Q4 2023 DFW Industrial Market Report

Q4 2023 INDUSTRIAL MARKET REPORT DALLAS/FORT WORTH

P ro p er t y : G a tewa y Crossing Logistics 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 Q4 2023 DFW INDUSTRIAL MARKET REPORT

Q4 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

Q4 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 Associate Dallas wporter@holtlunsford.com 214.442.8933

Market Associate 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 Q4 2023 DFW INDUSTRIAL MARKET REPORT

HLC OUTLOOK The Dallas-Fort Worth industrial market concluded Q4 2023 with continued (but measured) growth and activity.

Tenant demand for industrial space remained steady, fueled by the region’s strong economy and favorable business climate. Q4 2023 marked the 53rd consecutive quarter of positive net absorption. (more than 13 years!)

Construction deliveries for 2023 reached a new high watermark of 68.2M SF (previous high was 39M SF in 2022). Consequently, the overall DFW direct vacancy rate increased to 7.5%. 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.

DFW INDUSTRIAL Trends & Transactions MARKET TRENDS

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, probusiness environment, central location and connectivity will continue to be attractive to businesses and capital markets.

•

Continued tenant demand is evident as shown by 53 consecutive quarters of positive net absorption.

Overall demand is balancing back to pre-covid levels of leasing activity and absorption. Absorption remained very strong through 2023 although down from 2021 and 2022 figures (48.5M SF and 38.2M SF respectively), the 2023 annual absorption totaled 33.9M SF.

•

Costs Stabilizing

•

Increased Demand from Foreign Companies and Manufacturers

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.

•

Increased Attention On Workforce

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

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

The rise of sublease space is a trend to be noted as we conclude 2023. Sublease space availability has reached an all time high of 1% (tempered against 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 enter 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.

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

Q4 Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

6,997,660

9,196,455

12,422,715

Q4 Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

8.6%

7.8%

5.3%

Q4 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

13,746,900

14,877,136

18,320,035

Q4 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

40,609,176

52,130,010

81,568,260

Q4 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

14,039,964

17,674,259

8,903,689

•

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 •

Drinkpak has signed a 1,403,152 SF lease at Carter Park East with Clarion and Crow Holdings.

•

DrinkPak has signed a 1,250,743 SF lease at 35 – Eagle Building C with Trammell Crow Company.

•

Pepsi leased 515,792 SF from Prologis at 3636 Mountain Creek Parkway in Dallas, Texas, just north of I-20.

•

Kuka Furniture leased 504,500 SF from Prologis at 3584 Mountain Creek Parkway in Dallas, Texas, just north of I-20.

•

Alan Ritchey renewed a 450,340 SF lease at 4931 Conflans with Clarion Partners.

•

Vehicle Accessories has signed a 327,357 SF lease at 2700 E Scyene Road with Bental Green Oak.

•

Fruit of the Earth renewed a 277,200 SF lease at 3325 W Trinity Boulevard with LaSalle.

•

Network Logistics, Inc. signed a renewal on Airport ground lease at 1200 N 28th Avenue totaling 263,100 SF.

•

Eastern Trading purchased and is occupying 210,945 SF at 321 W. Centre Park Boulevard in DeSoto, Texas.

•

Consolidated Hospitality Supplies signed a 168,757 SF lease at Exeter’s Westpark III Development. This leaves 250K SF remaining in the building.

