Q3 2023 DFW Industrial Market Report

Q3 2023 INDUSTRIAL MARKET REPORT DALLAS/FORT WORTH

P ro p er t y : Mea cha m Co mme 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 Q3 2023 DFW INDUSTRIAL MARKET REPORT

Q3 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

Q3 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

BLAKE TROIANI

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 Director Dallas btroiani@holtlunsford.com 972.280.0126

Market Associate Fort Worth wwilson@holtlunsford.com 817.284.5555

Market Associate Dallas mcantwell@holtlunsford.com 972.265.0133

TREY GOODSPEED

WALKER FLOYD

WESTON PORTER

JON SKIDMORE

DANNY PHILLIPS

LUKE FLOYD

GRAYSON FLEITZ

Market Associate Fort Worth tgoodspeed@holtlunsford.com 817.632.6155

Market Associate Dallas wfloyd@holtlunsford.com 972.265.0141

Market Analyst Dallas wporter@holtlunsford.com 214.442.8933

Market Analyst Dallas jskidmore@holtlunsford.com 214.442.8942

Market Analyst Dallas dphillips@holtlunsford.com 972.585.5102

Market Analyst Dallas lfloyd@holtlunsford.com 972.585.5109

Market Analyst Fort Worth gfleitz@holtlunsford.com 817.632.6159

08 Q3 2023 DFW INDUSTRIAL MARKET REPORT

HLC OUTLOOK Coming out of the summer months, the DFW industrial market experienced continued (but measured) growth and activity during the third quarter of 2023. Tenant demand for industrial space remained steady, fueled by the region’s strong economy and favorable business climate. Q3 2023 marked the 52nd consecutive quarter of positive net absorption (more than 12 years). The market posted 6.6M SF of positive net absorption in Q3, and totals more than 23M SF positive net absorption YTD. The DFW industrial market is still on pace to outperform the average historical annual absorption figures.

Q3 2023 reported 16M SF of new product delivered.

Consequently, the overall DFW vacancy rate increased to 7.9%. Going forward, new construction starts will continue to taper as the capital markets settle toward a new equilibrium. Under construction figures are down from a Q4 2022 historical high of 80M SF to 51.7M SF reported in Q3 2023. Leasing activity indicated a “summer slowdown” at 13M SF reported for Q3 versus 19.8M SF and 15.8M SF respectively for Q1 and Q2.

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.

As we enter the final quarter of 2023, we expect the overall industrial market to remain relatively stable. E-commerce, logistics, and distribution companies continue to be among the key drivers of absorption, as the region’s strategic location and excellent transportation infrastructure attract businesses. 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.

MARKET OBSERVATIONS •

•

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.

•

•

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

Ryder Logistics signed a 234,478 SF lease at Northmark Commerce.

•

•

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

Hexagon has signed a 216,000 SF lease at 2401 E Meadows Boulevard with Landmark Companies.

•

•

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

ReaLogistics has signed a 174,200 SF lease at 1110 Military Parkway with Huntington Industrial Partners.

•

•

Rental Rates

AmeriPak renewed their 162,500 SF lease at 1011 N 28th Avenue with Link Industrial on DFW Airport land.

•

UPG signed a 143,309 SF lease at Freeport Corporate Center at 120 Dividend Drive in Coppell with Prologis.

•

Marcone Supply pre-leased 142,624 SF at ULR’s development at UD-35 in Denton. The project is 52% pre-leased.

•

Kuehne + Nagel signed a 134,458 SF lease at 820 Crossing.

•

Able Machinery has signed a 112,386 SF lease at 3737 Grader Street with Prologis.

− Continue to increase despite increased construction. − Annual increases continue to creep upwards with Landlords testing the waters on every deal.

TOP LEASE TRANSACTIONS Trina Solar leased 1,351,372 SF from Champion/Cresset Partners at 1200 N Sunrise Road in Wilmer, Texas.

•

•

Atkore has signed a 553,383 SF lease at Cowtown Crossing Building 1 with Transwestern Development Company.

BFG Supply leased 101,801 SF at 6111 N Stemmons Freeway in Sanger with CrossMar.

•

•

Siemens has signed a 549,780 SF lease at 7500 Oak Grove Road with Crow Holdings and Clarion Partners.

DFW Crating signed a 100,088 SF lease at 2001 Avenue K East with DWS.

•

•

LKQ Keystone Automotive signed a 523,620 SF lease with Invesco at 2900 N State Highway 161 in Irving, Texas.

Beckett Collectibles has signed a 100,069 SF lease at 2700 Summit Avenue with Link Logistics.

•

•

Greif Inc. leased 354,892 SF from Eider Creek Capital at 3737 Dan Morton Drive, in Dallas, Texas in the Redbird submarket.

Hobi International renewed their 98,489 SF lease at 7601 Ambassador with ML Realty.

•

•

JT Logistics leased 351,194 SF from GLP Capital Partners at 1600 N Polk Street in DeSoto, Texas just south of I-20.

Standard Textiles renewed a 87,816 SF lease at 225 SW 114th Street with Heller Industrial Parks.

•

•

AMCOR renewed a 269,338 SF lease at 4200 Fleetwood Road with ML Realty.

