Market Brief...
Dallas/Fort Worth
INDUSTRIAL
1Q2020 Property Pictured Above: Carter Distribution Center
TABLE OF CONTENTS 1. DALLAS/FORT WORTH INDUSTRIAL SUBMARKETS & EXPERTS
1 2 3
2. OVERALL DALLAS/FORT WORTH INDUSTRIAL MARKET A. Industrial Trends & Transactions
B. Facts and Figures
2. SUBMARKET INTELLIGENCE A. Great Southwest/Arlington
B. C. D. E. F. G. H.
DFW Airport Northeast & East Dallas Northwest Dallas South Dallas South Stemmons North Fort Worth South Fort Worth
3
4
HLC SUBMARKET COVERAGE
DFW
HLC DFW INDUSTRIAL MARKET EXPERTS
JIM BRICE
MATT CARTHEY
CANON SHOULTS
JOHN GORMAN
JOSH BARNES
ANDREW GILBERT
BEN WALLACE
GEORGE JENNINGS
Partner - Texas Leasing jbrice@holtlunsford.com 972.280.8306
Partner - Managing Principal mcarthey@holtlunsford.com 817.710.1111
Managing Principal cshoults@holtlunsford.com 972.280.8328
Senior Vice President jgorman@holtlunsford.com 214.920.9800
Senior Vice President jbarnes@holtlunsford.com 972.280.8353
Market Director agilbert@holtlunsford.com 972.280.8312
Market Director bwallace@holtlunsford.com 972.421.1966
Market Director gjennings@holtlunsford.com 817.632.6151
THOMAS GRAFTON
KEATON DUHON
MADDY CANTY
HOGAN HARRISON
HARRISON PUTT
BO PUCKETT
BLAKE TROIANI
Market Associate tgrafton@holtlunsford.com 817.632.6152
Market Associate kduhon@holtlunsford.com 817.284.5555
Market Associate mcanty@holtlunsford.com 972.280.8325
Market Associate hharrison@holtlunsford.com 817.710.7058
Market Associate hputt@holtlunsford.com 972.265.0124
Market Analyst bpuckett@holtlunsford.com 972.265.0123
Market Analyst btroiani@holtlunsford.com 972.265.0126
5
HLC DFW
HLC OUTLOOK Absorption
vs. Prev. Qtr
8,070,622
7,403,959
5,575,590
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
6.5%
6.7%
6.5%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
11,748,853
17,368,045
15,694,890
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
34,134,784
32,156,972
35,010,543
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
7,019,419
10,456,093
INDUSTRIAL TRENDS & TRANSACTIONS
vs. 12 Mths Ago
7,321,762
While the full effects of COVID-19 remain to be seen, the Dallas-Fort Worth industrial market ended 1Q 2020 with a record-setting start thanks to the great momentum that continued from late 2019. At 1Q 2020, CoStar reported net positive absorption of nearly 8.1M SF which set a new high watermark for quarterly absorption. Overall, Dallas-Fort Worth industrial construction ended the quarter with 7M SF of new product delivered and 34.1M SF currently under construction. Subsequently, the overall market vacancy has remained stable at a healthy 6.5% +/- since 1Q 2016. While construction numbers appear to be significantly higher when compared to previous years, it is worth noting that several of the projects are either pre-leased or build-to-suit. COVID-19 will likely cause short-term uncertainty in the Dallas-Fort Worth industrial market as landlords and tenants continue to navigate the changing business climate. While overall tenant demand and deal flow has slowed, we have seen certain sectors continue to perform well as most industrial tenants are considered “essential business”. Furthermore, we believe that the overall industrial market will weather the storm better than other asset classes as many of the large 3PL and e-commerce tenants are hiring as opposed to laying off employees.
TRENDS DUE TO COVID-19
While rent relief requests are present, they are not prevalent. In some cases, landlords are offering increased concessions to secure deals. We have seen an increase in tenant requests for short term deals and some landlords are increasing willing. While capital markets are proceeding with caution, developers are still scouting new land positions. For the time being, cities are not issuing construction permits for make ready projects and are only allowing essential construction for TI jobs related to incoming tenants.
TRENDS Need For Speed • More spec offices Desire For Flexibility • Requested expansion options and/or phased in occupancy Drive To Increase Efficiency • Increase parking requirements • Increased demand for high-quality second generation options vs rising rates for new construction Increased Attention On Workforce • Where are they coming from? • Better work environment (Ex. HVAC Warehouse) Foreign Companies Look To Avoid Tariffs TI Requests And Costs Continue To Increase Pre-Leasing - 8.8M SF is pre-leased or build-to-suit projects
6
TOP LEASE TRANSACTIONS
• Geodis has signed a 618,875 SF lease in 3700 Pinnacle Point Drive with Cohen. • Eatery Essentials has signed a 399,971 SF lease in 2425 W Danieldale Road with AEW. • Tosca Services has signed a 152K SF lease in 4009 Distribution Drive with Barings. • Mondelez has signed a 149,802 SF lease in 16200 Three Wide Drive with IDI. • Bell Textron has signed a 138,821 SF lease in 5401 Sandshell Drive with KKR. • Jinny Beauty Supply Co. has signed a 124,043 SF lease in 2527 Willowbrook Road with Ace Manor Property Management. • Synnex Corporation has signed a 117,206 SF lease in 1601 S Shiloh with TA Realty. • Mygrant Glass Company has signed a 93,079 SF lease in 2940 Telecom Parkway with Jackson Shaw. • GSM Outdoors has signed a 93,076 SF lease in 5111 Frye Road with Link Industrial. • Cooper Lighting has signed a 70,200 SF lease in 9500 N Royal Lane with Prologis. • Wirepath Home Systems has signed a 72,153 SF lease in 2901 Trade Center Drive with Prologis. • Siemens has signed a 67,200 SF lease in 8600 N Royal Lane with Sovereign Investments.