Q4 2023 DFW INDUSTRIAL MARKET REPORT 09

DFW INDUSTRIAL Facts & Figures OVERALL DFW

OVERALL VACANCY

10.0%

25,000,000

9.0%

OVERALL ABSORPTION

8.5%

8.0%

7.5%

8.0%

20,000,000

7.5%

6.9%

7.0% 6.0%

4.0%

7.0%

2.0%

5,000,000

1.0%

0.6%

1.0% 0.0%

0 Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

Q1 22

Q2 22

ABSORPTION

Q3 22

Q4 22

DELIVERIES

Q1 23

Q2 23

Q3 23

Q4 23

Q1 21

VACANCY

Q2 21

DIRECT

Q3 21

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

SUBLET

EXISTING INVENTORY SUBMARKET

2.0%

Q1 22

Q2 23

Q3 23

1.0%

30,000,000 20,000,000 10,000,000

Q1 21

Q2 21

Q3 21

Q4 21

TOTAL NET

TOTAL

40,000,000

0 Q4 20

Q4 23

50,000,000

5,000,000

0.0% Q4 20

60,000,000

10,000,000

3.0%

3.0%

70,000,000

15,000,000

4.0%

10,000,000

80,000,000

20,000,000

5.0%

5.0%

90,000,000

25,000,000

6.0%

15,000,000

OVERALL CONSTRUCTION

30,000,000

9.0%

Q1 22

Q2 22

Q3 22

Q4 22

Q1 22

Q2 23

Q3 23

0

Q4 23

Q4 20

LEASING ACTIVITY

Q1 21

Q2 21

Q3 21

Q4 21

Q1 22

Q2 22

DELIVERED

Q3 22

Q4 22

Q1 22

Q2 23

Q3 23

Q4 23

UNDER CONSTRUCTION

VACANCY

# BLDGS.

TOTAL RBA

DIRECT

SUBLET

TOTAL

YTD NET ABSORPTION

YTD DELIVERIES

UNDER CONSTRUCTION SF

YTD LEASING ACTIVITY

DFW Airport

1,030

98,620,503

6.9%

1.1%

8.1%

219,221

3,884,358

3,752,898

4,590,369

East Dallas

2,056

69,553,751

11.4%

0.6%

12.0%

4,174,789

5,800,489

7,461,882

5,825,790

Great SW/Arlington

1,971

129,683,993

4.5%

1.2%

5.6%

(94,562)

1,992,017

2,247,120

7,002,570

Henderson County

161

2,412,045

1.4%

0.0%

1.4%

34,351

7,601

0

29,254

North Fort Worth

1,548

142,074,611

9.6%

1.7%

11.3%

10,158,085

16,100,114

7,037,930

12,483,684

Northeast Dallas

3,231

128,887,988

4.2%

0.8%

5.0%

1,611,604

3,550,140

4,121,972

5,917,447

Northwest Dallas

2,387

132,450,043

6.3%

1.3%

7.6%

2,594,470

6,569,875

2,857,012

8,590,261

NW Dallas Outlying

259

4,491,286

7.6%

0.0%

7.6%

154,937

399,829

655,553

215,968

South Dallas

1,534

144,906,162

13.3%

0.7%

14.0%

11,865,981

23,283,772

7,059,212

9,614,753

South Fort Worth

3,207

101,429,741

6.7%

0.5%

7.1%

3,903,249

5,650,065

3,336,983

5,547,039

South Stemmons

4,734

139,238,871

5.6%

1.1%

6.7%

(634,924)

1,027,143

2,078,614

5,803,795

TOTALS

22,118

1,093,748,994

7.50%

1.00%

8.60%

33,987,201

68,265,403

40,609,176

65,620,930

SOURCE: COSTAR Q4 2023 INDUSTRIAL REPORT

10 Q4 2023 DFW INDUSTRIAL MARKET REPORT

SUBMARKET INTELLIGENCE

GSW/ARLINGTON

CURRENT EVENTS The Great Southwest (GSW) industrial submarket ended Q4 2023 with a slight decline in performance. However, the submarket as a whole remains in a very stable position. Per CoStar reporting in Q4, GSW ended 2023 with slight negative absorption of 94,562 SF. This is primarily due to the delivery of 1.9M SF of new projects during 2023. Additionally, GSW reported a total of 2.2M SF of new projects under construction at year end.

Despite the Q4 negative absorption, the GSW Q4 vacancy rate was a very healthy 5.6%, increasing 0.7% from the Q3 reported vacancy rate of 4.9%. This maintains GSW’s ranking at second among the major submarkets with the lowest vacancy rates, behind only Northeast Dallas. Projecting forward as we enter 2024, we expect the GSW market to remain one of the top-performing submarkets. While measured, we forecast 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.

Q4 Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

387,054

(550,166)

778,401

Q4 Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

5.6%

4.9%

3.5%

Q4 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

1,909,581

1,608,413

1,288,517

Q4 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,247,120

2,890,898

2,610,107

Q4 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

764,348

67,921

49,288

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%

-500,000

0.0%

-1,000,000 Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

Q1 22

ABSORPTION

Q2 22

Q3 22

Q4 22

Q1 23

DELIVERIES

Q2 23

Q3 23

Q4 23

VACANCY

NEW DEVELOPMENTS

Fruit of the Earth renewed a 277,200 SF lease at 3325 W Trinity Boulevard with LaSalle.

•

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

•

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

•

Commerce Center 161 – a 105,072 SF four (4) building spec development with Hopewell/MBK Partners

•

Alan Ritchey renewed a 450,340 SF lease at 4931 Conflans with Clarion Partners.

•

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

•

Lonestar Electric signed an 82,935 SF lease at 804 W. Shady Grove with Bridge Logistics Properties.

