 972.421.1956

500,000 0 -500,000 -1,000,000

0.0%

-1,500,000 Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

ABSORPTION

Q2 21

Q3 21

Q4 21

Q1 22

DELIVERIES

Q2 22

Q3 22

Q4 22

Q1 23

VACANCY

NEW DEVELOPMENTS •

Exeter Westpark II – a 1.1M SF development with Exeter in Denton, set for completion in Q2 2023

•

Rinchem, Inc. renewed their 54K SF lease at 4650 Simonton in Farmers Branch.

•

Exeter Westpark III – a 421,200 SF development with Exeter in Denton, set for completion in Q3 2023

•

K-9 Culture signed a 53,149 SF lease at 1000 Crosby in Valwood.

•

Denton Crossing 1 and 2 – a 699K SF two (2) building crossdock project with Scannell, set for completion in Q2 2023

•

Vallen has signed a 37,773 SF lease at Link’s new Live Oak development located at 4101 Live Oak Drive in The Colony.

•

•

A&W Trucking renewed their 32K SF lease with Principal Financial Group at 13920 Senlac located in Valwood.

Urban District 35 – a 441K SF four (4) building project with Urban Logistics Realty located in Denton with I-35 frontage, set for completion in Q2 2023

•

ICC - 35 – a 1.1M SF three (3) building project with CLX Ventures located directly off of Loop 288 and I-35 in Denton, set for completion in Q4 2023

•

3333 University Drive – Billingsley is under construction on a two (2) building project in Denton totaling over 900K SF, set for completion Q3 2023

•

288/380 Logistics Park – an 800K SF four (4) building project with Velocis in Denton located at Loop 288 and 380, set for completion in Q3 2023

•

Live Oak Logistics Park, Phase II – They are under construction on their final phase with two buildings totaling 240K SF, set for completion in Q3 2023

•

Red River Business Park – Hines is under construction on their three (3) building development in Lewisville at Highway 121 and I-35. The SF totals 248,936 set for completion in Q3 2023

•

Vice President agilbert@holtlunsford.com 972.280.8312

1,000,000

1.0%

Interface Systems signed a 30,860 SF lease in Carrollton at PDL Flooring’s new development at 3005 Belmeade.

HLC DEAL

HLC DEAL

DEALS IN THE MARKET

KEATON BRICE

1,500,000

SMS has signed a 117,843 SF lease at Bridge Logistics new development at 280 E Corporate Drive in Lewisville.

•

ANDREW GILBERT

2,000,000

•

HLC DEAL

EXPERTS

3,000,000 2,500,000

Mary Kay Distribution Center – 186K SF currently on the market for sale located in the Frankford Trade Center pocket in Valwood

SUBMARKET INTELLIGENCE

Q1 2023 DFW INDUSTRIAL MARKET REPORT 15

SOUTH DALLAS

CURRENT EVENTS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

4,630,094

3,218,884

(363,491)

VITAL STATS 12.0%

12,000,000 10,000,000

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

10.0%

9.8%

5.9%

6.2%

8.0%

Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

6.0%

3,083,525

3,322,546

2,701,595

4.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

15,522,398

25,151,174

21,655,615

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

10,789,533

2,901,707

1,517,176

TOP LEASE TRANSACTIONS

8,000,000 6,000,000 4,000,000 2,000,000

2.0%

0

0.0%

-2,000,000 Q1 20

Q2 20

Q3 20

Q4 20

ABSORPTION

Q1 21

Q2 21

Q3 21

Q4 21

Q1 22

Q2 22

Q3 22

DELIVERIES

Q4 22

Q1 23

VACANCY

LARGE EXISTING VACANCIES

•

DSV leased 1,037,316 SF from MetLife/Panattoni at 3701 Midpoint Drive in Lancaster, Texas just south of I-20.

•

1301 & 1501 Southport Parkway (Building 1 & 2) for 2,126,880 SF with Xebec in Wilmer, Texas

•

Blue Triton leased 603,328 SF from AEW at 2900 West Drive in Lancaster, Texas just east of I-35 and south of I-20. French Settlement Road in Dallas off Interstate 30.

•

3486 Cedardale Road – 1,084,460 SF with Trammell Crow Company

•

William-Sonoma leased 383,899 SF from Principal Real Estate Investors at 2200 Danieldale Road, in Lancaster, Texas just south of Interstate 20.