HLC Deal
HLC Deal
HLC Deal
HLC Deal
HLC DFW FACTS & FIGURES
Market
Existing Inventory
Vacancy
Total RBA
Direct SF
Total SF
Vac. %
DFW Airport
634
80,228,065
5,317,243
5,685,967
7.1%
East Dallas
609
47,007,516
3,209,940
3,265,308
6.9%
Great SW/Arlington
1,117
115,828,625
6,261,086
6,445,188
5.6%
Henderson County
18
1,205,432
29,968
29,968
2.5%
North Fort Worth
710
103,503,367
8,023,341
8,555,516
8.3%
Northeast Dallas
1,513
111,871,775
7,214,693
8,300,902
7.4%
Northwest Dallas
1,360
111,077,532
5,447,131
6,033,336
5.4%
24
2,185,084
72,221
72,221
3.3%
South Dallas
14,000,000
7.0%
12,000,000
6.0%
10,000,000
5.0% 8,000,000 4.0% 6,000,000 3.0%
# Bldgs.
NW Dallas Outlying
OVERALL DFW
8.0%
696
104,054,452
8,633,849
8,708,660
8..4%
South Fort Worth
1,423
79,676,939
3,408,575
3,467,075
4.4%
South Stemmons
2,075
112,734,121
5,583,812
5,799,985
5.1%
Totals
10,179
869,372,908
53,201,859
56,364,126
6.5%
4,000,000
2.0%
2,000,000
1.0% 0.0%
0 1Q 17
2Q 17
3Q 17
4Q 17
1Q 18
2Q 18
3Q 18
Absorption
4Q 18
1Q 19
2Q 19
3Q 19
Deliveries
4Q 19
1Q 20
Vacancy
VACANCY - OVERALL DFW
10.0% 9.0% 8.0%
7.0%
6.5%
6.7% 6.1%
7.0% 6.0% 5.0% 4.0% 3.0% 2.0%
0.4%
0.3%
1.0% 0.0%
1Q 17
2Q 17
3Q 17
4Q 17
1Q 18
2Q 18
3Q 18
Direct
4Q 18
1Q 19
2Q 19
3Q 19
Sublet
4Q 19
1Q 20
Total
ABSORPTION - OVERALL DFW 22,500,000 20,000,000
YTD Net Absorption
YTD Deliveries
Under Construction SF
YTD Leasing Activity
DFW Airport
188,439
240,471
6,434,577
2,484,987
East Dallas
309,051
0
2,091,300
420,357
1,868,580
2,068,225
977,680
1,341,090
Henderson County
(581)
0
0
0
North Fort Worth
1,552,209
2,530,697
11,330,794
2,632,416
Northeast Dallas
361,521
237,000
3,473,427
953,507
Northwest Dallas
(157,145)
307,938
2,529,574
1,740,728
NW Dallas Outlying
(3,500)
0
86,000
2,664
3,262,561
1,635,088
1,584,737
878,974
610,376
0
2,546,403
477,246
Market
17,500,000 15,000,000 12,500,000 10,000,000 7,500,000 5,000,000
Great SW/Arlington
2,500,000 0 1Q 17
2Q 17
3Q 17
4Q 17
1Q 18
2Q 18
3Q 18
4Q 18
Total Net
1Q 19
2Q 19
3Q 19
4Q 19
1Q 20
Leasing Activity
CONSTRUCTION - OVERALL DFW 40,000,000 35,000,000
South Dallas South Fort Worth South Stemmons Totals
79,111
0
3,080,292
816,884
8,070,622
7,019,419
34,134,784
11,748,853
30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 1Q 17
2Q 17
3Q 17
4Q 17
1Q 18
2Q 18
Delivered Inventory
3Q 18
4Q 18
1Q 19
2Q 19
3Q 19
4Q 19
1Q 20
Under Construction
7 Source: CoStar 1Q 2020 Industrial Report
SUBMARKET INTELLIGENCE GREAT SOUTHWEST/ARLINGTON
HLC OUTLOOK
14+ YEARS CRE EXPERIENCE
While the effects of COVID-19 remain to be seen, the Great Southwest (GSW) industrial submarket entered 2020 with a strong start. GSW experienced positive absorption of 1,868,580 SF with 1.3M SF of leasing activity through 1Q 2020. GSW reported 1Q new construction completions of 2.1M SF (89% pre-leased with Home Depot accounting for 1.5M SF) and an additional 978K SF of product currently under construction (this signifies a slow down in the development of new product in GSW). The 1Q 2020 GSW vacancy rate remained stable at 5.6% versus 5.5% at YE 2019. As we continue 2020, we expect short-term uncertainty as the country continues to navigate the business climate due to COVID-19.