•

•

Regency Technologies renewed a 117,025 SF lease at 2501 N GSW Parkway with Prologis.

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

•

1200 Oakdale Road – a 70,050 SF spec development with Alluz Capital.

•

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

•

CANON SHOULTS

2,500,000

6.0%

•

DEALS IN THE MARKET

EXPERTS

VITAL STATS 7.0%

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.

LARGE EXISTING VACANCIES •

2250 Lion Country Parkway | Wildlife 2 – 172,200 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

•

3050 Red Hawk Drive | 360 Crossing @ Red Hawk - 214,801 SF

•

502 Fountain Parkway – 214,684 SF

SUBMARKET INTELLIGENCE

Q4 2023 DFW INDUSTRIAL MARKET REPORT 11

DFW AIRPORT

CURRENT EVENTS

Q4 Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(665,833)

374,232

(179,068)

Q4 Vacancy

vs. Prev. Qtr

8.1%

VITAL STATS 10.0%

4,000,000

9.0%

3,500,000

vs. 12 Mths Ago

8.0%

3,000,000

6.5%

4.6%

7.0%

2,500,000

6.0%

2,000,000

Q4 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

5.0%

1,500,000

461,013

1,286,052

1,170,985

4.0%

1,000,000

Q4 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

3.0%

500,000

2.0%

0

3,752,898

3,446,894

4,773,308

1.0%

-500,000

Q4 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

630,836

727,289

858,895

TOP LEASE TRANSACTIONS •

Network Logistics, Inc. signed a renewal on Airport ground lease at 1200 N 28th Avenue totaling 263,100 SF.

•

Fresenius USA signed a 130,240 SF renewal with Prologis at 5201 Regent Boulevard in Irving.

•

Cynergy renewed their lease with LaSalle at 4055 Corporate Drive in Grapevine totaling 96,548 SF.

0.0%

•

Skyway Logistics Center – Box Investment Group sold their freestanding 84,000 SF development to an undisclosed user out of CA at building delivery.

Q2 21

Q3 21

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

DELIVERIES

Q1 23

Q2 23

Q3 23

Q4 23

VACANCY

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 Q4 2023

•

DFW Walnut Hill – HLCI is wrapping up their freestanding 145K SF building located at Passport Park on Airport land, set to deliver in January. This building has been pre-leased.

•

Mustang Court – Brookfield is finalizing their three (3) building development in Southlake, totaling 335,401 SF, set for delivery in Q1 2024.

•

DFW Commerce Center, Bldg 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. Set to deliver in Q1 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 August 2024.

•

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

HLC DEAL

TOP SALE TRANSACTIONS Lakeside Commerce Center Portfolio – Stockbridge sold four (4) buildings totaling 345K SF on Lakeside Parkway just north of Highway 121 in Flower Mound. The sale was part of a larger portfolio across the market.

Q1 21

ABSORPTION

HLC DEAL

•

-1,000,000 Q4 20

HLC DEAL

The Dallas-Fort Worth (DFW) Airport industrial submarket finished Q4 2023 with an 8.1% vacancy rate. That is an uptick compared to the 6.5% vacancy rate at the end of Q3 due to new delivered product at Passport Park, Highway 114 and State Highway 121, which will likely be leased in the next 6 - 9 months. The sweet spot size range remains in the 200K - 500K SF size range as there are only a few options readily available in that size at the Airport. In addition, the shallow bay leasing remains extremely active and strong without much downtime.

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 $10.50 to $12.50, depending on the age. 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 ANDREW GILBERT

KEATON BRICE

Vice President agilbert@holtlunsford.com 972.280.8312

Market Director kbrice@holtlunsford.com 972.421.1956

12 Q4 2023 DFW INDUSTRIAL MARKET REPORT

SUBMARKET INTELLIGENCE

EAST DALLAS

CURRENT EVENTS East Dallas finished 2023 with 4.1M SF positive absorption.

We expect this trend to continue as construction starts have slowed down considerably and leasing activity is steady. There is still 7.4M 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 micromarkets, 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 5.1%. 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 8.0%, it should be noted it has already dropped to 7.2% in January. Tenant demand has remained steady although dropping from peak levels.

Forney/Terrell is still the main point of conversation within the East Dallas submarket due largely to the amount of spec development underway. The Forney/Terrell micro market has a vacancy rate of 12.4%, consisting mostly of Exeter’s two (2) 500K SF buildings and the Cart.com sublease. 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.

