Q4 2023 DFW Office Market Report

Page 1

OFFICE Q4 2023 MARKET REPORT DALLAS/ FORT WORTH

P ro p er t y : S ummi t P a rk

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



TABLE OF CONTENTS

05

DFW Office Market Experts

06

Featured Properties

08

DFW Office Submarket Coverage

09

DFW Office Facts & Figures

10

Submarket Intelligence

DALLAS 5950 Berkshire Lane, Suite 900 Dallas, Texas 75225 T 972.241.8300 | F 972.241.7955

FORT WORTH 1200 Summit Avenue, Suite 300 Fort Worth, Texas 76102 T 817.710.1110 | F 817.810.9017

www.holtlunsford.com



Q4 2023 DFW OFFICE MARKET REPORT 05

DFW OFFICE Market Experts

MATT CARTHEY

JOHN DICKENSON

CHASE STONE

TYLER HOWARTH

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

Managing Principal Dallas jdickenson@holtlunsford.com 972.421.1971

Managing Principal Dallas cstone@holtlunsford.com 972.265.0128

Managing Principal Dallas thowarth@holtlunsford.com 972.280.8302

DAVID CASON

JAKE NEAL

VIC MEYER

HUNTER HEDRICK

Vice President Fort Worth dcason@holtlunsford.com 817.810.9137

Vice President Fort Worth jneal@holtlunsford.com 817.710.1112

Market Director Fort Worth vmeyer@holtlunsford.com 817.710.1113

Market Associate Dallas hhedrick@holtlunsford.com 972.421.1973

JOHN ARMES

PAUL HERNANDEZ

HARRISON DAVIS

HUDSON SHEETS

Market Associate Dallas jarmes@holtlunsford.com 972.381.3210

Market Associate Dallas phernandez@holtlunsford.com 972.380.3641

Market Associate Dallas hdavis@holtlunsford.com 972.421.1974

Market Associate Dallas hsheets@holtlunsford.com 972.421.1975

CARTER SELLS

CAROLINE HIX

HAYDEN PARKER

GARRETT LEVY

Market Associate Fort Worth csells@holtlunsford.com 817.632.6153

Market Analyst Dallas chix@holtlunsford.com 972.421.1961

Market Analyst Dallas hparker@holtlunsford.com 972.265.0129

Market Analyst Dallas glevy@holtlunsford.com 972.585.5110

MATT ARENDS

KAREEM AMER

Market Analyst Dallas marends@holtlunsford.com 972.585.5154

Market Analyst Fort Worth kamer@holtlunsford.com 817.632.6169


Dallas Featured Property GRANITE TOWER


Fort Worth Featured Property ONE WEST 7TH


08 Q4 2023 DFW OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

DFW OFFICE Submarket Coverage OTHER SUBMARKETS

TUR

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

DENTON McKINNEY

FAR NORTH DALLAS

PRINCETON

ALLEN/MCKINNEY FRISCO

LEWISVILLE/DENTON

ALLEN

JUSTIN

THE COLONY

BOYD

LEWISVILLE

RICHARDSON/PLANO

NORTH FORT WORTH

PLANO

FLOWER MOUND

WYLIE

ROANOKE

HASLET

CARROLLTON GRAPEVINE

KELLER

COPPELL LAS COLINAS

ADDISON

RICHARDSON

SOUTHLAKE FARMERS BRANCH

DFW INTERNATIONAL AIRPORT

7

GARLAND

ROCKWALL ROWLETT

LAS COLINAS

8

COLLEYVILLE

3

SAGINAW DALLAS LOVE FIELD AIRPORT

BEDFORD EULESS FORT WORTH MEACHAM INTERNATIONAL AIPRORT

RICHLAND HILLS

HURST

WHITE SETTLEMENT

6

IRVING

2

4

MID-CITIES

EAST DALLAS SUNNYVALE 5

1

DALLAS

MESQUITE

FORT WORTH

FORNEY

GRAND PRAIRIE ARLINGTON

DALLAS EXECUTIVE AIRPORT

BENBROOK DUNCANVILLE

HUTCHINS

CRANDALL

WEST-SOUTHWEST FORT WORTH

CEDAR HILL

DESOTO

LANCASTER

MANSFIELD

SOUTHWEST DALLAS

BURELSON

N

RED OAK

SOUTHEAST FORT WORTH MIDLOTHIAN

WAXAHACHIE

CLEBURNE ENNIS


Q4 2023 DFW OFFICE MARKET REPORT 09

DFW OFFICE Facts & Figures OVERALL DFW

OVERALL VACANCY

20.0%

20.0%

4,000,000 17.8%

18.0%

2,000,000

16.0%

18.0%

16.2%

3,000,000

16.0%

16.2%

15.1%

14.0% 12.0%

1,000,000

10.0%

14.0% 0 12.0%

8.0% 6.0%

-1,000,000

4.0%

10.0%

-2,000,000

8.0%

-3,000,000 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

1.6%

1.1%

Q4 23

Q1 20

Q2 21

Q3 21

Q4 21

Q1 22

Q2 22

DIRECT

VACANCY

OVERALL ABSORPTION

Q3 22

Q4 22

Q1 23

Q2 23

Q3 23

SUBLET

Q4 23

TOTAL

OVERALL CONSTRUCTION 7,000,000

10,000,000

6,000,000

9,000,000

5,000,000

8,000,000

4,000,000

7,000,000

3,000,000

6,000,000

2,000,000

5,000,000

1,000,000

4,000,000

0

3,000,000

-1,000,000

2,000,000

-2,000,000

1,000,000

-3,000,000 Q4 20

Q1 20

Q2 21

Q3 21

Q4 21

Q1 22

TOTAL NET

Q2 22

Q3 22

Q4 22

Q1 23

Q2 23

Q3 23

0

Q4 23

Q4 20

LEASING ACTIVITY

Q1 20

Q2 21

Q3 21

Q4 21

DELIVERED

EXISTING INVENTORY SUBMARKET

2.0% 0.0%

Q4 20

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

Q2 23

Q3 23

Q4 23

UNDER CONSTRUCTION

VACANCY

# BLDGS.

TOTAL RBA

DIRECT SF

TOTAL SF

VAC. %

YTD NET ABSORPTION

YTD DELIVERIES

UNDER YTD LEASING CONSTRUCTION SF ACTIVITY

Dallas CBD

146

34,474,840

7,926,457

8,685,065

25.2%

(90,149)

0

0

627,889

Central Expressway

251

14,960,811

2,684,786

2,833,421

18.9%

(270,865)

0

0

819,990

Far North Dallas

1,354

74,974,952

14,692,420

16,236,003

21.7%

(203,943)

1,259,283

2,785,750

3,665,252

Fort Worth CBD

121

11,246,511

1,234,816

1,270,231

11.3%

243,963

0

0

332,113

Las Colinas

506

45,296,868

9,161,708

10,370,764

22.9%

500,622

990,066

931,035

3,429,228

LBJ Freeway

253

23,377,603

5,248,170

5,831,895

24.9%

(124,554)

0

0

1,242,182

Mid-Cities

2,785

44,641,712

6,597,840

7,135,027

16.0%

(508,708)

440,615

279,529

1,420,914

North Fort Worth

842

12,324,222

1,170,662

1,394,622

11.3%

45,249

155,248

443,395

286,880

Preston Center

174

7,973,777

699,819

780,892

9.8%

31,919

235,106

10,434

298,315

Richardson/Plano

856

35,718,407

5,266,902

5,726,313

16.0%

(287,765)