•

950 N Interstate Highway 45 – 1,013,833 SF with Majestic Realty

•

4235 Singleton Boulevard – 1,005,200 SF with Lovett Commercial (shell complete)

•

601 Distribution Drive – 610,662 SF spec with Champion Partners

•

4601 Langdon Road – 488,780 SF with LINK (2nd generation)

•

Crystal Lake Boulevard & Dan Morton – 467,541 SF with Eider Creek Capital (shell complete)

HLC DEAL

•

Undisclosed Freezer/Cooler tenant leased 205,931 SF from Cold Summit Development at 2800 Cedardale Road in Dallas, Texas east of Dallas Ave south of I-20.

•

Allied Stone leased 110,600 SF from EQT/Exeter at 2050 Kestrel Ave in DeSoto, Texas just south of Interstate 20 off Hampton Road.

DEALS IN THE MARKET •

3199 Telephone Road – LINK (Seller) offering 920,275 SF leased to Amazon south of I-20

•

3800 Cedardale Road – Arcapita (Seller) offering 776,629 SF leased to FedEx off I-20

•

1600 N Polk Street – 350,798 SF offered by Modlo

The overall South Dallas Industrial submarket as surveyed off I-30 west of downtown, I-20, & I-45 is approximately 167 Million SF. In accordance with the area surveyed, CoStar is reporting positive Net Absorption of 4,178,031 SF for South Dallas in Q1 2023. Despite the positive Net Absorption this combined sector of the industrial market is now 10.0% vacant which is 3.5% higher than reported in Q4 2022. According to CoStar research South Dallas delivered 10.8 Million SF in Q1 of 2023 and still has 16.7 Million SF remaining under construction in the I-30, I-20, & I-45 corridors. Besides the residual projects under construction, this submarket has another 18 Million SF planned development positioned for the future.

For the past 3 years, the South Dallas submarket of I-30, I-20, and I-45 has enjoyed an average single-digit vacancy rate of 6.025%.

However, the rapid pace of an abundance of construction projects and deliveries has flooded this submarket with inventory. Deliveries have outpaced tenant demand in the changing macro-economic environment hence washing away the previous single-digit vacancy along Interstate 20 and Interstate 45.

Please note: CoStar’s South Dallas boundaries do not include the west Dallas I-30 corridor. As such, their data in the charts will vary.

EXPERTS JOHN GORMAN

CANON SHOULTS

Senior Vice President jgorman@holtlunsford.com 214.920.9800

Managing Principal cshoults@holtlunsford.com 972.280.8328

MITCH CANTWELL Market Associate mcantwell@holtlunsford.com 972.265.0133

16 Q1 2023 DFW INDUSTRIAL MARKET REPORT

SUBMARKET INTELLIGENCE

SOUTH STEMMONS

CURRENT EVENTS The outlook for South Stemmons remains positive as we head into 2Q 2023. Per Costar reporting, leasing activity showed positive 1.05M SF, with 5.5% vacancy. This vacancy rate is due in large to some of the bigger box product in the Turnpike area. Rental rates and price per SF continue to rise while landlords continue to capitalize on the submarket’s irreplicable infill location. South Stemmons, historically known as a user-owned market, has become primarily institutionally owned, which in turn has improved a lot of the building offerings for tenants with a lot of capital projects underway. We are still seeing a strong influx of tenants moving further down Irving Boulevard out of the Design District due to the increasing rates. For tenants looking in the market, location has continued to outweigh functionality due to the close proximity to Dallas CBD, the Medical District, and immediate access to thriving Dallas suburbs.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(303,099)

(430,166)

(555,065)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

5.0%

5.5%

5.0%

3.8%

4.0%

Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

3.0%

1,053,959

1,467,045

2,227,289

2.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,896,734

1,636,901

2,811,023

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

789,337

1,227,594

158,544

TOP LEASE TRANSACTIONS •

HLC DEAL

• • •

HLC DEAL

Ready Spaces leased 138,716 SF at 11420 Mathis Street with Sealy and Company.

Raw Materials renewed their lease of 31,232 SF at 2727 W Airport Freeway with Sealy and Company.

Lawns of Dallas will occupy 30K SF in their 57K SF development at 7 Justice Way. Jackson Durham Floral leased 16,350 SF at 1272 Security Drive with Hines.

