Q1 2024 DFW Industrial Market Report

DFW INDUSTRIAL Submarket Coverage

DFW INDUSTRIAL Market Experts

HARRISON DAVIS HUDSON SHEETS WESTON PORTER JON SKIDMORE DANNY PHILLIPS

HLC OUTLOOK

During Q1 2024, the overall DFW industrial market remained active. However leasing activity is balancing back to pre-covid levels following an unprecedented surge coming out of the pandemic in 2020 as companies reacted to disruptions in the supply chain.

Q1 2024 marked the 54th consecutive quarter of positive net absorption (more than 13 years) even as we did see some submarkets report negative absorption. This is a result of the continued quantitative tightening that first impacted the capital markets. As credit for small to midsize companies becomes more difficult to obtain, they are looking for ways to save by consolidating locally and regionally.

Construction deliveries for Q1 2024 totaled 16.2M SF which outpaced the previous (post pandemic quarterly avg by 42%. Consequently, the overall DFW direct vacancy rate increased to 9.4%. Construction starts have reduced dramatically due to the headwinds created by the capital markets; thus deliveries will sharply decline in subsequent quarters as the market settles toward a new equilibrium. During Q1 2024, the construction pipeline receded from peak levels to 29.7M SF.

The rise of sublease space is a trend to be noted as we continue 2024. Coming off a year-end all-time high of 1%, the current Q1 sublet vacancy rate is 0.9%. (compared to a historical average of 0.3% to 0.5%). Thus far, the availability has not had a meaningful impact on direct leasing / absorption as the majority of the available sublease space is offered as partial spaces or seasonally.

As we continue 2024, we expect the overall industrial market to remain relatively stable. However, rent growth is expected to slow or stall in some pockets due to current vacancy from recent deliveries. Manufacturing tenants, foreign companies and 3PL users will continue to be among the key drivers of absorption, as the region’s strategic location and excellent transportation infrastructure attract businesses.

We expect the DFW region will outperform other parts of the country in 2024 as it continues to be the biggest benefactor of population growth, favorable business climate and large-scale relocation efforts.

DFW INDUSTRIAL Trends & Transactions

KEY MARKET INSIGHTS

• Absorption: Absorption as reported by Costar Q1 stats was lower than expected at 1.1M SF. Other sources report between 1.7M - 4M SF

At first glance the absorption figure is far below the pace experienced even pre-pandemic. However, the discrepancy is quickly reconciled with the understanding that Costar does not record absorption upon lease execution but rather upon tenant occupancy. That said, within 15 days following the end of Q1, Costar reported an additional 3.9M SF of positive absorption thus totaling 5M through April 15, 2024.

• Vacancy Rate: The direct vacancy rate increased by 1.5% to 9.4%

• Deliveries: Q1 2024 deliveries totaled 16.2M SF

• Under Construction: The pipeline continued to taper for a fourth consecutive quarter to 29.9M SF

MARKET OBSERVATIONS

• As debt markets remain right, the development wave has slowed down. In some infill submarkets where quality supply remains constrained, increased rental rates will provide developers the confidence to move forward.

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

• Tenant demand has regulated to pre-covid levels

• Construction Costs continue to stabilize

• Increased Demand from Foreign Companies and Manufacturers

• Increased Attention On Workforce

MARKET TRENDS

• Sublease listings are on the rise and currently account for 1.0% of the overall reported vacancy.

• With new deliveries to the market, tenants now have more options than they have for a while. A temporary increase in concessions is expected in some submarkets and/or size ranges.

• Manufacturing requirements have increased steadily as companies look to onshore production

• Rental Rate growth continues albeit more slowly, each individual submarket is performing differently.

TOP LEASE TRANSACTIONS

• Venture Solutions renewed a122,259 SF lease at 4401-4425 Cambridge Road with Ivanhoe Cambridge.

• The Container Store renewed a 1.1M SF renewal with Prologis at 500 Freeport Parkway in Coppell.

• Barrett Distribution Center signed a 529,047 SF lease at 13391 US Highway 80 with EQT Exeter

• Modular Power signed a 304,576 SF lease at M-75 Commerce Center with CA Ventures

• Cantoni renewed a 138,800 SF lease at 4248 Simonton Road in the Metro/Addison Submarket in Farmers Branch.

• Post Consumer Brands leased 1,095,360 SF from Xebec at 1301 Southport Parkway in Wilmer, Texas.