227,666

17,440

1,257,001

SW Fort Worth

1,445

20,925,202

1,733,702

1,814,385

8.7%

91,032

293,570

56,449

1,024,551

Stemmons

320

16,202,840

2,474,900

2,671,197

16.5%

317,984

20,000

339,247

274,445

Uptown/Turtle Creek

305

17,564,189

3,466,711

3,663,846

20.9%

(256,397)

496,797

1,962,640

1,058,319

TOTALS

9,358

359,681,934

62,358,893

68,413,661

19.0%

(511,612)

4,118,351

6,825,919

15,737,079

SOURCE: COSTAR Q4 2023 OFFICE REPORT


10 Q4 2023 DFW OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

DALLAS CBD CURRENT EVENTS The owners of one of downtown Dallas’ biggest skyscrapers are spending millions more on renovations to the landmark building. The 55-story former Chase Tower on Ross Avenue, built in 1987, contains almost 1.3M SF of office space. The high-rise lost its namesake tenant when JPMorgan Chase recently moved its downtown operations to a new location in the Hunt Consolidated building a few blocks away on Woodall Rodgers Freeway. The New York investment firm that owns the building — since renamed Dallas Arts Tower — has spent more than $10 million on upgrtades in the last five years. The affiliate of New Yorkbased owner Fortis Group now plans to spend another $3 million on renovations to the lobby of the skyscraper at Ross and Pearl Street. Chase previously had a retail banking center on the ground floor of the building. Dallas’ Entos Design is working on the renovation plan, which is set to start in March, according to planning documents filed with the state. Construction is scheduled for completion in early 2025. More than a year after disclosing plans for the project, New York-based Goldman Sachs Group and Dallas’ Hunt Realty are finally ready to break ground on the financial firm’s new campus north of downtown. In June of last year, Dallas’ city council voted to provide more than $18 million in economic incentives to support development of the $500 million office center to be constructed on Field Street next to Victory Park. Since then, the financial services giant and developers have been working to prepare for the project, which will be built on the site of apartments that were cleared to make way for the North End development. Dallas developer Hillwood is part of the team building the project. The office buildings for Goldman Sachs will be the first phase of an 11-acre high-rise mixed-use development Hunt Realty is building next to the Perot Museum. The North End project will also include additional offices, residential and hotel towers and retail space built around a 1.5-acre park. North Texas’ largest office sale of the year just happened in downtown Dallas. Brooklyn, New York-based Shelbourne Global Solutions paid an undisclosed amount for the 1.2M SF Plaza of the Americas office complex at 600 North Pearl Street, the Dallas Morning News reported. The sellers, M-M Properties and Invesco Real Estate, bought Plaza of the Americas in 2011 and have been trying to sell it since last year. That joint venture paid $100 million for the complex and spent an additional $26 million on renovations, which included an overhaul of the atrium in 2013, replacing its indoor ice-skating rink with a 1-acre garden area with eating and gathering spaces. Newmark Group’s Chris Murphy, Robert Hill and Gary Carr brokered the sale to Shelbourne Just months after completing its latest Dallas tower, developer Harwood International is making plans to build another high-rise just north of downtown. The 23-story Harwood No.15 office building is planned on Wolf Street near Harry Hines Boulevard near the entrance to the Dallas North Tollway in the 19-block Harwood mixed-use district. The 340K SF tower – one of the few speculative office projects announced in North Texas this year – will be just blocks from Harwood’s No.14 building, which was completed in June. No.14 is already 76% leased at a time when many North Texas office buildings are struggling to secure tenants. Harwood’s new glass and metal clad tower was designed by the same architects that did No.14 – Japan’s Kengo Kuma & Associates and Dallas-based Corgan. “Kengo Kuma & Associates, Corgan and Harwood’s in-house teams have worked incredibly well together to bring our latest development Harwood No.14 to life,” Harwood International president Oliver Barbier-Mueller said in a statement. “We are keeping the band together to bring the same success to our next project, Harwood No.15.”

VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

683,187

(245,947)

(1,661,317)

35.0%

2,000,000

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

30.0%

1,500,000

25.0%

25.2%

27.2%

27.7%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$30.81

$30.53

$30.20

TOP LEASE TRANSACTIONS • Barrow Hanley Mewhinney & Strauss, LLC signed a 41.1K SF lease at Chase Tower, located at 2200 Ross Avenue, in Dallas. • Russell Reynolds Associates signed a 17.6K SF lease at Trammell Crow Center, located at 2001 Ross Avenue, in Dallas.

1,000,000 500,000

20.0%

0 15.0%

-500,000

10.0%

-1,000,000

5.0%

-1,500,000

0.0%

-2,000,000 Q4 20

Q1 21

Q2 21

Q3 21

ABSORPTION

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

Q2 23

DELIVERIES

Q3 23

Q4 23

VACANCY

LARGE EXISTING VACANCIES • Fountain Place | 1445 Ross Avenue – 589,268 SF • 555 S Pearl Expressway – 486K SF • Renaissance Tower | 1201 Elm Street – 402,223 SF • Energy Plaza | 1601 Bryan Street – 400K SF

• Crowe, LLP signed a 9.9K SF lease at Chase Tower, located at 2200 Ross Avenue, in Dallas.

• Bank of America Plaza | 901 Main Street – 287,054 SF

• Arcadis signed a 19.6K SF lease at in the Easter Quarter, located in Dallas.

• 1700 Pacific | 1700 Pacific Avenue – 270,822 SF

• Two Arts Plaza – 296,800 SF

• Dallas Arts Tower – 193,203 SF • Harwood Center | 1999 Bryan Street – 187,728 SF • Comerica Bank Tower | 1717 Main Street – 148,025 SF • East Quarter | 300 S Pearl Expressway – 137,157 SF • Radiance Plaza | 1301 Young Street – 117,673 SF • One Main | 1201 Main Street – 115,410 SF • Plaza of the Americas | South Tower – 109,964 SF


SUBMARKET INTELLIGENCE

Q4 2023 DFW OFFICE MARKET REPORT 11

CENTRAL EXPRESSWAY CURRENT EVENTS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(25,486)

(19,368)

83,128

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

18.9%

18.8%

17.3%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$35.27

$35.38

$34.63

TOP LEASE TRANSACTIONS • Witherite Law Group signed a 71.5K SF lease at Meadow Park Tower, located at 10440 N Central Expressway, in Dallas. • Leeward Renewable Energy Development signed a 20.9K SF lease at Energy Square 3, located at 6688 N Central Expressway, located in Dallas. • LIA Engineering signed a 18.7K SF lease at 6060 at Eastline, located at 6060 North Central Expressway, in Dallas. • Goodnight Water Solutions signed a 16.5K SF lease at Premier Place, located at 5910 N Central Expressway, in Dallas. • Lee Financial signed a 16.5K SF lease at The Gild, located at 8350 N Central Expressway, in Dallas.