CSMS, LLC renewed and expanded into a full 83,700 SF at 460 W Mockingbird with Investcorp.

•

LODC Group signed a 74,740 SF lease at 1580 Riverview in Lewisville off of 121 Business with TA Realty.

•

Aston Global has signed a 62,600 SF lease at 902 Nicholson Road with Prologis.

•

Stuart C. Irby, Co. has signed a 51,600 SF lease at West Fork Business Center with Exline Capital.

•

Production & Rigging renewed their 49,280 SF lease at 4904 Sharp Street with AEW.

•

6,663,076

8,081,588

11,803,343

•

Q3 Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

•

7.9%

7.1%

5.5%

•

Q3 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

− Increased car and trailer parking requirements.

13,057,999

15,773,854

20,688,550

Increased Attention On Workforce

Q3 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

− Where are they coming from? − Better work environment (Ex. HVAC Warehouse).

51,676,234

63,754,557

76,861,953

Q3 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

16,137,547

17,575,950

13,363,314

− Shell construction and finish-out costs are beginning to stabilize.

Drive To Increase Efficiency

HLC DEAL

•

•

Costs Stabilizing

Jillamy has signed a 244,200 SF lease at 1130 E Kearney Street with Icahn Enterprises.

Sublease listings are on the rise and currently account for 0.8% of the overall reported vacancy.

vs. 12 Mths Ago

•

•

•

vs. Prev. Qtr

Continued tenant demand is evident as shown by 52 consecutive quarters of positive net absorption.

•

MARKET TRENDS

Q3 Absorption

•

•

DFW INDUSTRIAL Trends & Transactions

• •

HLC DEAL

HLC DEAL

Q3 2023 DFW INDUSTRIAL MARKET REPORT 09

DFW INDUSTRIAL Facts & Figures OVERALL DFW

OVERALL VACANCY

9.0%

25,000,000

8.0% 20,000,000

7.0%

OVERALL ABSORPTION

7.5%

7.1%

90,000,000 80,000,000

7.0% 6.7%

6.6%

6.0%

20,000,000

6.0%

70,000,000 60,000,000

5.0%

15,000,000

5.0%

OVERALL CONSTRUCTION

25,000,000

8.0%

15,000,000

50,000,000

4.0%

4.0%

10,000,000

3.0% 2.0%

0.8%

0.5%

1.0% 0.0% Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

Q1 22

ABSORPTION

Q2 22

Q3 22

DELIVERIES

Q4 22

Q1 23

Q2 23

Q3 23

Q3 20

Q4 20

Q1 21

DIRECT

VACANCY

Q2 21

Q3 21

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

SUBLET

EXISTING INVENTORY SUBMARKET

Q1 23

Q2 23

20,000,000

5,000,000

1.0%

10,000,000

0.0%

0 Q3 20

30,000,000

2.0%

5,000,000

40,000,000

10,000,000

3.0%

Q3 23

Q3 20

TOTAL

0

0 Q4 20

Q1 21

Q2 21

Q3 21

TOTAL NET

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

Q2 23

Q3 20

Q3 23

Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

Q1 22

DELIVERED

LEASING ACTIVITY

Q2 22

Q3 22

Q4 22

Q1 23

Q2 23

Q3 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

1,019

97,980,343

5,556,603

6,384,875

6.5%

1,176,665

3,253,522

3,592,670

3,978,702

East Dallas

2,048

67,188,525

6,938,976

7,509,704

11.2%

2,888,194

4,105,674

9,156,685

5,143,530

Great SW/Arlington

1,968

129,269,917

5,553,240

6,433,403

5.0%

(702,685)

1,227,211

2,903,198

4,205,089

Henderson County

157

2,402,460

34,224

34,224

1.4%

32,895

7,601

0

14,807

North Fort Worth

1,529

137,557,167

12,332,828

13,982,177

10.2%

6,418,318

11,669,371

11,773,409

10,007,796

Northeast Dallas

3,438

138,246,353

5,902,167

6,774,933

4.9%

1,030,300

2,441,617

4,631,982

3,905,346

Northwest Dallas

2,362

130,237,980

7,539,213

9,271,295

7.1%

4,715

4,297,595

4,616,853

6,079,620

NW Dallas Outlying

259

4,531,109

439,877

439,877

9.7%

125,891

468,549

671,553

185,712

South Dallas

1,515

141,806,279

18,921,133

19,749,545

13.9%

9,862,844

21,420,833

7,440,678

6,872,632

South Fort Worth

3,184

99,818,719

6,380,162

7,048,875

7.1%

3,011,510

4,279,167

4,788,192

4,133,494

South Stemmons

4,743

139,287,066

7,201,174

8,463,084

6.1%

(705,956)

986,111

2,135,614

4,192,469

TOTALS

22,222

1,088,325,918

76,799,597

86,091,992

7.9%

23,142,691

54,157,251

51,710,834

48,719,197

SOURCE: COSTAR Q3 2023 INDUSTRIAL REPORT

10 Q3 2023 DFW INDUSTRIAL MARKET REPORT

SUBMARKET INTELLIGENCE

GSW/ARLINGTON

CURRENT EVENTS The Great Southwest (GSW) industrial submarket ended Q3 2023 with a slight decline in performance. However, the submarket as a whole remains in a relatively stable position.