• Nelson Companies signed a 100,000 SF lease at 8611 Ambassador with Oxford Properties

• Lockheed Martin Corporation signed a 136,165 SF lease at Fort West Building C with Creation Equity.

• Kurita America Inc. signed a 90,278 SF lease at South Fort Worth Commerce Center with IDI.

DFW INDUSTRIAL Facts & Figures

Others noted

EXISTING INVENTORY

VACANCY

The

stats as of

are

but it should be noted that another 3.9M SF has been “absorbed” between 4/1/24 - 4/22/24. A comparison to stats provided by our peers is outlined to the right.

GSW/ARLINGTON

CURRENT EVENTS

The Great Southwest (GSW) industrial submarket ended Q1 2024 with a slight decline in performance. However, the submarket as a whole remains in a very stable position. Per CoStar reporting in Q1, GSW reported positive absorption of 99,785 SF. GSW posted moderate leasing activity numbers of 666,789 SF. Additionally, GSW reported a total of 1.9M SF of new projects under construction at the end of Q1.

The GSW Q1 vacancy rate currently sits at 6.6%; an increase of 0.7% from the YE 2023 reported vacancy rate of 5.9%. The majority of the increase can be attributed to recent deliveries of approximately 1.1M SF. This maintains GSW’s ranking at second among the major submarkets with the lowest vacancy rates, behind only Northeast Dallas. Projecting forward to the rest of 2024, we expect the GSW market to remain one of the top-performing submarkets. We anticipate continued tenant demand in the premier submarkets. Additionally, GSW continues to remain one of the tightest submarkets for bulk spaces above 200K SF.

TOP LEASE TRANSACTIONS

• Wallace Packaging renewed a 68,962 SF lease at 415-417 113th St. with Link.

• Venture Solutions renewed a122,259 SF lease at 4401-4425 Cambridge Road with Ivanhoe Cambridge.

• Hallmark Building Supplies, Inc. signed a 39,582 SF lease at 1115 Enterprise Pl. with TA Realty.

• Restoration Hardware signed a 72,800 SF lease at 732 Avenue R with Proterra.

• RIM Logistics signed a 75,000 SF lease at 3550 N Hwy 161 with MOLTO.

DEALS IN THE MARKET

• DFW Last-Mile Logistics Portfolio – Leon Capital Group is selling a multi-building 461,182 SF portfolio with two (2) assets in the GSW submarket.

• Great Southwest Infill Shallow-Bay Portfolio – CanTex Capital is selling a multi-building 194,840 SF portfolio with three (3) industrial assets in the GSW submarket.

NEW DEVELOPMENTS

• Commerce Center 161 – a 105,072 SF two (2) building spec development with Hopewell/MBK Partners

• Wildlife Commerce Park | Wildlife 14 & 15 – two (2) building spec development with Crow Holdings Industrial totaling 228,121 SF and 305,640 SF

• Remington I-30 | 701 E Wildlife Parkway – a 440,960 SF development with Ironwood/Graff Interests

• 1250 Oakdale Road – a 70,050 SF spec development with Alluz Capital

• 2125-2129 Bardin Rd. – a 83,174 SF two (2) building spec development with Primera

• Park South GSW | 2650 Great Southwest Parkway –a 284,865 SF two (2) building development with Bridge Logistics Properties

• 2550 114th Street – a 41,923 SF development with Primera

LARGE EXISTING VACANCIES

•

• 3580 N Hwy 161 | Building

DFW AIRPORT

CURRENT EVENTS

VITAL STATS

TOP LEASE TRANSACTIONS

• The Container Store renewed their 1.1M SF renewal with Prologis at 500 Freeport Parkway in Coppell.

• Assurant signed a new lease totaling 428,738 SF at 2700 Regent Boulevard on DFW Airport land with Invesco.

• Barcel USA renewed their 308,600 SF lease at 301 Northpoint Drive in Coppell with Clarion Partners.

• Teleplan renewed their 71,643 SF lease at 2700 Story Road in Irving with Taurus Investment Holdings.

TOP SALE TRANSACTIONS

• 101 Lakeside Parkway – Clark Material Handling Company purchased the freestanding 57,003 SF building at 101 Lakeside Parkway in Flower Mound. The newly constructed building was sold at delivery.

• Skyway Logistics Center – Box Investment Group sold their freestanding 84,000 SF development in Irving at 3260 Skyway Circle to Bison Asset Management out of California.