NEW DEVELOPMENTS

EXPERTS CANON SHOULTS

MADDY CANTY

Managing Principal cshoults@holtlunsford.com 972.280.8328

Market Director mcanty@holtlunsford.com 972.280.8325

VITAL STATS 6.0%

•

Core35 Logistics Center IV | Building A – 289,564 SF development with Crow Holdings Industrial

•

Core35 Logistics Center IV | Building B – 142,966 SF development with Crow Holdings Industrial

•

Trinity Industrial Park | Building B – 42,999 SF development with GTC Real Estate Investments

•

Trinity Industrial Park | Building A – 39,774 SF development with GTC Real Estate Investments

3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0

1.0%

-500,000

0.0%

-1,000,000 Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

ABSORPTION

Q4 21

Q1 22

DELIVERIES

LARGE EXISTING VACANCIES •

505 N Wildwood Drive – 167,490 SF

•

1011 Regal Row – 101,939 SF

•

2343 Walnut Hill Lane – 69,256 SF

•

134-170 Pittsburg Street – 61K SF

•

2205 E Pioneer Drive – 54,047 SF

•

3202 Manor Way – 52,841 SF

Q2 22

Q3 22

Q4 22

Q1 23

VACANCY

SUBMARKET INTELLIGENCE

Q1 2023 DFW INDUSTRIAL MARKET REPORT 17

NORTH FORT WORTH Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

2,166,291

2,298,053

2,298,177

CURRENT EVENTS VITAL STATS 12.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

10.0%

6.3%

6.3%

9.0%

8.0%

Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

6.0%

3,309,348

1,946,660

1,562,253

4.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

18,236,528

19,063,142

9,794,171

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,522,877

2,016,334

983,483

TOP LEASE TRANSACTIONS

4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000

2.0%

500,000

0.0%

0 Q1 20

Q2 20

Q3 20

Q4 20

ABSORPTION

Q1 21

Q2 21

Q3 21

Q4 21

Q1 22

Q2 22

DELIVERIES

Q3 22

Q4 22

Q1 23

VACANCY

•

•

Undisclosed tenant has signed a 581K SF lease at Mark IV Commerce Park with Dalfen.

Fort West – a 531,601 SF three (3) building project with Creation Equity and JP Morgan

•

•

Lumber Liquidators has signed a 457,363 SF lease at Northlink with TA Realty.

DFW Point 35 – a 485,680 SF two (2) building project with Stonemont

•

•

Iron Mountain has signed a 400,299 SF lease at Westport Parkway Logistics Center with CT Realty Investors.

Westport Parkway Commerce Center – a 400,565 SF development with Molto Properties

•

•

K Power has signed a 215,600 SF lease at Commerce 35 W with Nuveen.

820 Crossing – a 335,004 SF development with Scannell Properties

•

Champion Crossing – a 317K SF development with Greystar

•

Mercantile I-35 – a 718,705 SF two (2) building project with MCW Capital, LLC

•

Blazing Trail – a 657,562 SF four (4) building project with USAA

•

35 Eagle – a 2,125,159 SF five (5) building project with Clarion

•

Westport 25 – a 1,076,459 SF development with Hillwood

•

Westside 287 – a 476,576 SF two (2) building project with Crow Holdings

•

Speedway 3 – a 683,140 SF three (3) building project with Scannell

•

Mercantile Logistics Station – a 816K SF two (2) building project with Velocis

•

Quorum Ceiling Fan signed a 156,205 SF lease at 401 Railhead Road with Bentall GreenOak.

DEALS IN THE MARKET •

Commerce 35W – a 215,600 SF Class A building

NEW DEVELOPMENTS •

Northlake 35 – a 2,571,480 SF six (6) building project with Clarion

•

Alliance Center North – a 1,057,414 SF two (2) building project with Hillwood

•

Elizabeth Creek Gateway C – a 1,510,500 SF development with DHL

•

Alliance Center East 1 – a 1,240,584 SF development with Hillwood

•

Sylvania Crossing @ I-35W | Building 2 – 697,140 SF

•

Silver Creek Business Park – a 1,108,938 SF development with Majestic Realty

•

Speedway Logistics Crossing | Building 3 – 384,716 SF

•

Elizabeth Creek Gateway | Building D – 286,467 SF

•

Intermodal Logistics Center 6 – a 1,008,416 SF development with Northpoint Development

•

DFW Point 35 | Building 1 – 267,280 SF

•

Northmark Commerce Center – 234,478 SF

•

114 Logistics Park – a 1,004,400 SF development with Logistics Property Company

•

DFW Point 35 | Building 2 – 218,400 SF

•

Northlink | Building C – 211,037 SF

•

Basswood 35 – a 628,260 SF five (5) building project with Eastgroup Properties

After a record-setting year of absorption in 2022, North Fort Worth continues its run into 2023 with a Q1 posting of another 2.3M SF. This marks the third consecutive quarter of positive absorption above 2M SF and highlights the depth of the submarket. After delivering approximately 2.5M SF of product through Q1, the development pipeline remains robust through the end of the calendar year and into the first couple of quarters of 2024 with approximately 14.5M SF currently under construction. New construction starts have stagnated to a noticeable degree with only a handful of new projects breaking ground thus far in 2023 - namely Velocis with Mercantile Logistics Station and Scannell with Speedway 3. With continued positive net absorption, low vacancy (6.3%), and sustained rental growth, North Fort Worth is once again primed for a stellar year.