Per CoStar reporting in Q3, GSW reported negative net absorption of (363,067) SF. This is primarily due to the delivery of 67,921 SF of new construction in Q3 and 1.2M SF of deliveries YTD. At Q3 2023, GSW reported a total of 2.9M SF of new projects currently under construction.

Despite the Q3 negative absorption, the GSW Q3 vacancy rate was 5.0%, increasing 0.4% from the Q2 reported vacancy rate of 4.6%. This ranks GSW second among the major submarkets with the lowest vacancy rates (behind only Northeast Dallas). Projecting forward to the remainder 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.

Q3 Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(363,067)

(65,333)

123,575

Q3 Vacancy

vs. Prev. Qtr

5.0%

4.6%

3.9%

Q3 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

1,485,625

797,444

2,727,756

Q3 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,903,198

2,901,069

2,543,837

Q3 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

67,921

641,232

701,838

TOP LEASE TRANSACTIONS

MADDY CANTY

Managing Principal cshoults@holtlunsford.com 972.280.8328

Market Director mcanty@holtlunsford.com 972.280.8325

2,000,000

5.0%

1,500,000

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

2.0%

0

1.0% 0.0%

-500,000 Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

ABSORPTION

Q1 22

Q2 22

Q3 22

Q4 22

DELIVERIES

Q1 23

Q2 23

Q3 23

VACANCY

NEW DEVELOPMENTS

•

Standard Textiles renewed a 87,816 SF lease at 225 SW 114th Street with Heller Industrial Parks.

•

Prologis Interchange 20 – a 742,543 SF four (4) building spec development with Prologis

•

DFW Crating signed a 100,088 SF lease at 2001 Avenue K East with DWS.

•

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

•

AMCOR renewed a 269,338 SF lease at 4200 Fleetwood Road with ML Realty.

•

GSW Commerce Center at 161 – a 464,495 SF two (2) building spec development with Molto

•

Millennium Packaging signed a 90,465 SF lease at 2400 E I-20 with Cabot Properties.

•

•

St. George Warehouse & Trucking Co. renewed an 88,000 SF lease at 3701 E Randol Mill Road with Prologis.

Wildlife Commerce Park | Wildlife 14 & 15 – two (2) building spec development with Crow Holdings Industrial totaling 258,120 SF and 305,640 SF

•

Shady Grove Logistics Crossing – a 99,322 SF three (3) building spec development with Scannell/Crow Holdings

•

360 Crossing @ Red Hawk | 2617 S Hwy 360 – a 214,801 SF spec development with Ironwood and Affinius Capital

•

Oxford Properties is selling two (2) assets in the GSW submarket: 1375 Avenue S and 1169 113th.

•

KKR is selling the GSW & North Fort Worth Infill Portfolio containing five (5) buildings on Eden Road.

•

Barings is selling a 727,316 SF two (2) building project at River Park 500 & 600.

•

Stockbridge is selling a 500,638 SF two (2) building project at River Park Business Center.

•

CANON SHOULTS

2,500,000

6.0%

vs. 12 Mths Ago

DEALS IN THE MARKET

EXPERTS

VITAL STATS 7.0%

Sealed Air Corporation is selling a 123,545 SF building at 4400 Diplomacy Road.

LARGE EXISTING VACANCIES •

14900 Trinity Boulevard – 310,000 SF

•

1600 S Great Southwest Parkway – 298,506 SF

•

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

•

3580 N Hwy 161 | Building 1 – 252,555 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

Q3 2023 DFW INDUSTRIAL MARKET REPORT 11

DFW AIRPORT

CURRENT EVENTS

Q3 Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(7,746)

340,358

366,022

Q3 Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

6.5%

5.8%

2.8%

Q3 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

1,283,802

1,576,132

1,680,144

Q3 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

3,592,670

3,815,065

4,742,681

Q3 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

727,289

640,075

494,536

TOP LEASE TRANSACTIONS

VITAL STATS 10.0%

3,500,000 3,000,000

8.0%

2,500,000 2,000,000

6.0%

1,500,000 1,000,000

4.0%

500,000 0

2.0%

-500,000 0.0%

-1,000,000 Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

ABSORPTION

Q1 22

Q2 22

Q3 22

DELIVERIES

Q4 22

Q1 23

Q2 23

Q3 23

VACANCY

NEW DEVELOPMENTS

•

LKQ Keystone Automotive signed a 523,620 SF lease with Invesco at 2900 N State Highway 161 in Irving.

•

Royal 114 – a 429,027 SF four (4) building project with Archway Properties and Nuveen, set to deliver in Q3 2023

•

AmeriPak renewed their 162,500 SF lease at 1011 N 28th Avenue with Link Industrial on DFW Airport land.

•

•

UPG signed a 143,309 SF lease at Freeport Corporate Center at 120 Dividend Drive in Coppell with Prologis.

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 Q4 2023

•

•

Challenge Manufacturing renewed their 91,364 SF lease at 5101 Statesman Drive in Irving.

DFW Walnut Hill – HLCI has broken ground on their freestanding 145,776 SF building located at Passport Park on Airport land, set to deliver in Q3 2023. This building has been pre-leased.