EXPERTS 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

707,719

2,124,374

1,737,434

Q4 Vacancy

vs. Prev. Qtr

12.0%

11.0%

VITAL STATS

vs. 12 Mths Ago 9.9%

Q4 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

677,260

1,316,567

2,082,008

Q4 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

7,461,882

9,156,697

9,460,793

Q4 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,694,815

1,069,947

344,637

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%

-500,000

0.0%

-1,000,000 Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

Q1 22

Q2 22

ABSORPTION

Q3 22

Q4 22

Q1 23

DELIVERIES

Q2 23

Q3 23

Q4 23

VACANCY

•

•

Vehicle Accessories has signed a 327,357 SF lease at 2700 E Scyene Road with Bental Green Oak.

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

•

•

General Dynamics has signed a 156,144 SF lease at 19800 IH 635 - Bldg B with LGE Design Build/Creation Equity.

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

•

•

General Dynamics has signed a 103,978 SF lease at 19800 IH 635 - Bldg C with LGE Design Build/Creation Equity.

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

•

•

SRS Distribution has signed a 78,854 SF lease at 100 N Sam Houston with Cone Commercial.

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

LARGE EXISTING VACANCIES DEALS IN THE MARKET • •

•

12955 FM 2932 – 1,009,530 SF

Peachtree Distribution Center – a 396,750 SF building with Dalfen Industrial located in Mesquite.

•

13991 US Hwy 80 – 509,047 SF

•

13871 US Hwy 80 – 500,063 SF

Mesquite Airport Logistics Center – a 1,003,100 SF (two) building project with Dalfen Industrial located in Mesquite.

•

301 Apache Trail – 294,899 SF (Sublease)

•

12955 FM 2932 – 293,548 SF

•

1204 Military Parkway – 241,512 SF

•

5151 Samuell Boulevard – 211,234 SF (Sublease)

•

2614 Big Town Boulevard – 211,112 SF

•

13871 US Hwy 80 – 182,996 SF

•

1475 Republic Parkway – 177,473 SF (Sublease)

•

510 N Peachtree Road - 144,750 SF (Sublease)

•

4401 Samuell Boulevard – 143,801 SF

•

5320 S Peachtree Road – 137,537 SF

•

1201 Big Town Boulevard – 137,500 SF

•

1204 Military Parkway – 117,260 SF

NEW DEVELOPMENTS •

•

•

JOSH BARNES

Q4 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) 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 SF 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)

SUBMARKET INTELLIGENCE

Q4 2023 DFW INDUSTRIAL MARKET REPORT 13

NORTHEAST DALLAS Q4 Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

89,796

176,792

1,746,377

CURRENT EVENTS VITAL STATS 8.0%

Q4 Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

5.0%

4.1%

3.2%

5.0%

Q4 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

4.0%

2,500,000

6.0%

1,553,507

917,963

1,890,855

3.0%

Q4 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

2.0%

4,121,972

4,506,465

4,730,048

Q4 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,089,831

515,743

1,359,297

TOP LEASE TRANSACTIONS

3,000,000

7.0%

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

1.0% 0.0%

0 Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

Q1 22

Q2 22

ABSORPTION

Q3 22

Q4 22

Q1 23

Q2 23

DELIVERIES

Q3 23

Q4 23

•

Device Services Group has signed a 150,898 SF lease at 350 Cypress Hill Drive with AC Industrial Properties.

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

•

•

DisplayIt has signed a 123,500 SF lease at 1911 FM 546 with Greystar.

M-75 Commerce Center – a 304,576 SF spec building in McKinney with CA Ventures

•

•

First Place Foods has signed a 69,780 SF lease at 751 S International Drive with Cohen Asset Management.

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

•

Stealth Finishing, LLC has signed a 57,319 SF lease at 9660 Dilworth Road with ML Realty.

•

•

Cinno, Inc has signed a 55,000 SF lease at 2040 Redbud Boulevard with Dalfen Industrial.

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

•

•

Lonestar Electric has signed a 54,860 SF lease at 2120 Central Circle with Stonelake.

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

•

McNichols has signed a 52,500 SF lease at 3540 W Miller Road with Link.

•

910 10th Street – 328,704 SF

•

Southern Star has signed a 47,865 SF lease at 2801 Technology Drive with Mapletree.

•

12791 International Parkway – 183,764 SF

DAC Vision has signed a 47,006 SF lease at 3630 W Miller Rd with Link.