NEW DEVELOPMENTS

• DFW Logistics Hub – a 1.5M SF three (3) building project developed by Weber & Company and Gruene Real Estate located on Airport land, set for delivery in Q2 2024

• Tristar Business Park – Hopewell has commenced construction on their two (2) building project at Jetstar and Highway 114 in Irving. The total SF is 173,680 SF and set to deliver in Q3 2024.

• DFW Commerce Center, Building 5 – CLX is developing their next phase at Passport Park which is a 509,668 SF building which is set for delivery in Q2 2024.

• Genesis 121 – Freestanding 182,983 SF rear loader on Highway 121 in Grapevine developed by Bridge Logistics Properties in partnership with Clarion Partners. Set to deliver in Q2 2024.

• Edmonds 121 Interchange – Box Investment Group has broken ground on their freestanding 50,125 SF building at 121 Business and Edmonds in Lewisville. Set to deliver in July 2024.

• Park West Crossing – ML Realty is developing their next phase at Park West. Three (3) buildings totaling 205K SF set for delivery in Q2 2024.

The Dallas-Fort Worth (DFW) Airport industrial submarket finished Q1 2024 with a 10.8% vacancy rate. That is an uptick compared to the 7.7% vacancy rate at the end of Q4 2023 due to new delivered product at Passport Park, Highway 114 and State Highway 121, which majority of the new deliveries will be leased by end of 2024. Absorption at the Airport ended up in the negative 2M range as there is a wave of 30,000 - 60,000 SF and 100,000 SF spaces on the market. In addition, the aforementioned new deliveries have lowered the absorption numbers as well. There are currently over 30 active tenants in the Airport submarket pursuing spaces under 100,000 SF so we expect mid-year stats to provide positive absorption numbers and a sub10% vacancy rate. The sweet spot size continues to be under 100,000 SF which is a good sign for the increased amount of availabilities in that size and there has been strong demand for deals 500,000 SF - 1,000,000 SF as well. With minimal new construction starts in 2024, we expect mid-year stats to be in line with 2023 numbers.

The bulk warehouse rental rates are increasing into the $7.75 - $8.50 range, dependent on building age. In the 50K to 100K SF range, for functional shallow bay product, we are seeing rates from $11.50 to $13.50, depending on the age and size. Rental abatements are still prevalent depending on renewal versus new deals and the size of the lease transaction.

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

EAST DALLAS

CURRENT EVENTS

East Dallas started 2024 with 800,000 SF of positive absorption while also delivering 3M SF of product. There is still 4.5M SF under construction, so we expect vacancy rates to be up/down as leases commence and buildings deliver. This construction activity spans a very large SF range, so as you micro analyze any opportunity moving forward, each size range will tell a different story.

It is important to understand that the East Dallas submarket consists of three distinctly different micro-markets, Central East Dallas, East Dallas/Mesquite and Forney/Terrell. The data must be examined closely to see their difference.

Central East Dallas includes primarily older buildings on the outskirts of Dallas’ CBD. It should also be noted that the overall availability rate for this micro-market is currently only 4.1% while being 14.3% vacant because of the multi-story abandoned Sears warehouse at 710 Belleview. The broader view by those focused on institutional-grade industrial projects should not be influenced too heavily by this micromarket. Much of it has been previously redeveloped or is planning to be redeveloped as opposed to new industrial development. Crow Holdings does have a proposed project on the far east side of this pocket, which will compete more with the East Dallas/Mesquite submarket.

East Dallas/Mesquite continues to be the backbone of the overall East Dallas submarket. While reporting a micro market vacancy rate of 9.8%, it should be noted that the increase in vacancy rate from last quarter is largely due to the delivery of Dalfen’s 1.3M three building project in Mesquite. With IFCO signing a lease in Huntington’s 240K cross dock and a few other deals on the horizon, we suspect the vacancy rate to come back down, especially since there are few new developments set to deliver in this micro market.

Forney/Terrell is still the main point of conversation within the East Dallas submarket due largely to the amount of spec development that has delivered and is set to deliver. The Forney/Terrell micro market has a vacancy rate of 19.9%, consisting mostly of Exeter’s 500K SF building, Stream’s 1M SF building and Lovett’s 817K SF building. As large vacancies in Mesquite continue to get absorbed, bulk users will be forced to look further east, leaving Forney in a great spot to take on the next big wave of leasing activity. Tenants certainly have more options as new projects deliver and as a result, landlords are competing harder for each deal. Rates are expected to hold through this lease up phase, however concessions are likely to increase for the short term.