LARGE EXISTING VACANCIES EXPERTS GEORGE JENNINGS

MATT CARTHEY

Vice President gjennings@holtlunsford.com 817.632.6151

Managing Principal, Partner mcarthey@holtlunsford.com 817.710.1111

18 Q1 2023 DFW INDUSTRIAL MARKET REPORT

SUBMARKET INTELLIGENCE

SOUTH FORT WORTH

CURRENT EVENTS The South Fort Worth industrial submarket posted a Q1 2023 vacancy of 4.7%, a figure slightly up from the 5.5% recorded in Q4 2022. This drop in vacancy correlates with the ~591k SF of new deliveries and the ~976K SF in absorption that was confirmed this quarter.

A statistic which ranks the south Fort Worth submarket fourth in quarterly absorption behind South Dallas, North Fort Worth, and Northwest Dallas in the first quarter, further validating its position as one of the top-performing submarkets in the metroplex. We expect to see the vacancy rate continue to decrease in Q2 2023 with over ~1.1M SF of active deals tracking and no new building deliveries until Q3 and Q4.

Looking forward to the second half of 2023, the South Fort Worth speculative development pipeline is currently slated to deliver over 2.4M SF. However, we anticipate a slowdown in development with only two projects totaling 381K SF announcing 2023 groundbreaks.

Specifically, this pipeline consists of the Falcon Development single 237K SF rear-load dubbed “Oak Creek Distribution” and Empire Equities four (4) building 144k SF single tenant grade level concept at Campus Park.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

1,078,443

1,939,022

1,146,753

VITAL STATS 12.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

10.0%

4.7%

5.5%

8.8%

8.0%

Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

6.0%

843,956

1,355,738

1,725,731

4.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

5,146,650

5,466,223

4,007,005

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

591,673

249,765

2,718,277

TOP LEASE TRANSACTIONS

3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000

2.0%

0

0.0%

-500,000 Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

ABSORPTION

Q2 21

Q3 21

Q4 21

Q1 22

Q2 22

DELIVERIES

Q3 22

Q4 22

Q1 23

VACANCY

NEW DEVELOPMENTS

•

ID Logistics has signed a 129,070 SF lease at Fort Worth South Business Park with Majestic Realty.

•

HomeGoods | BTS – a 1,033,760 SF BTS for HomeGoods with Clarion and Crow Holdings Capital

•

Cummins Inc. has signed a 128,321 SF lease at Carter Logistics Center with Ares.

•

Risinger Park South – a 655,500 SF development with TCRG Properties

•

Texas Collision Center has signed a 68,885 SF lease at Majestic Fort Worth South with Majestic Realty.

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Southland Business Park | Phase 3 – a 781,530 SF building part of a master-planned park with Majestic Realty

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JC Industries has signed a 56,700 SF lease at 46 Ranch Logistics Park with Nuveen.

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Carter Park East | Phase 2 – a 558,569 SF three (3) building project with Clarion

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Junction 20-35 – a 139,496 SF development with CIM

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Point South Commerce – a 258,100 SF development with Alliance

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Benbrook Business Park – a 917,374 SF four (4) building project with Jackson Shaw

DEALS IN THE MARKET •

Mansfield Commerce Park – a 520K SF four (4) building portfolio

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High Point Business Park – a 403,240 SF Class A Building

LARGE EXISTING VACANCIES

EXPERTS THOMAS GRAFTON

MATT CARTHEY

Vice President tgrafton@holtlunsford.com 817.632.6152

Managing Principal, Partner mcarthey@holtlunsford.com 817.710.1111

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Fort Worth Logistics Hub | Building 2 – 606,480 SF

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Carter Park East | Building 1 – 549,780 SF

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Southwest Crossing Logistics Center – 213,546 SF

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Carter Park Distribution | Building 2 – 263,900 SF

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South Fort Worth Commerce Center | Building 2 – 180,556 SF

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Fort Worth South Business Park | Building 6 – 91,077 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