VITAL STATS 20.0%

200,000

19.0%

150,000

18.0%

100,000

17.0%

50,000

16.0%

0

15.0%

-50,000

14.0%

-100,000

13.0%

-150,000

12.0%

-200,000

11.0% 10.0%

-250,000 Q4 20

Q1 21

Q2 21

Q3 21

ABSORPTION

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

Q2 23

DELIVERIES

Q3 23

Q4 23

VACANCY

LARGE EXISTING VACANCIES • 2828 N Haskell Avenue – 475K SF • Cityplace Tower – 407,763 SF • The Tower at Preston Hollow Village – 250K SF • The Ivy – 191,050 SF • 8750 NorthPark Central – 102,297 SF • 8080 NCX – 125,505 SF • One Lincoln Park – 88,225 SF

A Dallas investor is buying another one of the office buildings up for grabs with the bankruptcy of a Houston real estate firm. Hartman SPE is selling its office and retail properties as part of a plan to refocus the real estate investment trust on self-storage properties. The unit of Houston’s Silver Star Properties REIT has been in bankruptcy since this summer following a dispute with the company founder. Hartman recently contracted to sell one of its North Dallas high-rises — a 10-story office on North Central Expressway — to retailer Costco, who owns the property next door. The bankrupt firm has contracted to sell an office building it owns in Irving to a limited liability corporation represented by the Good Cos., according to court records. The investor has agreed to pay $12.5 million for the Westway One office building at 1707 Market Place Boulevard near Interstate 635. Built in 2001, the three-story building contains more than 170K SF. Hartman has owned the building since 2018. Tenants in the building include CEC Entertainment, Pei Wei Asian Diner LLC and Lennar Homes. The building was most recently valued for taxes at $20.6 million. Owners of a North Dallas office building have gotten approval from the city to convert the property to medical uses. The 145K SF Pyramids South Tower is located at Park Lane on the west side of North Central Expressway. The six-story building near NorthPark Center mall was constructed in 1998 and since last year has been owned by Dallas-based real estate investor Big Sky Medical. Dallas’ City Council approved the request to utilize the building for health care services. “We are honored by the unanimous support from the Dallas City Council, recognizing the importance of bringing advanced medical services to the heart of our community,” Jason Signor, founder and CEO of Big Sky Medical said in a statement. “This achievement aligns perfectly with our mission to redefine healthcare spaces and contribute to the wellbeing of the residents we serve.” The building already is home to several health-related tenants. The adjoining Pyramids North Tower in 2005 was rezoned to medical use. Together the buildings have almost 300K SF.


12 Q4 2023 DFW OFFICE MARKET REPORT

CURRENT EVENTS A Plano tower that just sold is now the second high-profile Dallas-area office sale in the last week. The purchase of the One Legacy Circle office high-rise in West Plano’s Legacy business park comes at a time when few office buildings are changing hands. The eight-story, more than 214,K SF property on the Dallas North Tollway was built in 2008. It’s more than 70% leased to tenants including Morgan Stanley, Bread Financial and TBX Employee Benefits. The building was sold by Franklin Street Partners to a real estate partnership represented by Dallas’ Gildenson Real Estate. Franklin Street owned the property since 2011. Terms of the sale were not disclosed. The tower is valued for property taxes at more than $55 million. Oklahoma-based Liberty National Bank provided the financing. The building last sold for almost $54 million. An Addison office building is facing foreclosure — one of several North Texas commercial properties at risk of forced sale by lenders. The Princeton office, built in 1982, contains almost 378K SF of space. The nine-story office campus on the Dallas North Tollway south of Quorum Drive has been owned by a Dallas-based partnership since 2004. Lender Liberty Bankers Life Insurance has declared that the owner is in default on more than $35.1 million in debt. Liberty Bankers Life has appointed a trustee empowered to sell the property at a foreclosure auction, according to county records. A new Plano office tower is back on the sublease market again. The highrise was built by Trammell Crow Co. for Reata Pharmaceuticals Inc. The drug developer — founded in 2002 — broke ground on the 327K SF tower on Legacy Drive in 2019 and planned to move into the building when it was finished. But at the end of 2021 when the building was nearing completion, Reata decided to stay put in its existing space and sublease the new high-rise. Then, earlier this year, Reata finally decided to occupy the building, which was taken off the sublease market. That was before the drug maker was purchased for $7.2 billion by Massachusetts-based Biogen Inc. Cushman & Wakefield is now marketing the high-rise at 6100 Legacy Drive to sublease tenants. Reata has a long-term lease on the tower.

SUBMARKET INTELLIGENCE

FAR NORTH DALLAS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

266,775

(426,670)

207,483

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

21.7%

22.0%

20.2%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

VITAL STATS 25.0%

1,000,000

500,000

0 20.0%

2,785,750

2,423,585

2,484,329

-500,000

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-1,000,000

25,678

440,009

19,867

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$34.62

$34.33

$34.27

TOP LEASE TRANSACTIONS •

HLC DEAL

HLC DEAL

iHeart Media + Entertainment extended its 22K SF lease at Stanford Corporate Centre, located at 14001 N Dallas Parkway, in Dallas. Fieldwork Dallas signed a 14.1K SF lease at Providence Towers, 5001 Spring Valley Road, in Dallas. Cancer Check Labs signed a 7.9K SF lease at Lincoln R&D Legacy III, located at 5212 Tennyson Parkway, Located in Plano. Navigation Financial signed a 6.9K SF lease at Tollway Towers North, located at 15770 N Dallas Parkway, located in Dallas. Genuent Global renewed its 6.2K SF lease at Liberty Plaza II, located at 5057 Keller Springs Parkway, in Addison.

DEALS IN THE MARKET •

Parkway Centre IV is being marketed for sale by Newmark. Goldman Sachs owns the 174,322 SF building, which is 85% leased. Under Contract to a HNW family at $18.5M (~$108/SF). Preston Park Towers is being marketed for sale by Newmark. Terracap owns the 359,630 SF office buildings which are 87% leased. Guidance pricing is $55.0M ($153/SF). 5000 and 5050 Quorum is being marketed for sale by Newmark. DRA Advisors own the 299,805 SF office buildings which are 84.0% leased. Guidance pricing is $27.0M ($90/SF). Galleria Tower North II is being marketed for sale by CBRE. DWS/RREEF owns the 379,019 SF office building which is 80% leased. Guidance pricing is $70.0M ($185/SF). Parkway Plaza I & II is being marketed for sale by CBRE as a covered land play. Hartman owns the 136,506 SF buildings, which are 60% leased. Guidance pricing is $8.5M ($60/SF). Bent Tree Green is being marketed for sale by JLL. Hartman owns the 139,609 SF building, which is 70.1% leased. Guidance pricing is $14.0M ($100/SF). Under contract to Bradford for $10.75M ($77/SF). The Commons is being marketed for sale by Newmark. Triten owns the 91,046 SF office building which is currently 80% leased. Guidance pricing is $13.5M ($150/SF). Liberty Plaza I & II is being marketed for sale by Newmark. Franklin Street Properties owns the 216,834 SF office buildings, which are 78% leased. Guidance pricing is $38.0M ($175/SF).

15.0%

-1,500,000 Q4 20

Q1 21

Q2 21

Q3 21

ABSORPTION

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

DELIVERIES

Q2 23

Q3 23

Q4 23

VACANCY

Interchange Office Center is being marketed for sale by JLL. Brookwood Financial Partners owns the 150,596 SF office building, which is 86% leased. Guidance pricing is $22.0M ($175/ SF). Tollway Plaza is being marketed for sale by JLL. Buchanan Street and UC Regents own the 370,624 SF office buildings, which are 85.0% leased. The original guidance pricing was $90.0M ($245/SF).