•

1475 Republic Parkway – 177,473 SF (Sublease)

•

Harry McKillop Boulevard – 165,864 SF

•

2701-2805 S Shiloh Road – 164,656 SF

•

1501 Kings Road – 154,923 SF

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

•

1411 E Lookout Drive – 138,003 SF

•

2600 McCree Road – 132,600 SF

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

•

12019-12097 Corporate Drive – 120,445 SF

•

1405 E Lookout Drive – 118,893 SF

•

12790 International Parkway – 113,864 SF

•

12002 Corporate Drive – 111,084 SF

•

10401 Miller Road – 108,490 SF

•

1125 E Collins Boulevard – 100,354 SF

HLC DEAL

•

HLC DEAL

DEALS IN THE MARKET • •

NEW DEVELOPMENTS •

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

•

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

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.

VACANCY

•

HLC DEAL

The Northeast Dallas submarket finished 2023 with an overall vacancy rate of 5.0%, making it the lowest vacancy rate amongst all other submarkets in DFW. The total year posted 1.6M of positive absorption however it was still not enough to keep the vacancy rate from rising. This is primarily due to the deliveries that took place in the Allen/ McKinney/Frisco micro market which is seeing good leasing activity post delivery. The one thing everyone should continue to monitor is subleasing activity as that could directly affect rent growth and absorption.

LARGE EXISTING VACANCIES

NE Dallas/Garland is the oldest and most mature micromarket consisting of supply chain companies as well as manufacturing. Vacancy has increased slightly as new projects have been delivered and more has been posted to the market for sublease, although it is still only 3.9% from an all time low of 1.6% mid 2022. 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 5.7% vacancy rate remains steady from the previous quarter and a historic low of 5.1% 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. New projects being delivered 1Q 2023 might cause this to increase slightly but there is good leasing activity expected to fill it up soon.

Allen/McKinney/Frisco is the newest micro-market and is seeing the most development activity due to the availability of land. With 2.5M 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. Vacancy increased slightly to 5.8% with the majority of that change coming from sublease vacancy being posted.

EXPERTS JOSH BARNES

BLAKE TROIANI

Senior Vice President jbarnes@holtlunsford.com 972.280.8353

Market Director btroiani@holtlunsford.com 972.280.0126

14 Q4 2023 DFW INDUSTRIAL MARKET REPORT

SUBMARKET INTELLIGENCE

NORTHWEST DALLAS

CURRENT EVENTS Through Q4 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 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. 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 Q4 with a 7.6% vacancy rate, which is higher than last quarter due to recent spaces of more than 100K SF becoming available in NW Dallas. Poly Air, Lennox and Tuesday Morning have all vacated spaces more than 100K SF and the vacancy rate will decrease when the big blocks of space become leased, which we expect downtime to be nominal. The NW Dallas absorption numbers totaled a positive 1.2M SF in Q4 due to Consolidated Hospitality Supplies and Interlake Mecalux signing large deals in Denton.

vs. Prev. Qtr

vs. 12 Mths Ago

1,264,690

(883,434)

1,016,182

Q4 Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

7.6%

7.1%

4.0%

5.0%

Q4 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

4.0%

2,037,533

855,070

2,502,746

3.0%

Q4 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

2.0%

2,857,012

4,774,123

7,327,008

Q4 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

2,133,768

923,509

480,499

TOP LEASE TRANSACTIONS •

Interlake Mecalux signed a 250K SF lease at Billingsley’s Denton development at I-35 and Highway 380.

•

Consolidated Hospitality Supplies signed a 168,757 SF lease at Exeter’s Westpark III Development. This leaves 250K SF remaining in the building.

•

Big D Party Rentals signed a 72K SF renewal at 3237 Commander Drive in Carrollton.

•

St Charles Trading signed a 60K SF lease at Billingsley’s Denton development at I-35 and Highway 380.

•

TTR Shipping signed a 50K SF lease at 2727 Realty with Investcorp in Carrollton.

•

WineDirect signed a 50K SF lease at 4455 Simonton Road with AEW in Farmers Branch.

HLC DEAL

HLC DEAL

DEALS IN THE MARKET •

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

HLC DEAL

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

Q4 Absorption

8.0%

3,000,000

7.0%

2,500,000 2,000,000

6.0%

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

1.0%

-1,000,000

0.0%

-1,500,000 Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

Q1 22

ABSORPTION

Q2 22

Q3 22

Q4 22

DELIVERIES

Q1 23

Q2 23

Q3 23

Q4 23

VACANCY

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 Q1 2024

•

3333 University Drive – Billingsley is under construction on a two (2) building project in Denton totaling nearly 900K SF, set for completion in Q1 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 Logistics Center – Brookfield is breaking ground on their freestanding 270K SF development in Denton. Set to deliver Q3 2024.