•

Terminix signed a 64,979 SF lease with Alliance Industrial at their Freeport Commerce Center development on 635/ Freeport Parkway.

•

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

•

Lakeside Commerce Center Portfolio – Stockbridge is selling four (4) buildings totaling 345,800 SF on Lakeside Parkway just north of Highway 121 in Flower Mound.

Genesis 121 – Freestanding 182,983 SF rear loader on Highway 121 in Grapevine developed by Bridge Logistics Properties. Set to deliver in Q1 2024

•

Freeport Commerce Center Portfolio – Alliance Industrial is selling two (2) buildings totaling more than 325,000 SF at LBJ Freeway at Freeport Parkway in Irving.

Skyway Logistics Center – Box Investment Group has broken ground on their freestanding 84,406 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 Q4 2023.

HLC DEAL

DEALS IN THE MARKET •

•

HLC DEAL

HLC DEAL

The Dallas-Fort Worth (DFW) Airport industrial submarket finished Q3 2023 with a 6.5% vacancy rate. That is a slight uptick compared to the 5.0% vacancy rate at the end of the Q1, due to recently delivered product at Passport Park and Highway 121 which will likely be leased prior to the end of the year. The sweet spot size range 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 $7.75 - $8.50 range, dependent on building age. In the 50K to 100K SF range, for functional shallow bay product, we are seeing rates from $10.50 to $12.50 depending on the age and functionality. 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 Q3 2023 DFW INDUSTRIAL MARKET REPORT

SUBMARKET INTELLIGENCE

EAST DALLAS

CURRENT EVENTS The overall East Dallas submarket ended Q3 with a vacancy rate of 11.2% which puts it as the second highest behind South Dallas. With strong absorption numbers this quarter, the vacancy rate is moving back in the right direction and we expect this trend to continue as time goes on. It is also 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. It should also be noted that the overall availability rate for this micro-market is only 5.1% 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 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 7.9%, there are roughly 400K SF of leases that have yet to be accounted for in absorption/ vacancy numbers with another 600K SF coming right behind it. We expect the tenant demand to keep up with construction numbers within the East Dallas/Mesquite micro market and vacancy rates to start moving in the right direction.

Forney/Terrell is still the main point of conversation within the East Dallas submarket due largely due to the amount of spec development that is underway. The Forney/ Terrell micro market has a vacancy rate of 12.4% and is comprised mostly of Exeter’s two 500K SF buildings and the Cart.com sublease. With Hayes Retail being the only tenant to lease a building on a spec basis, everyone awaits to see who will take the next big bite. All in all, as large vacancies in Mesquite continue to get absorbed, bulk users will be forced to look further east which leaves Forney in a great spot to take on the next big wave of leasing activity.

BLAKE TROIANI

Senior Vice President jbarnes@holtlunsford.com 972.280.8353

Market Director btroiani@holtlunsford.com 972.280.0126

vs. Prev. Qtr

vs. 12 Mths Ago

2,007,993

1,275,047

572,819

Q3 Vacancy

vs. Prev. Qtr

VITAL STATS

vs. 12 Mths Ago

11.2%

12.8%

12.1%

Q3 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

1,311,567

2,033,333

842,393

Q3 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

9,156,685

10,117,599

7,756,060

Q3 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,069,947

1,788,890

2,052,242

TOP LEASE TRANSACTIONS

14.0%

2,500,000

12.0%

2,000,000

10.0%

1,500,000

8.0% 1,000,000 6.0% 500,000

4.0%

0

2.0% 0.0%

-500,000 Q3 20

Q4 20

Q1 21

Q2 21

ABSORPTION

Q3 21

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

DELIVERIES

Q1 23

Q2 23

Q3 23

VACANCY

•

•

Jillamy has signed a 244,200 SF lease at 1130 E Kearney Street with Icahn Enterprises.

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

•

•

Hexagon has signed a 216,000 SF lease at 2401 E Meadows Boulevard with Landmark Companies.

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

•

•

ReaLogistics has signed a 174,200 SF lease at 1110 Military Parkway with Huntington Industrial Partners.

1220 Data Drive – a 315,906 SF two (2) building project located in Rockwall with Seefried Industrial Properties

•

•

CH Robinson has signed a 102,206 SF lease at S Buckner Boulevard with Exeter.

635 Commerce Center – a 262,322 SF two (2) building project located in Mesquite with Stonelake

•

540 S Town East Boulevard – a 193,800 SF building in Mesquite with Leon Capital

DEALS IN THE MARKET •

Mesquite Business Center – a 555,216 SF three (3) building portfolio with Stockbridge located in Mesquite

LARGE EXISTING VACANCIES •

13991 US Hwy 80 – 509,047 SF

•

13871 US Hwy 80 – 500,063 SF

•

2700 E Scyene Road – 325,218 SF

•

301 Apache Trail – 294,899 SF (Sublease)

•

1204 Military Parkway – 241,512 SF

•

5151 Samuell Boulevard – 211,234 SF (Sublease)

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)

•

2614 Big Town Boulevard – 211,112 SF

•

13871 US Hwy 80 – 182,996 SF

•

1475 Republic Parkway – 177,473 SF (Sublease)

•

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)