NEW DEVELOPMENTS •

• • •

• •

TIAA Frisco Corporate Center | 3951 N Dallas Parkway – A 500K SF class A office building (proposed) The Tower at Hall Park | 6605 Warren Parkway – A 496K SF class A office building Ryan Tower | 8101 Windrose Avenue – A 409K SF class A office building Fields West | Panther Creek Parkway & Legacy Drive – A 360K SF class A office building Southstone Yards | NEC Spring Creek Parkway & State Highway 121 – A 235K SF class A office building Fourteen555 – South Building | 14545 N Dallas Parkway – A 239K SF class A office building The Parkwood – Phase 2 | East of DNT & Windhaven Pkwy – A 125K SF class A office building 121 Commerce Center : Aqua & Terra | 8560 Belleview Dr – A 104K SF class A office building FarmWorks One (The Farm) | 1234 Johnson Rd – A 100K SF class A office building

LARGE EXISTING VACANCIES • • • • • • • • •

5400 Legacy Drive – 1,587,458 SF CALWest – 1,071,344 SF The Campus at Legacy – 500,864 SF Granite Park Six – 352,258 SF 6100 Legacy – 238,887 SF AmerisourceBergen – 300K SF 2395 Midway Rd - Bldgs A-D – 279,089 5600 Headquarters Drive – 251,478 SF 6400 Legacy Drive – 227,577 SF


SUBMARKET INTELLIGENCE

Q4 2023 DFW OFFICE MARKET REPORT 13

FORT WORTH CBD CURRENT EVENTS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

49,932

60,591

(64,538)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

11.3%

11.7%

15.2%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$29.67

$29.00

$27.76

TOP LEASE TRANSACTIONS • Kimley Horn has signed a lease for 22,338 SF at 801 Cherry Street, Fort Worth, Texas 76102. • US Risk has signed a lease for 3,880 SF at 801 Cherry Street, Fort Worth, Texas 76102. • An undisclosed tenant has signed a lease for 2,896 SF at 300 Throckmorton Street, Fort Worth, Texas 76102.

DEALS IN THE MARKET • 210 E 7th Street is being marketed for sale by Jim Finley Properties. Jim Finley Properties own the 82,226 SF class B office building. • 512 W 4th Street is being marketed for sale by Lancarte Commercial Real Estate. The YMCA owns the 31,537 SF class B office building. • 1100 Macon Street is being marketed for sale by Sentry CRE. Manuel & Teresa Diaz own the 30,699 SF class C office building.

VITAL STATS 200,000

20.0% 18.0%

150,000

16.0%

100,000

14.0% 12.0%

50,000

10.0% 0

8.0% 6.0%

-50,000

4.0%

-100,000

2.0% 0.0%

-150,000 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 • 301 Commerce Street | Bank of America Tower – A 62,660 SF class A vacancy • 801 Cherry Street | Burnett Plaza – A 54,421 SF class A vacancy • 777 Main Street | 777 Main – A 47,862 SF class A vacancy • 640 Taylor Street | Frost Tower – 45,872 SF class A vacancy • 307 W 7th Street | The Star-Telegram Building – 43,772 SF class B vacancy

Hillwood has announced the acquisition of a full city block in the heart of the Fort Worth Central Business District. The property is bounded by 6th and 7th Streets to the north and south, and Calhoun and Jones Streets to the east and west. Oncor has owned the site for decades. The purchase of the Oncor property reinforces the belief in Fort Worth and the evolution of downtown, further demonstrating growth in the city. Mike Berry, president of Hillwood, said in a statement. “Downtown Fort Worth is playing a vital role in the city’s growth and success, and we want to help drive its economic development far into the future.” The company said development plans for the property are still under review. Company officials said Hillwood will look at a variety of land use and development options that “will complement existing trends in the downtown Fort Worth market.” The company noted that the property is at the “front door” of the rapidly evolving southern corridor of downtown. The neighboring Texas A&M-Fort Worth campus, which broke ground in June, will anchor the city’s downtown innovation district. The Fort Worth Convention Center, which sits two blocks south of the property, recently kicked off its $95 million expansion, and the adjacent Omni Hotel Fort Worth will add a new tower with 400 rooms and additional meeting spaces. Also nearby, the new Deco 969 luxury apartment building will open at the end of the year. “The acquisition of the Oncor property represents an exciting opportunity for Hillwood,” said Steve Aldrich, senior vice president of Hillwood. “It puts us in the middle of one of the fastest-growing corridors not only in Downtown Fort Worth but within the entire city. Because of its location, the site provides flexibility for a best-in-class development project, whether that be office, residential, or mixed-use. Jon McNeil and Ryan Matthews from JLL represented Oncor in the transaction. Hillwood’s investment in Fort Worth and partnerships with the city of Fort Worth began 35 years ago with the development of Perot Field Fort Worth Alliance Airport.


14 Q4 2023 DFW OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

LAS COLINAS CURRENT EVENTS Irving-based McKesson Corp. is joining the list of North Texas businesses hoping to offload excess office space with a lease to other firms. The international drug and medical products distributor has hired commercial property firm CBRE Group to rent out more than 270K SF of its Las Colinas headquarters complex, according to real estate data provider CoStar. McKesson relocated its head offices from California to Irving in 2019. The company has more than 1,500 workers in North Texas at its two-building campus on Carpenter Freeway at State Highway 161. McKesson officials earlier this year said they planned to trim the company’s real estate footprint. During the last couple of months, McKesson has filed plans for more than $20 million in renovations to the larger of its two buildings in Las Colinas. The work involves more than 90K SF in the building at 6555 S.H. 161, according to planning documents filed with the state. Architect Gensler is handling the work, which includes upgrades to a café, addition of meeting spaces and a conferencing center, new finishes in the lobby and new workstations on the top floor, the information provided the Texas Department of Licensing & Regulation says. The renovations would allow McKesson to consolidate some operations in the larger building. McKesson acquired the buildings in 2016. The block of McKesson office space is one of the largest new spaces available in Las Colinas. And it adds to the almost 11 million square feet of sublease offices up for grabs in the Dallas-Fort Worth area. The largest office leases signed in DallasFort Worth last year totaled enough space to fill a downtown skyscraper. More than 1.5M SF of North Texas offices were gobbled up by the 15 largest tenant deals signed in 2023, according to a report by commercial property firm Transwestern. “There was a good mix of everything from small tenants to large corporations taking office space in newer buildings,” said Transwestern research manager Andrew Matheny. “It’s gotten kind of lost in all the negative news about the office market.”Office leasing has lagged in D-FW since the pandemic with thousands of workers sent home. They’ve been slow to return to offices, and employers have been stuck with more than 11M SF of surplus office space in the area. Even so, more than a dozen major leases signed last year helped reduce vacancies, Transwestern found in its year-end office leasing report. The largest office lease signed in 2023 was watch and accessories maker Fossil, which renewed 255K SF in its longtime Richardson headquarters. Fossil downsized its offices in the campus by about 200K SF. Bank of America’s new 238K SF lease in the Parkside Uptown tower being built just north of downtown Dallas was the second biggest office deal of the year. The bank plans to move from its namesake tower on Main Street to the new tower in 2027. Construction materials firm Lehigh Hanson renewed its 145,300 SF office lease in Las Colinas and commercial air-conditioning system firm Texas AirSystems signed a 103,500 SF lease in another Las Colinas office building. Just north of downtown Dallas, ISN Software leased a 100K SF office in the new Knox Street mixed-use development that just started construction. The tech firm will occupy two-thirds of the office space planned in the four-acre development. Of the 15 largest office leases last year, four were in Irving’s Las Colinas development. An increase in office transactions completed in the final months of 2023 contributed to the 396,781 SF of net leasing in D-FW last year.

vs. Prev. Qtr

vs. 12 Mths Ago

59,345

(94,889)

(725,640)

25.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

20.0%

22.9%

23.0%

22.3%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

931,035

951,101

1,064,101

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

20,066

300,000

165,753

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$28.52

$28.44

$27.96

TOP LEASE TRANSACTIONS •

Americredit Financial Services/GM Financial signed a 115.6K SF lease at Mandalay Tower 1, located at 220 E Las Colinas Boulevard, in Irving. • 7-Eleven extended its 62K SF lease at Connection Park II, located at 4795 Regent Boulevard, in Irving. • JPI signed a 53.7K SF lease in Cypress Waters, located at 9001 Cypress Waters Boulevard, located in Coppell. • Evoque signed a 30.3K SF lease at The Sound at Cypress Waters, located at 3100 Olympus Boulevard, in Coppell. • OWL Services signed a 16.6K SF lease at Intellicenter, located at 3701 Regent Boulevard, in Dallas. HLC DEAL • Lifetime Sciences signed a 3.1K SF lease at Crown Plaza III, located at 11496 Luna Road, in Farmers Branch.