HLC DEAL

HLC DEAL

SUBMARKET INTELLIGENCE

Q4 2023 DFW INDUSTRIAL MARKET REPORT 15

SOUTH DALLAS

CURRENT EVENTS

Q4 Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

1,615,535

5,414,616

2,489,409

Q4 Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

VITAL STATS 16.0%

14.0%

13.9%

6.9%

vs. Prev. Qtr

vs. 12 Mths Ago

8.0%

2,737,499

1,603,124

3,328,566

6.0%

Q4 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

4.0%

26,235,126

2.0%

8,382,426

Q4 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,862,939

7,840,883

2,312,880

TOP LEASE TRANSACTIONS

8,000,000

12.0%

Q4 Leasing Activity

7,059,212

10,000,000

14.0%

6,000,000

10.0%

4,000,000 2,000,000 0

0.0%

-2,000,000 Q4 20

Q1 21

Q2 21

Q3 21

ABSORPTION

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

DELIVERIES

Q1 23

Q2 23

Q3 23

Q4 23

VACANCY

LARGE EXISTING VACANCIES

•

Nina Footwear leased 125,299 SF from Affinius Capital at 1309 E Cleveland Road in Hutchins, Texas.

•

1301 Southport Parkway (Bld 1) for 1,095,360 SF with XEBEC in Wilmer, Texas (new construction)

•

NTB leased 158,633 SF from Johnson Development at 2201 E Longhorn Drive in Lancaster, Texas, just east of I-35E and south of I-20.

•

3486 Cedardale Road – 1,084,460 SF spec development by Trammell Crow (new construction)

•

Eastern Trading purchased and is occupying 210,945 SF at 321 W. Centre Park Boulevard in DeSoto, Texas.

•

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

•

Logistics + leased 489,907 SF from Xebec at 1300 E. Fulghum Road in Wilmer, Texas off I-45.

•

950 N Interstate 45 – 1,013,833 SF spec development by Majestic Realty Company (new construction)

•

Kuka Furniture leased 504,500 SF from Prologis at 3584 Mountain Creek Parkway in Dallas, Texas, just north of I-20.

•

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

•

Pepsi leased 515,792 SF from Prologis at 3636 Mountain Creek Parkway in Dallas, Texas, just north of I-20.

•

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

NEW DEVELOPMENTS •

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

•

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

•

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

•

800 Cottonwood Valley Road – 565,600 SF spec with Stonemont in Wilmer, Texas

•

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

The overall South Dallas Industrial submarket, as surveyed, encompasses I-30 west of downtown, I-20, and I-45, totaling approximately 179M SF. According to the survey area, CoStar reported a positive Net Absorption of 1,396,416 SF for South Dallas in Q4 2023.

Despite the positive Leasing Activity, this combined sector of the industrial market is now 13.3% vacant, which is 0.2% higher than the previous report in Q3 2023. This increase is primarily due to deliveries outpacing leasing activity. In Q4, South Dallas saw the delivery of another 1.9M SF and still has 8.6M SF remaining under construction.

Although facing a rising vacancy rate in this submarket, South Dallas had YTD Net Absorption of 11,176,974 SF, representing 33.0% of the 33,918,810 SF overall YTD Net Absorption in the DFW Industrial Market.

Between 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%. However, the rapid pace of numerous construction projects and deliveries flooded this submarket with inventory in 2023. Deliveries have outpaced tenant demand in the changing macro-economic environment, subsequently eroding the previously enjoyed 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.

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 Q4 2023 DFW INDUSTRIAL MARKET REPORT

SUBMARKET INTELLIGENCE

SOUTH STEMMONS

CURRENT EVENTS The outlook for South Stemmons remains positive as we head into 2024. Per Costar reporting, leasing activity was a positive 1.5M SF, while absorption was down 682,962 SF. South Stemmons ended the quarter with 5.6% direct vacancy, ranking it as one of the top 3 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.

vs. Prev. Qtr

vs. 12 Mths Ago

(682,962)

(177,637)

11,380

Q4 Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

6.7%

6.0%

4.8%

5.0%

Q4 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

4.0%

1,498,227

745,512

1,612,536

3.0%

vs. Prev. Qtr

vs. 12 Mths Ago

2,135,614

1,655,271

1.0%

Q4 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

57,000

20,000

1,227,594

SOW Good signed a 51,264 SF lease at 304-308 W Mockingbird with Prologis

•

Preziosa Stone signed a 23,874 SF lease at 3200 Irving Boulevard (Proto Park) with M2G Ventures.