TOP LEASE TRANSACTIONS

• Barrett Distribution Center signed a 529,047 SF lease at 13391 US Highway 80 with EQT Exeter

• Hithium signed a 483,874 SF lease at 12955 FM 2932 with Stream Realty Partners

• CH Robinson signed a 398,162 SF renewal at at 4696 Clover Haven Street with EQT Exeter

• IFCO signed a 241,512 SF lease at 1420 Military Parkway with Huntington Industrial

• Harmon signed a 211,112 SF lease at 2614 Big Town Boulevard with EQT Exeter

• Regent Aerospace signed a 73,580 SF lease at 5200 E Grand Avenue with HLCI

DEALS IN THE MARKET

• 1201 Chase Road – a 530,100 SF building owned by Cabot

NEW DEVELOPMENTS

• 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)

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

• Landmark Sunnyvale – a 316,297 SF building in Mesquite with Landmark Companies

• Town East Junction 540 – a 193,800 SF building in Mesquite with Leon Capital

• Sunnyvale Crossing – a 180,440 SF building in Sunnyvale with Stonelake

LARGE EXISTING VACANCIES

• 12955 FM 2932 – 1,009,530 SF

• 755 Ridgecrest Road – 817,538 SF

• 2200 Berry Road – 649,398 SF

• 13871 US Highway 80 – 500,063 SF

• 510 N Peachtree – 385,207 SF

• 1305 Airport Boulevard – 342,916 SF

• 1525 Airport Boulevard – 342,196 SF

• 301 Apache Trail – 294,899 SF (Sublease)

• 12955 FM 2932 – 293,548 SF

• 733 Ridgecrest Road – 175,092 SF

• 721 Ridgecrest Road – 145,020 SF

• 4401 Samuell Boulevard – 143,801 SF

• 1460 E Kearney Street – 138,402 SF

• 5320 S Peachtree Road – 137,537 SF

• 5324 S Peachtree Road – 124,785 SF

• 1204 Military Parkway – 117,260 SF

• 300 US Highway 80 – 109,701 SF

NORTHEAST DALLAS

VITAL STATS

CURRENT EVENTS

The Northeast Dallas submarket remained steady and started 2024 with 5.5% vacancy rate which is only 0.01% from where it ended 2023. This marks the sixth consecutive quarter that Northeast Dallas has had the lowest vacancy rate amongst all other submarkets in DFW. The overall absorption for Q1 2024 was 500K SF which was just enough to keep up with the total deliveries and keep vacancy from rising.

It is important to note that Northeast Dallas consists of three primary areas that are unique in their tenant base, maturity and overall landscape. Each micro-market must be examined separately as it is rare to see tenants consider space from one to the next. NE Dallas/Garland, Plano/Richardson, and Allen/McKinney/Frisco all boast unique strengths that make them viable for a diverse tenant base.

TOP LEASE TRANSACTIONS

• Modular Power signed a 304,576 SF lease at M-75 Commerce Center with CA Ventures

• University Furnishings signed a 227,768 SF renewal at 2149 Jupiter Road with EQT Exeter

• TwinMed signed a 210,526 SF at 3838 W Miller Road lease with Link

• Maverick Power signed a 165,864 SF lease at Harry McKillip Boulevard with Transwestern Development

• Batory Foods signed a 135,323 SF renewal at 3850 Regency Crest with Ares

• Assa Abloy signed a 107,155 SF lease at 2925 Plano Parkway with Opus Group

• JW Nutritional signed a 95,179 SF lease at 4700 S Hardin Boulevard with Eastgroup Properties

• Amphenol signed a 94,413 SF lease at Highway 121 at Chelsea Boulevard with Stillwater Capital Investments

• Syco Enterprise signed a 52,629 SF lease at 4600 S Hardin Boulevard with Eastgroup Properties

DEALS IN THE MARKET

• Plano Industrial Portfolio – a 707,668 SF seven (7) building portfolio owned by Link Logistics

• Plano Commerce Center – a 300,000 SF three (3) building portfolio owned by Provident Realty

• Richardson Light Industrial Portfolio – a 102,944 SF three (3) building portfolio owned by CIP Real Estate

• Texas Infill Portfolio - a 318,372 SF two (2) building portfolio owned by Prologis

NEW DEVELOPMENTS

• 121 Technology Park – a 370,860 SF four (4) building spec project in Allen with Stillwater Capital

• Centerville Commerce Center – a 150,926 SF spec building in Garland with Leon Capital