DEALS IN THE MARKET •

VITAL STATS

Absorption

Regent 5601 Executive Drive is being marketed for sale by CBRE. Novel owns the 155,571 SF office building which is 97.5% leased with a 4.9-year WALT. Guidance pricing is $25.0M ($161/SF). One Panorama Center is being marketed for sale by Newmark. Regent owns the 208,450 SF office building which is 74% leased. Guidance pricing is $24.0M ($115/SF). 4200 Regent is being marketed for sale by Cushman & Wakefield. Property Income Advisors owns the 164,375 SF building, which is 36% leased. Guidance pricing is $14.75M ($90/SF). Corporate Point at Las Colinas is being marketed for sale by Cushman & Wakefield. The 223,498 SF building is currently owned and occupied by Gainwell Technologies. Guidance pricing is $16.75M ($75/sf). Westway One is being marketed for sale by CBRE. Hartman owns the 165,982 SF building, which is 83% leased. Guidance pricing is $14.0M ($84/SF). Fuller Ridge is being marketed for sale by JLL. Goddard owns the 285,467 SF office buildings, which are 66% leased. Guidance pricing is 14.25M ($50/SF). Regent II Office Center (5150 Regent) is being marketed for sale by Colliers. Yonezawa owns the 76,400 SF building, which is 18.5% leased. Guidance pricing is $11.0M ($145/sf).

1,000,000

500,000

15.0% 0 10.0% -500,000

5.0%

0.0%

-1,000,000 Q4 20

Q1 21

Q2 21

Q3 21

ABSORPTION

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

DELIVERIES

Q2 23

Q3 23

Q4 23

VACANCY

NEW DEVELOPMENTS •

Wells Fargo Campus – A 800K SF class A office building

LARGE EXISTING VACANCIES • • • • • • • • • • • • • • • • • •

Exxon Mobil HQ – 379,014 SF 6000 Connection – 287,581 SF The Apex at Las Colinas Crossing - Building A – 271,778 SF 8900 Freeport Parkway – 268,446 SF One MacArthur Ridge – 249,838 SF Regent Commons – 214,985 SF 6655 MacArthur – 172,230 SF Browning Place III – 170,848 SF Intellicenter Dallas – 165,286 SF 3300 Olympus – 150K SF 600 ELC – 145,826K SF SF 6031 Connection Drive – 138,850 SF MacArthur Ridge II – 132,735 SF 3929 WJC – 125,421 SF Las Colinas Commons – 122,180 SF Carpenter Corporate Center 2 – 112,149 SF Freeport Business Center 1 – 105,261 SF 2250 W John Carpenter Freeway – 101,946 SF


SUBMARKET INTELLIGENCE

Q4 2023 DFW OFFICE MARKET REPORT 15

LBJ CURRENT EVENTS

VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(130,021)

(25,605)

(192,907)

26.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

25.0%

24.9%

24.4%

24.7%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

22.0%

-

-

-

21.0%

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

20.0%

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$25.77

$26.18

$25.09

TOP LEASE TRANSACTIONS • Beacon Oral signed a 28.7K SF lease at Park Central 8, located a 12770 Merit Drive, in Dallas. • Truist Bank renewed and expanded its 8.7K SF lease at Pinnacle Tower, 5005 Lyndon B Johnson Freeway, in Dallas. • Link Logistics signed an 26.7K SF expansion and extension lease at Galleria North Tower II, located at 13727 Noel Road, in Dallas.

DEALS IN THE MARKET • NCP I is being marketed for sale by CBRE. Hartman owns the 204K SF building, which is 79% leased. Guidance pricing is $14.25M ($70/SF). This deal was recently awarded to Costco at $14.0M ($69/SF). • Three Forest Plaza is currently being marketed for sale by Goodwin Advisors (Evan Stone). Hartman owns the 366,549 SF office building which is currently 75.5% leased. Guidance pricing is $36.5M ($100/SF).

150,000 75,000

24.0% 0

23.0%

-75,000 -150,000 -225,000

19.0% 18.0%

-300,000 Q4 20

Q1 21

Q2 21

Q3 21

ABSORPTION

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

Q2 23

DELIVERIES

Q3 23

Q4 23

VACANCY

LARGE EXISTING VACANCIES • 7171 Forest Lane – 180,000 SF • Park Central 8 – 145,024 SF • Lakeside Square – 112,749 SF • Northpoint Plaza II – 92,694 SF • Three Galleria Tower – 92,977 SF

Mortgage firm Mr. Cooper Group Inc. may soon be adding to the Dallas area’s growing sublease office totals. The company is considering putting a big chunk of its headquarters northwest of Dallas on the lease market. Mr. Cooper has more than 175K SF of offices in the Cypress Waters development near LBJ Freeway and Belt Line Road, just east of Coppell. The company founded in 1994 was previously known as Nationstar Mortgage. “As Mr. Cooper has moved into a ‘home-centric’ remote environment to provide more flexibility for our team members, we are strategically evaluating the size of our office footprint and have partnered with CBRE to explore potential sublease opportunities,” a spokeswoman for the firm said in an email. Since last year, Mr. Cooper has cut more than 1,500 jobs as rising interest rates caused declines in mortgage originations. North Texas’ largest apartment builder is headed to new office digs. Irving-based JPI, which in 2023 was building more than 4,000 Dallas-Fort Worth rental units, was recently acquired by an international housing firm based in Japan. Tokyo-based Sumitomo Forestry Co. — a worldwide conglomerate of wood products and housing construction firms — acquired majority ownership of the more than three-decade-old areas apartment builder in December. The purchase was estimated at $215 million. With the sale complete, JPI is now eyeing a move from its longtime Las Colinas offices to a new location in the Cypress Waters development north of LBJ Freeway. JPI is subleasing almost 54K SF of offices in the 9001 Cypress Waters building. The lease was one of the 20 largest signed in North Texas last year, according to a report by commercial property firm Transwestern.


16 Q4 2023 DFW OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

MID-CITIES CURRENT EVENTS In Arlington there are cranes pointing toward the sky and workers in orange construction vests are found across Arlington. But commercial construction is on the decline. After a year that saw $517 million in new construction projects come to Arlington in 2022, commercial construction in the city is down more than $150 million in 2023, according to the planning and development department. “We’re seeing more largerscale projects this year, so there’s less volume this way, compared to the many, many small scale (projects),” said Ariel Stermer, the department’s assistant building official. Another difference is the increase in new commercial remodels, which were valued at more than $25 million over the valuation in 2022. “It’s also about focusing on maintaining existing infrastructure before building all-new,” Stermer said. Overall, including residential buildings, building valuations for construction projects during 2023 reached $972 million, an 8.66% decrease from 2022, when values reached more than $1 billion. The city’s new commercial construction valuations fell to $342 million, marking a 34% decrease from the previous fiscal year’s $517 million. “There’s always a cycle to permitting that comes and goes with big projects,” said Britton Cunningham Merritt, the Arlington Chamber of Commerce’s Vice President of Marketing and Communications. “But, we’re confident the Arlington economy is strong.” While new construction slowed, commercial remodel valuations told a different story. Peaking at $91.2 million during the fourth quarter of the 2023 fiscal year, those projects totaled $197.2 million for the year — a 15.4% increase from last year’s $171 million. Among the standout projects is the $180 million renovation and expansion of Tarrant County College’s Southeast Campus. The campus will gain about 100K SF and will be large enough to accommodate enrollment through 2030. A high-profile hotel project is brewing in Arlington, adding to the plethora of hotel developments in Dallas-Fort Worth. The Arlington City Council is considering a public-private partnership with Loews Hotels for a 500-room hotel with a minimum of 25K SF of convention space, the Dallas Morning News reported. The 311-room Sheraton Arlington Hotel at 1500 Convention Center Drive would be demolished, freeing up 14 acres for development. The project, which would also include a parking garage, would cost an estimated $410 million, or about $820,000 per room. Loews would provide all advance funding through private equity and debt financing. Arlington would contribute $40 million toward development costs and provide annual grants exceeding $57 million over 25 years.

VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(215,113)

(58,460)

(4,188)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

16.0%

15.5%

14.1%

12.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

10.0%

279,529

297,671

512,011

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

18,142

16,437

33,558

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$26.72

$26.50

$26.07

TOP LEASE TRANSACTIONS • 1521 N Cooper Street is being marketed for sale by Younger Partners. Silver Star Properties REIT, Inc. owns the 115,700 SF class A office building. • 3400 William D. Tate Avenue is being marketed for sale by Avision Young. Benny Hinn Ministries owns the 56,520 SF class B office building. • 6815 Manhattan Boulevard is being marketed for sale by KA Commercial Group. JPAR Real Estate owns the 56,236 SF class B office building.

NEW DEVELOPMENTS • 2170 E Lamar Boulevard – A 70K SF class A office building • 64 Tarragona Drive – A 21,419 SF class B office building • 880 Village Center Drive – A 8,050 SF class B office building

18.0%

800,000

16.0%

600,000

14.0%

400,000 200,000

8.0% 6.0%

0

4.0%

-200,000

2.0% 0.0%

-400,000 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 • 1500 Solana Boulevard – 1,282,646 SF class A vacancy • 1401 Nolan Ryan Expressway – 131,337 SF class B vacancy • 1900 W Kirkwood Boulevard – 129,103 SF class A vacancy • 3120 Sabre Drive – 104,580 SF class A vacancy • 5000 S Bowen Road – 87,284 SF class B vacancy


SUBMARKET INTELLIGENCE

Q4 2023 DFW OFFICE MARKET REPORT 17

NORTH FORT WORTH CURRENT EVENTS

VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

59,525

59,503

55,534

12.0%

200,000

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

10.0%

150,000

11.3%

10.8%

10.6%

8.0%

100,000

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

6.0%

50,000

443,395

416,143

240,000

4.0%

0

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

144,748

10,500

34,431

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$24.71

$24.08

$24.67

TOP LEASE TRANSACTIONS • An undisclosed tenant has signed a 12K SF lease at 3700 Rufe Snow Drive North Richland Hills, Texas 76180. • An undisclosed tenant has signed a 7,951 SF lease at 3950 Fossil Creek Boulevard, Fort Worth, Texas 76180. • An undisclosed tenant has signed a 4,778 SF lease at 4035 E Belknap Street, Fort Worth, Texas 76180. • Mission Link has signed a 3,750 SF lease at 5748 Boat Club Road Fort Worth, Texas 76179.

DEALS IN THE MARKET • 7001 Boulevard 26 is being marketed for sale by Holt Lunsford Commercial, Inc. Cowan Company Inc owns the 101,396 SF class B office building currently at 49.5% leased. • 2301 Eagle Parkway is being marketed for sale by David & Bogel Real Estate. Cogency Global owns the 73,747 SF class B office building that is currently at 90.3% leased. • 8101 Boat Club Road is being marketed for sale by Colonial Commercial Real Estate, LLC. William Galle owns the 24,990 SF class B office building currently at 94.3% leased.

2.0%

-50,000

0.0%

-100,000 Q4 20

Q1 21

Q2 21

Q3 21

ABSORPTION

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

DELIVERIES

Q2 23

Q3 23

Q4 23

VACANCY

NEW DEVELOPMENTS • I-35 & Highway 287 – A 75K SF class A office building • Golden Triangle & Alta Vista RD – A 57K SF class B office building • Alta Vista Road & N Beach Street – A 48K SF class A medical office building • 9705 Tehama Ridge Parkway – A 30K SF class B office building • 516 W Bonds Ranch Road – A 15K SF class C medical office building

LARGE EXISTING VACANCIES • 13650 Heritage Parkway – 164,333 SF class A vacancy • 5555 N Beach Street – 163,283 SF class B vacancy • 14600 Heritage Parkway – 149,160 SF class B vacancy • 4600 Alliance Gateway Freeway – 140K SF class B vacancy • 9810 Hillwood Parkway – 135K SF class A vacancy

H-E-B officially started construction on a store in north Tarrant County, breaking ground on H-E-B Alliance. Set to open in late spring 2024, the new store will be located at 3451 Heritage Trace Parkway at the northwest corner of Heritage Trace Parkway and N. Riverside Drive on the northern edge of Fort Worth. In Tarrant Co., H-E-B Alliance will join two Central Market locations, which have served Tarrant Co. for more than two decades, and H-E-B Mansfield, a location announced earlier this year. At 117K SF, the H-E-B store, the company’s flagship format, will showcase all the quality products and innovative services H-E-B customers have come to love and expect. Along with a world class product assortment at H-E-B’s everyday low prices, the store will include a True Texas BBQ restaurant with drive-thru, which was named best barbecue chain in Texas by Texas Monthly and a top barbecue chain in the nation by Thrillist, as well as H-E-B Curbside and Home Delivery, which will allow customers to place orders online for pickup at the store or delivery to the home. Other features include a full-service H-E-B Pharmacy with drive-thru and Texas Backyard department with a selection of outdoor essentials. More people are living in Northwest ISD, which covers 234 square miles in far north Fort Worth and 13 other cities and communities, including in Denton and Wise counties. And more are coming. To deal with that growth, the district proposed a nearly $2 billion bond to build eight new schools to fit an expected influx of 8,400 students. Fort Worth, Texas — According to state and local economic development sources NT Suites plans to invest $5,900,000.00 to build out 29,522 SF of new space in Fort Worth. According to the company website Executive Suites and Full Service Professional Offices. We’ve got all your office needs covered: from single rooms to multiple suites and everything in between.


18 Q4 2023 DFW OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

PRESTON CENTER CURRENT EVENTS

A Wednesday afternoon ceremony formally launched construction on Dallas’ most expensive real estate project — a 4-acre residential, office, retail and hotel development on the eastern edge of Highland Park. The 1M SF high-rise mixed-use development on Dallas’ Knox Street will open in 2026. The threetower complex is a project of Trammell Crow Co., MSD Partners, The Retail Connection and Highland Park Village Associates. The development at Travis and Knox streets will include a tower with a 140-room Auberge Resorts Collection hotel and 48 high-end condominiums. A 150K SF office building will occupy the north end of the property fronting on Knox. Dallas-based ISN Software Corp. has leased the top four floors of the office building. More than 100K SF of lowerfloor retail and restaurant space will be located on the block. A 27-story, 173-unit apartment building will be constructed at the south end of the site. All of the new buildings will surround a half-acre park along the east side of the Katy Trail. Crow Co. and MSD Capital have been planning the development since 2017, said Joel Behrens, Trammell Crow Co. managing director.

VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

17,974

144,001

(32,709)

14.0%

300,000

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

12.0%

250,000

10.0%

9.8%

10.0%

8.4%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

10,434

10,434

245,540

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

5,228

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

TOP LEASE TRANSACTIONS • Diamond Energy signed a 27.5K lease at 8111 Douglas Ave, in Dallas. • Cherry Peterson signed a 8K SF lease at 8343 Douglas at Douglas Center, in Dallas. • Broadway Bank signed a 6.7K SF lease at 8343 Douglas at Douglas Center, in Dallas.

200,000 150,000

8.0%

100,000 6.0%

50,000

4.0%

0

2.0%

-50,000

0.0%

-100,000 Q4 20

Q1 21

Q2 21

Q3 21

ABSORPTION

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

DELIVERIES

Q2 23

Q3 23

Q4 23

VACANCY

LARGE EXISTING VACANCIES • 5950 Sherry Lane – 27,948 SF • 8111 Douglas Avenue – 27,619 SF • Sherry Lane Place – 23,539 SF • 8333 Douglas Avenue – 23,419 SF • 8343 Douglas Avenue – 21,752 SF • Preston Commons East Tower – 21,345 SF • Sterling Plaza – 20,644 SF


SUBMARKET INTELLIGENCE

Q4 2023 DFW OFFICE MARKET REPORT 19

RICHARDSON/PLANO/ALLEN/MCKINNEY CURRENT EVENTS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(315,347)

292,041

24,075

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

16.0%

15.1%

14.8%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

17,440

40,940

245,106

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

23,500

-

53,211

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$24.24

$24.17

$23.97

TOP LEASE TRANSACTIONS

VITAL STATS 20.0%

600,000

16.0%

400,000

12.0%

200,000

8.0%

0

4.0%

-200,000

0.0%

-400,000 Q4 20

Q1 21

Q2 21

Q3 21

ABSORPTION

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

Q2 23

DELIVERIES

Q3 23

Q4 23

VACANCY

LARGE EXISTING VACANCIES

• America Contractors Insurance Group signed a 26.7K SF lease at Tower 2600, located at 2600 N Central Expressway, in Richardson.

• Lookout Park I – 262,546 SF

• PureNodal signed a 24.4K SF lease at 2400 Glenville, located at 2400 N Glenville Drive, in Richardson.

• Assembly Park – 179,766 SF

• Exyte signed a 17.9K SF lease at 3400 CityLine, located at 3400 N Central Expressway, in Richardson.

• 17787 Waterview Parkway – 142,954 SF

• Keller Williams renewed its 19.6K SF lease at Custer Court, located at 501 W President George Bush Highway, in Richardson.

• Waterview 190 South – 116,038 SF

HLC DEAL

• Galatyn Commons C – 215,394 SF • 2400 Glenville – 192,512 SF • 2200 E President George Bush – 176,831 SF • Galatyn Commons D – 133,184 SF • Waterview 190 North – 115,987 SF • Lakeside Centre II – 115,583 SF • Allen Tech Center – 113,284 SF

DEALS IN THE MARKET • Collins Crossing is being marketed for sale by Newmark. Franklin Street Properties owns the 300,887 SF building, which is 88% leased. Guidance pricing is $50.0M.

• Lookout Park II – 106,327 SF • Legacy Central 1 – 103,759 SF • The Tower Lakeside Campus – 103,686 SF • Creekview 1 – 100,871 SF

The battered commercial property business will likely see a rebound later this year. That’s the forecast from top analysts at Dallasbased CBRE Group, one of the world’s largest commercial real estate firms.“We expect 2024 will be decidedly different for real estate investors,” Darin Mellott, head of Americas capital markets research for CBRE, which moved its headquarters to Dallas in 2020. “Activity levels should stabilize and begin to recover later in 2024.” Commercial property investments in the Dallas-Fort Worth area were down by more than 60% through the first nine months of last year. And nationwide commercial real estate sales were more than 50% below 2022 totals. A California-based investor has contracted to purchase two Richardson office properties out of bankruptcy. Houston-based Hartman SPE is selling its office and retail properties after filing for bankruptcy last summer. The sales are part of a plan by the company to refocus the real estate investment trust on self-storage properties. The property trust has recently contracted to sell office buildings in North Dallas and Irving. Hartman SPE is now asking bankruptcy court approval to sell an office campus in Richardson’s Telecom Corridor, court records show. The Central Park Business Center is on Firman and Glenville drives east of U.S. Highway 75.San Diego-based investor Avistone LLC has agreed to pay $6.6 million for the property, sales agents at CBRE Group have told the bankruptcy court. “I believe that the debtor is unlikely to receive a higher or better offer. The purchase agreement represents the best offer obtainable at this time and under current market conditions,” David Wheeler, president of Hartman SPE Management, said in a court filing. Potential buyer Avistone LLC has invested in industrial properties in California, Georgia, Ohio, Texas and Florida. The company has previously owned office and industrial buildings in Dallas and San Antonio. The pending Richardson transaction is the latest in a series of property liquidations by Hartman SPE, a unit of Houston’s Silver Star Properties REIT. The company filed for bankruptcy in an ongoing dispute with the company’s founder.


20 Q4 2023 DFW OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

SOUTHWEST FORT WORTH CURRENT EVENTS Nebraska commercial property firm that’s been making a major play in North Texas plans to start a Fort Worth tower early next year. Goldenrod Cos. — which recently made a big investment in West Dallas — is eyeing a March start for a more than $100 million mixed-use project in Fort Worth’s cultural district. The One University project will include a nine-story tower with office space, according to planning documents filed with the state. The project, across from the Modern Art Museum of Fort Worth, is being designed by Merriman Anderson Architects of Dallas. Located on University Drive south of Camp Bowie Boulevard, One University is one of two projects Nebraskabased Goldenrod is planning in Fort Worth. The city has agreed to more than $30 million in economic incentives to support the developer’s plans for the new buildings. Goldenrod plans to build 195K SF of office space, 20K SF of retail, 466 apartments, a 175room hotel and two parking garages in the One University and Van Zandt building on West Seventh Street. The projects are among several new mixed-use developments being built in the area west of downtown Fort Worth. Formed in 2005, Omahabased Goldenrod has acquired or developed more than $4.3 billion in properties in multiple U.S. markets. The company was founded by former pro football player Zach Wiegert, who played for the St. Louis Rams, Jacksonville Jaguars and Houston Texans from 1995 to 2006. Earlier this year, Goldenrod acquired ownership in dozens of properties surrounding the Trinity Groves restaurant and entertainment complex in West Dallas. The sale included more than 35 acres of real estate, which Goldenrod plans to develop over time.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(201,250)

374,319

26,162

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

VITAL STATS 11.0%

500,000

10.0%

400,000

9.0% 8.0%

300,000

7.0%

200,000

8.7%

7.7%

8.0%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

6.0%

56,449

56,449

328,570

4.0%

0

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

3.0%

-100,000

-

210,000

8,000

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$26.88

$26.96

$26.19

TOP LEASE TRANSACTIONS • An undisclosed tenant signed a lease for 15,404 SF at 5401 Woodway Drive Fort Worth, Texas 76133. • Serenity TMS Center, LLC signed a lease for 11,516 SF at 6500 West Freeway Fort Worth, Texas 76116 • Jay Washington Agency, Inc signed a lease for 8,257 SF at 685 John B Sias Memorial Parkway Fort Worth, Texas 76134.

DEALS IN THE MARKET • 4717 Fletcher Avenue is being marketed for sale by Colonial Commercial Real Estate, LLC. HK Venture owns the 53,564 SF class B office building that is currently 9.5% leased.