•

Reinhardt Fabrication signed a 22,402 SF lease at 9224 King Arthur with Stonelake.

•

Galleria Farms signed a 20K SF lease at 3148 Quebec with Olerio Homes.

•

Phillips May renewed their 18K SF lease at 1125 Longpoint Avenue with Hines.

HLC DEAL

DEALS IN THE MARKET

•

CANON SHOULTS

MADDY CANTY

Managing Principal cshoults@holtlunsford.com 972.280.8328

Market Director mcanty@holtlunsford.com 972.280.8325

Dalfen has their Sunbelt portfolio on the market with one (1) building in West Brookhollow – 2040 Century Center Blvd (170K SF) Leon Capital has a portfolio on the market (DFW Last-Mile Logistics Portfolio) with two (2) buildings in West Brookhollow – 8888 Governors Row (61,406 SF) and 8816-8820 Directors Row (37,406 SF)

1,000,000

6.0%

2,078,614

•

1,500,000

7.0%

Q4 U/C SF

TOP LEASE TRANSACTIONS

•

8.0%

2.0%

HLC DEAL

EXPERTS

VITAL STATS

Q4 Absorption

500,000

0

-500,000

0.0%

-1,000,000 Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

Q1 22

ABSORPTION

Q2 22

Q3 22

Q4 22

Q1 23

Q2 23

DELIVERIES

Q3 23

Q4 23

VACANCY

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 •

8611 Ambassador Row – 100K SF

•

5017-5199 Pulaski Street – 79,577 SF

•

8107 Chancellor Row – 74K SF

•

1715 Market Center Boulevard – 71,562 SF

•

10614-10676 King William Drive – 65,243 SF

•

1608 Plantation Road – 67,575 SF

•

201 Regal Row – 59,970 SF

SUBMARKET INTELLIGENCE

Q4 2023 DFW INDUSTRIAL MARKET REPORT 17

NORTH FORT WORTH Q4 Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

3,173,852

2,187,820

2,906,193

Q4 Vacancy

vs. Prev. Qtr

11.3%

10.2%

6.9%

vs. Prev. Qtr

vs. 12 Mths Ago

1,613,989

3,808,580

2,949,115

Q4 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

7,037,930

11,461,463

18,792,907

Q4 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

4,423,533

5,063,111

2,016,334

TOP LEASE TRANSACTIONS

•

HLC DEAL

4,000,000

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

4.0%

1,000,000

2.0% 0.0%

0 Q4 20

Q1 21

Q2 21

Q3 21

Q4 21

Q1 22

ABSORPTION

Q2 22

Q3 22

Q1 23

Q2 23

DELIVERIES

Q3 23

Q4 23

LARGE EXISTING VACANCIES 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

•

Alliance Center North I Building 4 – 615,694 SF

•

Westport 20 – 562,500 SF

•

Westport Parkway Commerce Center – 400,565 SF

•

Northlake Business Center – 394,958 SF

•

Synergy Crossing I 390,440 SF

•

Intermodal Logistics Center I Building 5 – 386,250 SF

•

Speedway Logistics Crossing I Building 3 – 384,716 SF

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

•

Northwest Commerce Park I Building 3 – 351,194 SF

•

Northlake 35 I Building 3 – 346,322 SF

Mercantile Logistics Station – a 850,500 SF two (2) building project with Velocis.

•

Cowtown Crossing | Building 3 – 304,665 SF

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

•

Alliance Gateway 50 – 287,242 SF

•

Elizabeth Creek Gateway | Building D – 286,467 SF

•

11401 Harmon Road – 284,238 SF

•

Alliance Gateway 14 I 250,782 SF

Saginaw Distribution Center – a 321,193 SF building.

NEW DEVELOPMENTS

•

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

•

Basswood 35 – a 349,660 SF three (3) building project with Eastgroup Properties.

•

Alliance Gateway 62 – 245K SF

•

Champions Crossing – 215,128 SF

West GSW Logistics Crossing - Building A - a 154,588 SF project with Scannell Properties.

•

Northlink | Building C – 211,037 SF

The North Fort Worth submarket finished Q4 2023 off strong by posting a positive net absorption of 2.4M SF - bringing the overall absorption to 8.8M SF for the calendar year. For historical perspective, this total absorption is only slightly below the 2022 posting of 9.2M SF but still above the 2021 figure of 8M SF. Of further note, since Q1 2021, North Fort Worth has only posted a quarterly positive absorption figure less than 2M SF four separate times with the lowest of those posting being just below 1M SF. Every other quarter within that time frame has surpassed 2M SF. Concurrently, the submarket also posted yet another impressive Leasing Activity figure of 12.2M SF for the calendar year, following an all time market high of 14M SF in 2022.