• Lookout Logistics Center – a 102,273 SF spec building in Richardson with Crow Holdings Industrial

• Star Commerce Center V – a 76,480 SF spec building in Frisco with Blue Star Land

• Rowlett Business Center – a 68,640 SF spec building in Garland with Hopewell Development

• 260 E Exchange Parkway – a 50,864 SF spec building in Allen with Gillett Commercial

LARGE EXISTING VACANCIES

• 4030-4040 Forest Lane – 562,025 SF

• 910 10th Street – 328,704 SF

• 600 McIntyre Road – 209,016 SF

• 2801 N State Highway 78 – 197,983 SF

• 12791 International Parkway – 183,764 SF

• 1475 Republic Parkway – 177,473 SF (Sublease)

• 620 McIntyre Road – 168,840 SF

• 1220 Data Drive – 157,953 SF

• 1280 Data Drive – 157,953 SF

• 1501 Kings Road – 154,923 SF

• 580 McIntyre Road – 147,780 SF

• 1411 E Lookout Drive – 138,003 SF

• 1405 E Lookout Drive – 118,893 SF

• 12790 International Parkway – 113,864 SF

• 10401 Miller Road

•

NE Dallas/Garland is the oldest and most mature micromarket consisting of supply chain companies as well as manufacturing. Vacancy has slightly decreased from the previous quarter largely due to DRA leasing their 164K SF vacancy off Shiloh Rd and Proterra leasing their 111K SF space off Corporate Dr. With the last development set to deliver, we expect vacancy to decrease throughout the year and developers to start focusing on redevelopment and covered land plays and. Lastly, 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 6.2% vacancy rate remains steady from the previous quarter and a historic low of 5.3% mid 2022. This vacancy 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 2.0M SF still under construction from Frisco to McKinney, development is slightly outpacing demand causing the vacancy to increase from 5.7% to 6.6%. We expect these numbers to plateau, if not decrease, given the number of tenant’s currently in the market. Lastly, more institutional capital is starting to get comfortable with the Allen/ McKinney/Frisco market due to the absorption story and rent growth that is taking place.

NORTHWEST DALLAS

CURRENT EVENTS

The Northwest Dallas submarket finished Q1 2024 with a 7.9% vacancy rate, which is the almost the same vacancy rate the submarket provided at the end of 2024. The higher vacancy compared to years 2020 - 2022 is due to recent spaces larger than 100,000 SF becoming available in NW Dallas. Poly Air, Lennox and Tuesday Morning have all vacated spaces greater than 100,000 SF and in addition, there is a new wave of 20,000 - 30,000 SF on the market in NW Dallas. That is the sweet spot size range in NW Dallas so we expect the 20,000 - 30,000 SF spaces to be leased with nominal downtime. The NW Dallas absorption numbers totaled a positive 784,365 SF in Q1 due to the recent leases at Billingsley’s Denton development.

The Northwest Dallas industrial submarket does continue to see steady leasing activity and Valwood is a haven for building supply companies including Trane, Carrier, Shearer Supply, Goodman, Huttig as well as a haven for 3PL’s requiring direct access to I-35. Billingsley, Longpoint, Panattoni, and TA Realty have leased their recent developments in Valwood and there is not any more land readily available for new industrial development which will be a factor in the vacancy rate decreasing throughout the remainder of 2024. The activity in the Denton market started off slow, but has recently picked up as the year progressed into March. There are currently 1M SF of tenants that are at the proposal stage or beyond in Denton which will likely have their leases signed in Q2. Denton continues to be a desired location for users due to its population growth and outstanding labor pool.

TOP LEASE TRANSACTIONS

• Cantoni renewed a 138,800 SF lease at 4248 Simonton Road in the Metro/Addison Submarket in Farmers Branch.

• BuzzBalls, LLC renewed a 93,990 SF lease with GID at 2161 Hutton Drive in Carrollton

• Talley, Inc. renewed a 52,135 SF lease with Billingsley at 500 Tittle Drive at Austin Ranch in Lewisville

• Morsco Supply renewed a 50,400 SF lease with ML Realty Partners at 1402 Dunn Drive in Carrollton

DEALS IN THE MARKET

• Texas Infill Portfolio – Prologis is selling a portfolio with assets across Dallas, Houston, and San Antonio. There is one asset in NW Dallas which is a freestanding 64,000 SF building in Valwood on Benchmark Drive.