•

4401 Samuell Boulevard – 143,801 SF

•

20 East Trinity Pointe | Phase I – a 1,786,952 SF three (3) building project in Forney with Stream Realty Partners

•

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

NEW DEVELOPMENTS •

HLC DEAL

•

EXPERTS JOSH BARNES

Q3 Absorption

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)

SUBMARKET INTELLIGENCE

Q3 2023 DFW INDUSTRIAL MARKET REPORT 13

NORTHEAST DALLAS

CURRENT EVENTS VITAL STATS

Q3 Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(63,656)

1,124,880

135,397

Q3 Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

4.9%

4.6%

4.4%

5.0%

Q3 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

4.0%

702,872

1,216,580

2,058,591

3.0%

Q3 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

2.0%

4,631,982

4,818,755

5,156,673

Q3 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

490,641

1,428,874

125,953

TOP LEASE TRANSACTIONS •

Able Machinery has signed a 112,386 SF lease at 3737 Grader Street with Prologis.

•

Beckett Collectibles has signed a 100,069 SF lease at 2700 Summit Avenue with Link Logistics.

•

Aston Global has signed a 62,600 SF lease at 902 Nicholson Road with Prologis.

•

Shearer Supply has signed a 44,776 SF lease at 10515 Miller Road with Link Logistics.

•

Metroplex Sheet Metals has signed a 44,310 SF lease at 3701 Marquis Drive with High Street Logistics Properties.

•

Simpson Door has signed a 45,718 SF lease at McKinney National Business Park with Transwestern Development Company.

8.0%

3,000,000

7.0%

2,500,000

6.0%

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

1.0%

0

0.0%

-500,000 Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

ABSORPTION

Q1 22

Q2 22

Q3 22

DELIVERIES

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

•

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

LARGE EXISTING VACANCIES

•

Harry McKillop Boulevard – 165,864 SF

•

1501 Kings Road – 154,923 SF

•

350 Cypress Hill Drive – 150,898 SF

•

1911 FM 546 – 123,500 SF

•

12002 Corporate Drive – 111,084 SF

•

1901 FM 546 – 109,912 SF

•

2925 E Plano Parkway – 107,155 SF

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

•

1125 E Collins Boulevard – 100,354 SF

•

3724 E Plano Parkway – 100,000 SF

•

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

•

2722 S Jupiter Road – 100,000 SF

•

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

NEW DEVELOPMENTS •

HLC DEAL

VACANCY

•

1475 Republic Parkway – 177,473 SF

Plano Industrial Portfolio – Exeter is under contract on a 707,668 SF seven (7) building portfolio owned

by Link Logistics.

Q3 23

McKinney 121 – a 171,612 SF two (2) building project with EastGroup Properties.

3838 Miller Road – 200,000 SF

•

Q2 23

•

•

DEALS IN THE MARKET

Q1 23

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

•

HLC DEAL

Q4 22

•

HLC DEAL

Northeast Dallas consists of three primary areas that are unique in their tenant base, maturity and overall landscape. It is important to examine each micro-market 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 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 4.9% 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 5.5% 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 micromarket and is seeing the most development activity due to the availability of land. With 2.0M SF under construction from Frisco to McKinney, development is slightly outpacing demand, however with recent leasing activity we expect these new developments to lease up at a steady pace as they begin to deliver.

EXPERTS JOSH BARNES

BLAKE TROIANI

Senior Vice President jbarnes@holtlunsford.com 972.280.8353

Market Director btroiani@holtlunsford.com 972.280.0126

14 Q3 2023 DFW INDUSTRIAL MARKET REPORT

SUBMARKET INTELLIGENCE

NORTHWEST DALLAS

CURRENT EVENTS Through Q3 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 finished Q3 with a 7.1% vacancy rate which is higher than last quarter due to recent spaces more than 100K SF coming available in Valwood. The vacancy rate will decrease when the big blocks of space become leased from which we expect down time to be minimal.

Q3 Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(1,110,253)

303,416

2,020,356

Q3 Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

7.1%

5.6%

Q3 Leasing Activity 781,595 Q3 U/C SF

2,500,000

7.0%

2,000,000

6.0%

1,500,000

4.3%

5.0%

1,000,000

vs. Prev. Qtr

vs. 12 Mths Ago

4.0%

500,000

1,908,633

1,961,385

3.0%

0

vs. 12 Mths Ago

2.0%

-500,000

1.0%

-1,000,000

vs. Prev. Qtr

4,616,853

4,641,995

6,123,578

Q3 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

923,509

958,572

2,257,849

TOP LEASE TRANSACTIONS •

Marcone Supply pre-leased 142,624 SF at ULR’s development at UD-35 in Denton. The project is 52% pre-leased.

•

BFG Supply leased 101,801 SF at 6111 N Stemmons Freeway in Sanger with CrossMar.

•

LODC Group signed a 74,740 SF lease at 1580 Riverview in Lewisville off of 121 Business with TA Realty.

•

Multiquip pre-leased 74,268 SF at Hines’ Red River development located at Highway 121 and I-35 in Lewisville.

•

Southwest Interiors signed a 46,097 SF lease with Stockbridge at 2525 E State Highway 121 in Lewisville.