VACANCY

Big Ass Fans has signed a 221,444 SF lease at Fort West Building A with Creation Equity.

DEALS IN THE MARKET

•

Q4 22

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

Hohmann & Barnard, Inc has signed a 95,500 SF lease at 5600 Stratum Drive with ML Realty.

•

5,000,000

10.0%

•

•

•

6,000,000

•

CHEP USA has signed a 155,200 SF lease at 5301 Alliance Gateway with Brookfield Properties.

•

14.0% 12.0%

DrinkPak has signed a 1,250,743 SF lease at 35 – Eagle Building C with Trammell Crow Company.

•

•

VITAL STATS

vs. 12 Mths Ago

Q4 Leasing Activity

•

CURRENT EVENTS

These bright spots within the market help to soften the fact that North Fort Worth has surpassed an 11% vacancy rate for the first time since Q2 2021. However, the reality is that North Fort Worth delivered another 4.4M SF of new product in Q4, bringing the annual total to a staggering 16.1M SF of deliveries and has yet another 7M SF currently under construction. The majority of the construction activity, both deliveries and projects currently under construction have been in the Alliance sector which accounts for roughly 70% of the 7M SF still under construction. Fortunately, HLC has been given no indication or cause for concern as to the overall vitality of the submarket’s leasing activity and continued positive absorption. These factors coupled with the fact that the submarket only saw two new construction starts within the calendar year of 2023, tells us that North Fort Worth is poised to be able to stabilize the vacancy rate to historical averages over the next 12 months and continue to grow rental rates across the board.

**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 Q4 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 7% since Q4 2022 with approximately 5.9M SF delivering during that time period, a trend that kept up in Q4 2023 with 1.37M SF of new deliveries and ~1M SF in absorption. 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 broke ground in Q4 2023. Specifically, this pipeline consists of the Falcon Development single 237K SF rearload dubbed “Oak Creek Distribution” and Empire Equities four (4) building 144K SF single tenant grade level concept at Campus Park.

Q4 Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

992,855

496,384

1,967,706

vs. Prev. Qtr

vs. 12 Mths Ago

7.1%

7.1%

6.0%

8.0%

Q4 Leasing Activity

vs. Prev. Qtr

vs. 12 Mths Ago

6.0%

1,074,091

1,607,305

1,432,982

4.0%

Q4 U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

3,336,983

4,708,197

5,587,143

Q4 Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,371,214

1,424,256

254,265

1,500,000 1,000,000

Vice President tgrafton@holtlunsford.com 817.632.6152

Managing Principal, Partner mcarthey@holtlunsford.com 817.710.1111

500,000

2.0%

0

0.0%

-500,000 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

Q4 23

VACANCY

NEW DEVELOPMENTS

Drinkpak has signed a 1,403,152 SF lease at Carter Park East with Clarion and Crow Holdings.

•

Carter Park East – a 1,403,152 SF BTS development with Clarion and Crow Holdings

•

Lineage Logistics has signed a 122,500 SF renewal at Carter Park Distribution with TA Realty.

•

Everman Park – a 1,014,905 SF BTS development with TCRG Properties

•

US Auto Force has signed a 114K SF lease at Chisholm 20 with Jackson Shaw.

•

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

•

Shearer Supply has signed a 34,430 SF lease at Everman Trade Center with Cabot Properties.

•

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

•

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

DEALS IN THE MARKET

MATT CARTHEY

2,000,000

•

HLC DEAL

THOMAS GRAFTON

2,500,000

Q4 Vacancy

HLC DEAL

EXPERTS

3,000,000

10.0%

TOP LEASE TRANSACTIONS **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.

VITAL STATS 12.0%

•

Oak Creek Distribution Center – a 238,289 SF one (1) building portfolio

•

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

•

7901 South Freeway – a 219,401 SF one (1) building portfolio

•

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

•

1900 SE Loop 820 – a 225K SF one (1) building portfolio

LARGE EXISTING VACANCIES •

Majestic Fort Worth South | Building 10 – 781,530 SF

•

Carter Park East | Phase 2 Building 2 - 193,633 SF

•

Carter Park East | Phase 2 Building 3 - 193,633 SF

•

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

•

Carter Park East | Phase 2 Building 1 - 171,303 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