100,000

5.0%

2.0%

-200,000

1.0% 0.0%

-300,000 Q4 20

Q1 21

Q2 21

Q3 21

ABSORPTION

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

DELIVERIES

Q2 23

Q3 23

Q4 23

VACANCY

NEW DEVELOPMENTS • 1001 University Drive – A 125K SF class A office building • 2816 W 7th Street – A 114K SF class A office building • 2400 N Kentucky Avenue – A 20K SF class B office building • 6101 Southwest Boulevard – A 15K SF class B office Building • 465 S Main Street – A 13,449 SF class B office building • 7040 Harris Parkway – A 8K SF class B office building

LARGE EXISTING VACANCIES • 6100 Western Place – 103,213 SF class B vacancy

• 315 Hemphill Street is being marketed for sale by Transwestern Real Estate Services. Half Price Book Barn owns the 30K SF class C office building that is currently 100% leased.

• 4717 Fletcher Avenue – 48,500 SF class B vacancy

• 500-508 Hemphill Street is being marketed for sale by Transwestern Real Estate Services. ONCOR Electric Delivery CO LLC owns the 30K SF class C office building that is currently 100% leased.

• 7000 Calmont Avenue – 35,593 SF class A vacancy

• 6451 Brentwood Stair Road is being marketed for sale by Burt Ladner Real Estate. TSC South Main LLC owns the 25,451 SF class C office building that is currently 0.0% leased.

• 405 W Loop 820 S – 45K SF class B vacancy

• 6500 West Freeway – 34,452 SF class A vacancy


SUBMARKET INTELLIGENCE

Q4 2023 DFW OFFICE MARKET REPORT 21

STEMMONS CURRENT EVENTS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

98,342

197,354

214,609

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

16.5%

17.1%

18.5%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

339,247

272,743

292,743

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$25.74

$25.93

$25.20

NEW DEVELOPMENTS

VITAL STATS 22.0%

250,000 200,000 150,000

20.0%

100,000 50,000 0

18.0%

-50,000 -100,000 -150,000

16.0%

-200,000 Q4 20

Q1 21

Q2 21

Q3 21

ABSORPTION

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

DELIVERIES

Q2 23

Q3 23

Q4 23

VACANCY

LARGE EXISTING VACANCIES

• River Edge | 155 Riveredge – A 142K SF class A building

• The Connection at 8600 | 8600 Harry Hines Boulevard – 228,845 SF

• 1333 Oak Lawn Avenue – A 123K SF class A office building

• Pegasus Park – 133,477 SF • Thirteen Thirty Three – 122,740 SF • 2525 N Stemmons Freeway – 101,178 SF • River Edge – 146,955 SF

A landmark Dallas office tower development will get new life as a residential community. The Stemmons Towers northwest of downtown were originally built by legendary Dallas developers John Stemmons and Trammell Crow. The white concrete and glass towers were patterned after post-World War II modern buildings the developers had toured in Europe and South America. Several of the buildings have small floors with wide roof overhangs between each level. The more than 13-acre office campus on Stemmons Freeway just sold to Sava Holdings Ltd., an Irvingbased hotel development firm. Sava Holdings plans to convert the four office high-rises into an apartment project called the Lumiere. It’s the latest example of developers reusing older office buildings in Dallas for new residential space. Office vacancy rates in North Texas soared as companies dumped millions of square feet of excess building space on the market. More than 11M SF of sublease office space was available at the start of 2024. Companies signing major leases in the fourth quarter included Merit Energy, Liquid Agents Healthcare, Learfield, Thompson Reuters and Alcarity — all of which helped boost D-FW’s office occupancy, according to Transwestern. Counting sublease space, more than 26% of North Texas’ office space was empty at the end of the year. Removals of big blocks of offices from the market for other uses also helped keep vacancies from rising even higher. Developers and investors are converting office sites into new housing and industrial space.


22 Q4 2023 DFW OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

UPTOWN CURRENT EVENTS Construction has started on what will be the tallest office building in Dallas’ Uptown district. The 30-story highrise called Parkside Uptown is being built overlooking Klyde Warren Park and will house Bank of America’s Dallas offices when it opens in 2027. “This is another demonstration of our commitment to North Texas,” said Jennifer Chandler, Bank of America’s Dallas president. “We are incredibly excited to break ground on this beautiful building that will prominently display the Bank of America brand.” About 1,000 Bank of America workers housed in the bank’s namesake 72-story skyscraper on Main Street will be moving to the new tower. The bank will take up about half of the project. Another major tenant in one of downtown Dallas’ legacy skyscrapers is headed Uptown to a new building. Professional services firm Deloitte LLP plans to relocate its Dallas office from the former Chase Tower to the 23Springs office tower under construction in Uptown. Deloitte has been a major tenant in the Ross Avenue building — now called Arts District Tower — for more than three decades. In 2009, the global accounting and consulting firm chose to consolidate hundreds of workers in North Texas into the downtown skyscraper after considering suburban campus locations. The city provided economic incentives to bring more workers downtown. Now Deloitte plans to shift its Dallas operations to one of the largest office buildings under construction in Uptown. Developer Granite Properties is building the 26-story 23Springs at Maple Avenue and Cedar Springs Road across the street from the Crescent.The more than 625K SF office building is scheduled to open in 2025.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(311,465)

181,394

146,821

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

20.9%

18.5%

17.1%

U/C SF

vs. Prev. Qtr

vs. 12 Mths Ago

1,962,640

1,397,523

1,757,437

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

136,883

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$49.70

$49.64

$47.53

TOP LEASE TRANSACTIONS • Sales Force signed a 58.4K SF lease at The Union, located at 2300 N Field Street, in Dallas. • M Financial signed a 52.1K SF lease at 2828 Routh, located at 2828 Routh Street, in Dallas. • Baron+Budd signed a 50K SF lease The Centrum, located at 3102 Oak Lawn Avenue, in Dallas. • Alcority signed a 33.2K SF lease at Victory Commons One, located at 2601 Victory Avenue, in Dallas. • Brunswick signed a 15K SF lease at 3811 Turtle Creek, located at 3811 Turtle Creek, in Dallas.

VITAL STATS 25.0%

700,000 575,000

20.0%

450,000 325,000

15.0%

200,000 75,000

10.0%

-50,000 -175,000

5.0%

-300,000 0.0%

-425,000 Q4 20

Q1 21

Q2 21

Q3 21

ABSORPTION

Q4 21

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

Q2 23

DELIVERIES

Q3 23

Q4 23

VACANCY

NEW DEVELOPMENTS • 23Springs | 2323 Cedar Springs – A 626K SF class A office building • Harwood No. 14 – A 360K SF office building • The Quad | 2699 Howell Street – A 345K SF class A office building • Old Parkland East | 4040 Maple Avenue – A 285K SF class A building • 2850 Lemmon – A 280K SF class A office building • 2626 McKinney Avenue – A 181K SF class A office building • Goldman Sachs | 2323 N Field Street – a 702K SF class A office building

LARGE EXISTING VACANCIES • Victory Commons One – 200,467 SF • One West Village – 240K SF SF • One Victory Park – 169,753 SF • Maple Terrace – 117,625 SF • 2501 Cedar Springs Road – 112,143 SF • Parkside Tower – 73,330 SF



DALLAS 5950 Berkshire Lane, Suite 900 Dallas, Texas 75225 T 972.241.8300 | F 972.241.7955

FORT WORTH 1200 Summit Avenue, Suite 300 Fort Worth, Texas 76102 T 817.710.1110 | F 817.810.9017

www.holtlunsford.com

HOUSTON 11451 Katy Freeway, Suite 300 Houston, Texas 77079 T 713.850.8500 | F 713.850.8550


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