HLC DEAL

HLC DEAL

DEALS IN THE MARKET •

AEW Portfolio – AEW is selling three (3) projects in NW Dallas totaling more than 600,000 SF. The assets are currently 100% leased and suite sizes range from 15,000 - 170,000 SF.

•

DFW Shallow Bay Portfolio – Birtcher Anderson is selling their portfolio with assets located in South Stemmons and in NW Dallas. These assets provide suite sizes ranging from 3,000 - 15,000 SF.

HLC DEAL

EXPERTS ANDREW GILBERT

KEATON BRICE

Vice President agilbert@holtlunsford.com 972.280.8312

Market Director kbrice@holtlunsford.com 972.421.1956

VITAL STATS 8.0%

0.0%

-1,500,000 Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

ABSORPTION

Q1 22

Q2 22

Q3 22

DELIVERIES

Q4 22

Q1 23

Q2 23

Q3 23

VACANCY

NEW DEVELOPMENTS •

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

•

ICC-35 – a 1,193,2076 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 nearly 900,000 SF, set for completion Q4 2023.

•

288/380 Logistics Park – an 802,825 SF four (4) building project with Velocis in Denton located at Loop 288 and 380, set for completion in Q4 2023

•

Live Oak Logistics Park | Phase II – a 240,000 SF two (2) building project, set for completion in Q4 2023

•

Red River Business Park – a 248,936 SF three (3) building development with Hines located in Lewisville at Highway 121 and I-35, set for completion in Q4 2023

•

Mayhill 380 Business Park – a 261,741 SF three (3) building project in Denton located on the SEC of Loop 288 and 380 with Velocis, set for completion in Q2 2024

HLC DEAL

SUBMARKET INTELLIGENCE

Q3 2023 DFW INDUSTRIAL MARKET REPORT 15

SOUTH DALLAS

CURRENT EVENTS

Q3 Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

3,903,256

2,375,943

4,635,046

Q3 Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

VITAL STATS 16.0%

8,000,000

12.0%

13.9%

12.8%

7.0%

10.0%

Q3 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

8.0%

1,606,124

893,094

2,373,398

6.0%

Q3 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

4.0%

7,440,678

12,800,888

25,193,932

Q3 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

6,340,883

5,598,594

6,051,867

TOP LEASE TRANSACTIONS

10,000,000

14.0%

6,000,000 4,000,000 2,000,000 0

2.0% 0.0%

-2,000,000 Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

ABSORPTION

Q1 22

Q2 22

Q3 22

DELIVERIES

Q4 22

Q1 23

Q2 23

Q3 23

VACANCY

NEW DEVELOPMENTS

•

Trina Solar leased 1,351,372 SF from Champion/Cresset Partners at 1200 N Sunrise Road in Wilmer, Texas.

•

1200 N Sunrise Road – a 1,351,372 SF spec development by Champion Partners with Cresset Partners

•

Greif Inc. leased 354,892 SF from Eider Creek Capital at 3737 Dan Morton Drive, in Dallas, Texas in the Redbird submarket.

•

3701 Midpoint Drive – a 1,037,316 SF development by MetLife with Panattoni

•

JT Logistics leased 351,194 SF from GLP Capital Partners at 1600 N. Polk Street in DeSoto, Texas, just south of I-20.

•

1401-1501 E Pleasant Run Road – a 1,027,068 SF spec development with TRG/Grandview Partners in Wilmer, Texas

•

CRC Logistics leased a 215,219 SF freestanding building from Johnson Development at 2401 E Longhorn Drive in Lancaster, Texas, just east of I-35E and south of I-20.

•

1900 Southport Parkway – a 746,420 SF spec development with Bandera Ventures in Wilmer, Texas

•

Steelcase leased 147,447 SF from Link at 4951 Langdon Road in Lancaster, Texas, just south of I-20.

•

1701 E Pleasant Run Road – a 744,452 SF spec development with Bandera Ventures in Wilmer, Texas

•

iGPS leased 114,925 SF from SRS Industrial at 1701 S I-45 in Hutchins, Texas.

•

Cummins Filtration leased 96,333 SF from Affinius Capital at 1309 E Cleveland Road in Hutchins, Texas.

•

Allied Interiors leased 56,700 SF from Hillwood off Highway 67 in Cedar Hill, Texas in a new development south of I-20.

DEALS IN THE MARKET • •

2130-2180 French Settlement Road – Dogwood (Seller) offering 1,322,919 SF across DFW I-30 Distribution Center – Brookfield (Seller) offering 725,000 SF in Pinnacle Park

LARGE EXISTING VACANCIES

The overall South Dallas Industrial submarket, as surveyed, encompasses I-30 west of downtown, I-20, & I-45, and is approximately 176M SF. In accordance with the area surveyed, CoStar is reporting positive Net Absorption of 3,303,992 SF for South Dallas in Q3 2023. Regardless of the positive Leasing Activity, this combined sector of the industrial market is now 13.1% vacant, which is 0.7% higher than previously reported in Q2 2023. This is primarily due to deliveries outpacing leasing activity. In Q3, South Dallas delivered another 6.3M SF and still has 9M SF remaining under construction in the I-30, I-20, & I-45 corridors. Notwithstanding the rising vacancy rate in this submarket, South Dallas has YTD Net Absorption of 9,862,844 SF which represents 42.61% of the 23,142,691 SF overall YTD Net Absorption in the DFW Industrial Market.