• DFW Shallow Bay Portfolio – Birtcher Anderson is selling a portfolio with assets located in South Stemmons and in NW Dallas. These assets provide suite sizes ranging from 3K15K SF. Garden Brook and Lindbergh are the assets in the NW Dallas Submarket.

NEW DEVELOPMENTS

• 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 Q2 2024. Buildings 1 and 2 have been delivered and a 702,000 SF cross dock will be delivered in May.

• Denton Logistics Center – Brookfield is breaking ground on a freestanding 270,000 SF development in Denton. Set for completion in Q3 2024.

• Mayhill 380 Business Park – a 260K SF three (3) building project in Denton located on the SEC of Loop 288 and 380 with Velocis, set for completion in Q2 2024

• Denton 35 Exchange – EastGroup has broken ground on a two (2) building development in Denton totaling 245,000 SF, set for completion in Q4 2024

SOUTH DALLAS

VITAL STATS

3,166,321

TOP LEASE TRANSACTIONS

• Post Consumer Brands leased 1,095,360 SF from Xebec at 1301 Southport Parkway in Wilmer, Texas.

• Bunzel leased 488,780 SF from Link at 4601 Langdon Road in Dallas, Texas just south of I-20.

• Legendz Way leased 486,645 SF from Hillwood at 2720 Logistics Drive, Midlothian Texas .

• Allied Stone expanded into 227,425 SF with Morgan Stanely at 1240 E Centre Park Boulevard, DeSoto, Texas off I-35.

• Eshipping leased 215,009 SF from Keller Logistics at 901 Distribution Drive in Wilmer, Texas just east of I-45.

• Daqs on the Go leased 117,500 SF from Keller Logistics at 901 Distribution Drive in Wilmer, Texas just east of I-45.

• Empire Automotive leased 159,356 SF from Ares at 2610 Weir Street, Dallas Texas just north of I-30.

DEALS IN THE MARKET

• 301 S Millers Ferry Road & 200 Dalport Parkway – KBC Advisors (Seller) offering two (2) vacant buildings (376,368 SF + 481,520 SF) totaling 857,888 SF in Wilmer, Texas off I-45.

NEW DEVELOPMENTS

• 600 E Wintergreen Road – 799,529 SF Build-to-Suit for Best Buy by Crow Holdings Industrial.

• 3701 Norwich Street – Ryder Logistics purchased from Lovett off Interstate 30 in Dallas, Texas.

• 2003 MacArthur Boulevard – 602,355 SF Build-to-Suit (LEASED) for Conn’s by Brookfield in Grand Prairie, Texas.

• Pinto Road at Pleasant Run Road – 586,919 SF spec with Alto Real Estate Funds in Wilmer, Texas.

• 300 W. Wintergreen Road – 560,030 SF spec with IAC Properties in Hutchins, Texas.

• 601 W Pleasant Run Road – 420,643 SF spec with Hines Industrial in Wilmer, Texas.

LARGE EXISTING VACANCIES

• 3486 Cedardale Road – a 1,084,460 SF spec development by Trammell Crow in Dallas, Texas (new construction).

• 1401-1501 E Pleasant Run Road – a 1,027,068 SF spec with TRG/Grandview Partners in Wilmer Texas (new construction).

• 950 N Interstate 45 – a 1,013,833 SF spec development by Majestic Realty Company in Hutchins, Texas (new construction).

• 1900 Southport Parkway – a 746,420 SF spec with Bandera Ventures in Wilmer, Texas (new construction).

• 1701 E Pleasant Run Road – a 744,452 SF spec with Bandera Ventures in Wilmer, Texas (new construction).

• 3800 Railport Parkway – a 852,987 SF with Malouf in Midlothian Texas (2nd generation).

• 800 Cottonwood Valley Road – 565,600 SF spec with Stonemont in Wilmer, Texas (new construction).

CURRENT EVENTS

The overall South Dallas Industrial submarket, as surveyed, encompasses I-30 west of downtown, southwest Dallas, I-20, and I-45, totaling approximately 186 million square feet. According to the survey area, CoStar reported a positive Net Absorption of 1,789,979 square feet for South Dallas in Q1 2024.

Despite the positive Leasing Activity, this combined sector of the industrial market is now 14.4% vacant, which is 1.1% higher than the previous report in Q4 2023. This increase is primarily due to Q1 deliveries of 4.7 million SF outpacing leasing activity. As of Q1, South Dallas still has 6.1 million SF remaining under construction, which represents a 29% drop from the previous quarter.

Although the current vacancy rate has risen in this submarket, South Dallas had 3.0 million SF of new lease signings in Q1 2024. These new lease signings along with the rapid decline of projects under construction should lead to an increase in Net Absorption in the coming months and erode the current double-digit vacancy in the next 9 to 12 months for the South Dallas Submarket. This understanding is based upon data analysis which shows Q1 2024 Leasing Activity of 3,598,260 SF remaining consistent with the previous 3-year quarterly average Leasing Activity of 3,581,645 SF.

SOUTH STEMMONS

CURRENT EVENTS

The South Stemmons submarket finished Q1 2024 with an uptick in vacancy from 7.2% at the end of Q4 23 to 7.5% at the end of Q1. Historically, the submarket has remained sub 6.0%. As a whole, we have seen regional credit tenant’s become more cautious on their real estate decisions, trying to cut costs where they can as rent is a larger portion of their day-today operation than a larger corporation. South Stemmons as a whole has experienced dramatic rent growth over the last 5 years, in some instances over 150% on renewals. Today, while we have not seen rent comps move backwards, rents are starting to plateau. We do predict South Stemmons will see vacancy uptick a touch more before recovering back to normal sub 6.0%. The tenant base, made up of primarily regional credit / “mom and pop” type businesses tend to be the most affected during economic shifts. The outlook for South Stemmons remains positive due to the submarket’s infill, irreplicable location. 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.

TOP LEASE TRANSACTIONS

• Nelson Companies signed a 100,000 SF lease at 8611 Ambassador with Oxford Properties

• Real Floors Holdings signed a 66,023 SF lease at 11110 Goodnight Lane with Crow Holdings

• De-Valor International signed a 65,243 SF lease at 1061410676 King William Drive with EastGroup.

• Avadek renewed a 59,000 SF lease at 3325 Halifax Street with Arden Group

• Berma Stone renewed and expanded into 33,233 SF at 11125 Zodiak Lane with Link

• DEY Appliance Parts renewed a 30,525 SF lease at 605 Mockingbird Lane with Oxford Properties

NEW DEVELOPMENTS

• Core 35 Phase IV – 11124 Goodnight Lane | Building A – a 289,564 SF building under construction with Crow Holdings Industrial

• Core 35 Phase IV – 11110 Goodnight Lane | Building B – a 142,466 SF building under construction with Crow Holdings Industrial

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

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

LARGE EXISTING VACANCIES

• 11430 Ferrell Drive – 115,125 SF

• 10405 Shady Trail – 88,366 SF

• 5017-5199 Pulaski – 79,577 SF

• 11325 Gemini Lane – 77,071 SF

• 8107 Chancellor Row – 74,000 SF

• 1715 Market Center Boulevard – 71,562 SF

•

NORTH FORT WORTH

VITAL STATS

CURRENT EVENTS

After 14 straight quarters of positive net absorption over 1 million square feet, the North Fort Worth submarket has come back down to earth after posting an absorption figure of -190,893 SF to start 2024. The spectacular run which started during the aftermath of the Covid pandemic in Q3 2020 saw a total net absorption of 29.1M SF - averaging out to 2M SF per quarter during that time. Alongside the modest absorption figure for Q1 is the fact that the market delivered another 4.4M SF of new product raising the vacancy rate to 14.5% - a historical highwater mark for the submarket with the bulk of the deliveries and subsequent vacancy being in the Alliance sector of the submarket.

TOP LEASE TRANSACTIONS

• Lockheed Martin Corporation signed a 136,165 SF lease at Fort West Building C with Creation Equity.

DEALS IN THE MARKET

• DHL Alliance Logistics Center – a 1,227,243 SF one (1) building portfolio

• 35 Eagle I Building D – a 548,495 SF one (1) building portfolio

• Cooper I-20 I Building C – a 401,115 SF one (1) building portfolio

• Saginaw Distribution Center – a 321,193 SF one (1) building portfolio

• Blueridge Portfolio – a 168,552 SF four (4) building portfolio

• Cooper I-20 I Building C – a 401,115 SF one (1) building portfolio

NEW DEVELOPMENTS

• 35 Eagle I Building C – a 1,250,743 SF one (1) building development with Clarion.

• Alliance Westport 25 – a 1,076,459 SF one (1) building development with Hillwood.

• Mercantile Logistics Station – a 851,033 SF two (2) building development with Velocis.

• Mercantile 820 Logistics Park – a 654,581 SF four (4) building development with Velocis

• Alliance Center East – a 449,232 SF two (2) building development with Hillwood.