Various developers continue to hold land positions in this submarket for future development. During 2020, 2021, and 2022, the South Dallas submarket of I-30, I-20 and I-45 enjoyed an average single digit vacancy rate of 5.98%. Nonetheless, the rapid pace of an abundance of construction projects and deliveries has flooded this submarket with inventory in 2023. Deliveries have outpaced tenant demand in the changing macro-economic environment hence washing away the previous single digit vacancy along I-20 and I-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.

•

1301 & 1501 Southport Parkway | Building 1 & 2 – a 2,126,880 SF project with XEBEC in Wilmer, Texas (new construction)

•

3486 Cedardale Road – a 1,084,460 SF spec development

by Trammell Crow (new construction)

EXPERTS

•

950 N Interstate 45 – a 1,013,833 SF spec development

by Majestic Realty Company (new construction)

•

4235 Singleton Boulevard – a 1,005,200 SF with LOVETT Commercial (new construction)

JOHN GORMAN

CANON SHOULTS

•

3636 Mountain Creek Parkway – a 802,206 SF spec with Prologis (new construction)

Senior Vice President jgorman@holtlunsford.com 214.920.9800

Managing Principal cshoults@holtlunsford.com 972.280.8328

•

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

MITCH CANTWELL Market Associate mcantwell@holtlunsford.com 972.265.0133

16 Q3 2023 DFW INDUSTRIAL MARKET REPORT

SUBMARKET INTELLIGENCE

SOUTH STEMMONS

CURRENT EVENTS The outlook for South Stemmons remains positive as we head into 4Q 2023. Per Costar reporting, leasing activity was a positive 655,113 SF, while absorption was down (559,186 SF).

South Stemmons ended the quarter with 6.1% vacancy, which ranks it one of the 3rd tightest submarkets within the DFW metroplex. Rental rates and price per SF continue to rise due to the low vacancy and the submarket’s infill location. South Stemmons, historically known as a user-owned market, has become primarily institutionally owned, which in turn has improved the tenant offerings in the market and helped drive rental rate increases. 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.

Managing Principal cshoults@holtlunsford.com 972.280.8328

Market Director mcanty@holtlunsford.com 972.280.8325

(784,048)

vs. Prev. Qtr

vs. 12 Mths Ago

5.7%

4.1%

Q3 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

655,113

2,088,552

1,406,363

Q3 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,135,614

2,155,614

2,834,583

Q3 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

20,000

175,236

23,900

TOP LEASE TRANSACTIONS

VITAL STATS 7.0%

1,500,000

6.0%

1,000,000

5.0% 500,000

4.0% 3.0%

0

2.0% -500,000

1.0% 0.0%

-1,000,000 Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

ABSORPTION

Q1 22

Q2 22

Q3 22

Q4 22

DELIVERIES

Q1 23

Q2 23

Q3 23

VACANCY

NEW DEVELOPMENTS

•

Hobi International renewed their 98,489 SF lease at 7601 Ambassador with ML Realty.

•

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

•

CSMS, LLC renewed and expanded into a full 83,700 SF at 460 W Mockingbird with Investcorp.

•

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

•

Production & Rigging renewed their 49,280 SF lease at 4904 Sharp Street with AEW.

•

Road Tex renewed their 27,901 SF lease at 10701 King William Drive with Eastgroup.

•

8611 Ambassador Row – 100,000 SF

Gomez Flooring renewed their 26,200 SF lease at 1130 Inwood Road with Hines.

•

1715 Market Center Boulevard – 71,562 SF

•

1608 Plantation Road – 67,575 SF

•

3202 Manor Way – 52,841 SF

•

308 W Mockingbird Lane – 51,264 SF

•

4919 Woodall – 50,508 SF

•

MADDY CANTY

vs. 12 Mths Ago

161,578

6.1%

HLC DEAL

CANON SHOULTS

vs. Prev. Qtr

(559,186) Q3 Vacancy

HLC DEAL

EXPERTS

Q3 Absorption

LARGE EXISTING VACANCIES

SUBMARKET INTELLIGENCE

Q3 2023 DFW INDUSTRIAL MARKET REPORT 17

NORTH FORT WORTH Q3 Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

2,263,133

1,289,055

2,615,525

Q3 Vacancy

vs. Prev. Qtr

CURRENT EVENTS VITAL STATS

vs. 12 Mths Ago

10.2%

8.4%

7.3%

Q3 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

2,733,100

3,627,583

5,577,566

Q3 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

11,773,409

16,331,736

17,083,919

Q3 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

5,061,101

4,071,423

1,324,227

TOP LEASE TRANSACTIONS

14.0%

6,000,000

12.0%

5,000,000

10.0%

4,000,000

8.0% 3,000,000 6.0% 2,000,000

4.0%

1,000,000

2.0% 0.0%

0 Q3 20

Q4 20

Q1 21

Q2 21

ABSORPTION

Q3 21

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

DELIVERIES

Q2 23

Q3 23

VACANCY

•

•

Atkore has signed a 553,383 SF lease at Cowtown Crossing Building 1 with Transwestern Development Company.