• Basswood 35 – a 351,241 SF three (3) building development with Eastgroup Properties.

• Chessar 35 – a 313,732 SF two (2) building development with Alliance.

• West GSW Logistics Crossing – a 154,588 SF one (1) building development with Scannell Properties.

• Riverbend East I Building 2 – a 147,933 SF one (1) building development with Leon Capital Group.

LARGE EXISTING VACANCIES

• Northlake 35 | Building 1 – 1,049,022 SF

• 114 Logistics Park – 1,004,400 SF

• Northlake Logistics Crossing | Building 1 – 985,800 SF

• Sylvania Crossing @ I-35W | Building 2 – 699,246 SF

• Northlake 35 I Building 2 – 634,744 SF

• Mercantile I-25 I Building 1 – 564,387 SF

• Westport 20 – 562,500 SF

• Westport Parkway Commerce Center – 400,565 SF

• Intermodal Logistics Center I Building 5 – 386,250 SF

• Speedway Logistics Crossing I Building 3 – 384,716 SF

• Alliance Center North I Building 4 – 371,327 SF

• Northwest Commerce Park I Building 3 – 351,194 SF

• Blazing Trail I Building 2 – 339,846 SF

• 35 Eagle I Building L – 324,598 SF

• Cowtown Crossing | Building 3 – 304,665 SF

• Alliance Gateway 50 – 287,242 SF

• Elizabeth Creek Gateway Building D – 286,467 SF

• 11401 Harmon Road – 284,238 SF

• Westside 287 I Building A – 263,003 SF

• 35 Eagle I Building E –

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The situation is not at all doom and gloom however, as tenant activity remains robust throughout the submarket with notable deals currently at leases on bulk product as well as shallower bay facilities. Additionally, the submarket only has 4.4M SF remaining under construction which is the lowest figure for any given quarter since the end of 2016. All indications point to the market seeing a positive net absorption of well over 1M SF for Q2 and so long as the construction pipeline remains relatively tapered, North Fort Worth should sustain itself as one of the premier markets within DFW.

SOUTH FORT WORTH

CURRENT EVENTS

The South Fort Worth industrial submarket kicked off 2024 with some struggles. The submarket posted a 8.4% vacancy rate, which is the highest it’s been since Q3 2022. Also posted was a 395,726 SF absorption number, which is the lowest recording since Q4 2020. In fact, over the previous three years beginning in Q1 of 2021, on average the submarket has absorbed 86% of its deliveries in that quarter. Obviously there have been a few outliers both significantly higher and lower, but generally speaking “post pandemic” demand has consistently chewed through supply.

To make sense of this dip in activity, understanding the historical context is paramount. Simply put; What did activity look like from a “pre pandemic” perspective? Looking back at the three years trailing 2020 (2017, 2018, and 2019), quarterly absorption and deliveries have had a far less complementary relationship. The average absorption over that time frame on a quarterly basis equaled about 25% of new deliveries.

The synopsis; Yes - south Fort Worth did not perform like it has over the past 3 years in Q1 2024. However, this performance is not necessarily indicative of what is to come. We believe the jury is still out, and that this quarter could very well be an outlier within south Fort Worth and DFW as a whole. On a positive note, with new builds in the submarket practically stopping over the previous two quarters, we believe based on tracking tenant demand that ultimately the vacancy rate will drop in the second half of 2024. The only two projects that broke ground in the past 6 months have totaled 381K SF. 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.

TOP LEASE TRANSACTIONS

• Kurita America Inc. signed a 90,278 SF lease at South Fort Worth Commerce Center with IDI.

• TeaBev Co. signed a 76,839 SF lease at Chisholm 20 with Jackson Shaw.

• Silver Lining Collision signed a 56,192 SF lease at 8904 South Fwy with CanTex Capital.

DEALS IN THE MARKET

• Point South Commerce Center – a 258,100 SF single building project.

• Oak Creek Distribution Center – a 238,289 SF single building project.

NEW DEVELOPMENTS

• Carter Park East – a 1,403,152 SF one (1) building BTS development with Clarion and Crow Holdings.

• Everman Park – a 1,014,905 SF one (1) building BTS development with TCRG Properties.

• Risinger Road South – a 655,500 SF one (1) building development with TCRG Properties.

• Oak Creek Distribution Center – a 238,289 SF one (1) development with Falcon Commercial Development.

• Campus Industrial Park – a 150,538 SF five (5) building development with Empire Holdings.

LARGE EXISTING

VACANCIES

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