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

•

•

Ryder Logistics has signed a 234,478 SF lease at Northmark Commerce with Crow Holdings and Creation.

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

•

•

Ship Hero has signed a 152,910 SF lease at 900 Terminal Rd with Mapletree.

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

•

Kuehne + Nagel has signed a 134,458 SF lease at 820 Crossing with Scannell Properties.

•

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

•

Ring Container Technologies, LLC has signed a 105,857 SF lease at Railhead Building 2 with James Campbell Co.

•

114 Logistics Park – 1,004,400 SF

Tactical Air has signed a 102,000 SF lease at Champions Crossing with Greystar.

•

Northlake Logistics Crossing | Building 1 – 985,800 SF

•

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

•

Northlake 35 I Building 2 – 634,744 SF

•

Alliance Center North I Building 4 – 615,694 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

•

Northlake 35 I Building 3 – 346,322 SF

Silver Creek Business Park 2 – a 1,108,938 SF development with Majestic Realty

•

Cowtown Crossing | Building 3 – 304,665 SF

•

Elizabeth Creek Gateway | Building D – 286,467 SF

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

•

Northlink | Building C – 211,037 SF

•

Champions Crossing – 215,128 SF

HLC DEAL

•

DEALS IN THE MARKET •

Alliance Logistics Portfolio – a 1,992,639 SF five (5) building portfolio

NEW DEVELOPMENTS • • •

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

•

Mercantile I-35 – a 718,705 SF two (2) building project with Goldman Sachs

•

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

LARGE EXISTING VACANCIES

North Fort Worth continues to perform as a top DFW submarket through the end of Q3 posting yet another quarter of more than 2M SF of positive absorption. This now marks the fifth consecutive quarter of 2M SF or greater absorption for the submarket. Submarket vacancy has increased to double digits (10.2%) for the first time since Q2 2021 which was a consequence of 9M SF being delivered in Q2 & Q3. Nevertheless, the outlook through year’s end should continue to be positive as overall leasing activity remains as strong as ever.

Couple the existing leasing activity with the relatively low number of new deliveries slated for Q4 2023, the lack of new construction starts throughout 2023 and the lack of sublease square footage that has hit the submarket - North Fort Worth is positioned well to dramatically lower the vacancy rate, while sustaining rent growth to finish the year strong.

**HLC submarket absorption stats are recorded in real time and do not align with Costar quarterly stats, as Costar is, in some instances 60-90 days behind real time transactions.

EXPERTS GEORGE JENNINGS

MATT CARTHEY

Vice President gjennings@holtlunsford.com 817.632.6151

Managing Principal, Partner mcarthey@holtlunsford.com 817.710.1111

18 Q3 2023 DFW INDUSTRIAL MARKET REPORT

SUBMARKET INTELLIGENCE

SOUTH FORT WORTH

CURRENT EVENTS The South Fort Worth industrial submarket continues to have strong leasing activity across all product types. Vacancy rates have stayed between 5% and 6% for the past four quarters with approximately 2.55M SF delivering during that time period. A trend that kept up in Q3 2023 with no new deliveries and ~748K SF in absorption. We expect to see this streak snap in Q4 of this year with 2.4M SF slated to deliver and approximately only ~1.54M SF of active deals tracking. However, we believe the vacancy rate will ultimately drop in the second half of 2024 given the slowdown in speculative development. Only two projects totaling 381K SF have announced Q4 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.

**HLC submarket absorption stats are recorded in real time and do not align with Costar quarterly stats, as Costar is, in some instances, 60-90 days behind real time transactions.

Q3 Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

484,880

1,297,047

2,036,396

VITAL STATS 12.0%

3,000,000 2,500,000

Q3 Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

10.0%

7.1%

6.2%

8.3%

8.0%

Q3 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

6.0%

1,397,304

1,486,492

2,046,201

4.0%

Q3 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

4,788,192

5,519,884

5,034,704

Q3 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,424,256

1,908,065

333,402

TOP LEASE TRANSACTIONS

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

2.0%

0

0.0%

-500,000 Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

ABSORPTION

Q4 21

Q1 22

Q2 22

Q3 22

DELIVERIES

Q4 22

Q1 23

Q2 23

Q3 23

VACANCY

NEW DEVELOPMENTS

•

Stuart C. Irby, Co. has signed a 51,600 SF lease at West Fork Business Center with Exline Capital.

•

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

•

Siemens has signed a 549,780 SF lease at 7500 Oak Grove Road with Crow Holdings and Clarion Partners.

•

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

•

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

•

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

DEALS IN THE MARKET •

High Point Business Park – a 403,240 SF one (1) building portfolio

•

•

Blue Smoke Portfolio – a 183,918 SF eleven (11) building portfolio

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

•

•

DFW Shallow Bay Industrial Portfolio – 439,916 SF eight (8) building portfolio

Majestic Fort Worth South Building 10 – a 781,530 SF development with Majestic

•

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

•

Oak Creek Distribution Center – a 237,600 SF development with Falcon

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

•

Fort Worth Logistics Hub | Building 2 – 607,074 SF

•

Southwest Crossing Logistics Center – 213,546 SF

•

South Fort Worth Commerce Center | Building 1 – 180,556 SF

•

Majestic Fort Worth South | 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