CANON SHOULTS
Managing Principal cshoults@holtlunsford.com 972.280.8328
TOP LEASE TRANSACTIONS Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
1,868,580
1,553,817
2,337,886
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
5.6%
5.5%
4.4%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
1,341,090
2,516,247
1,992,746
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
977,680
3,045,905
4,971,819
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
2,068,225
755,825
1,824,411
DEALS IN THE MARKET
VITAL STATS
10.0%
4,100,000
9.0% 8.0%
3,100,000
7.0% 6.0%
2,100,000
5.0% 4.0%
1,100,000
3.0% 2.0%
100,000
1.0% 0.0%
(900,000) 1Q 17
2Q 17
3Q 17
Absorption
4Q 17
1Q 18
2Q 18
3Q 18
4Q 18
Deliveries
1Q 19
2Q 19
3Q 19
4Q 19
1Q 20
Vacancy
Source: CoStar 1Q 2020 Industrial Report
8
• Amazon has signed a 322,524 SF lease in 1102 State Highway 161 with Nuveen. • GSM Outdoors has signed a 93,076 SF lease in 5111 Frye Road with Link Industrial. • DriveTime has signed a 84K SF lease in 15001 Trinity Boulevard with Hollingsworth Companies. • eTak Worldwide has signed a 76,263 SF lease in 1010 E Avenue J. • Structural Technologies renewed a 72K SF lease in 15600 Trinity Boulevard with Stockbridge. •
• Stonelake Urban Logistics Portfolio – Stonelake is selling a 3.1M SF two (2) building portfolio • Oakdale Logistics Center – PLR is selling a 400K SF shell building
NEW DEVELOPMENTS • 1113 W Oakdale Road – a 576,123 SF spec development with Crow Holdings Industrial • Oakdale Logistics Center | 949 W Oakdale Road – a 401,557 SF spec development with PLR
LARGE EXISTING VACANCIES • • • •
Cooper I-20 Building C | 1131 W Bardin Road – 401K SF 14900 Trinity Boulevard – 310K SF 3254 W Trinity Boulevard – 305K SF Parkway Logistics Center | 2911 S Great Southwest Parkway – 271K SF • Empire Distribution Center | 4125 - 4332 Empire Road – 251,599 SF
SUBMARKET INTELLIGENCE DFW AIRPORT
HLC OUTLOOK
8+ YEARS
The Dallas-Fort Worth (DFW) Airport industrial submarket vacancy rate is 7.1% at the end of 1Q 2020 with year-to-date absorption totaling 188,439 SF. 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, and Fresenius Medical.
CRE EXPERIENCE ANDREW GILBERT
Market Director agilbert@holtlunsford.com 972.280.8312
Absorption
vs. Prev. Qtr
Rental rates have remained strong ranging from $4.50 to $8.50 for bulk distribution and shallow bay product. Rental abatements range from two to four months depending on renewal, versus new deals and the size of the lease transaction. Tenant improvement costs remain high because of increasing tenant demands and construction costs.
vs. 12 Mths Ago
188,439
231,709
304,988
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
7.1%
7.0%
7.9%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
2,484,987
1,997,448
2,315,527
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
6,434,577
5,479,910
4,687,940
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
240,471
-
879,065
VITAL STATS
9.0% 8.0%
1,800,000
7.0% 6.0%
1,300,000
5.0%
800,000
4.0%
300,000
3.0% (200,000) 2.0% (700,000)
1.0% 0.0%
(1,200,000) 2Q 17
3Q 17
Absorption
4Q 17
1Q 18
2Q 18
3Q 18
4Q 18
Deliveries
1Q 19
TOP LEASE TRANSACTIONS • Amazon has signed a 1M SF lease in 2601 S Airfield Drive with CLX Ventures. • Furniture Corporation of America has signed a 100,398 SF lease in 2601 W Airport Freeway with Bandera Ventures. • Cooper Lighting has signed a 70,200 SF renewal in 9500 N Royal Lane with Prologis. • Siemens has signed a 67,200 SF extension in 8600 N Royal Lane with Sovereign Investments.
building project with Clarion set for completion in 2Q 2020 • Majestic Airport Center DFW – a 285,150 SF project with Majestic
LARGE EXISTING VACANCIES • • • • •
2700 Market Street – 374,812 SF 2600 Market Street – 267,254 SF 180 N Freeport Pkwy – 142,080 SF 4051 N State Highway 121 – 120K SF 4255 Patriot Drive – 100K SF
NEW DEVELOPMENTS 2,300,000
1Q 17
The DFW Airport submarket continues to be one of the top three markets for institutional owners to buy or develop in the metroplex. With fee-simple land built out, most of the development currently taking place is on 40-year ground lease land owned by DFW Airport. The developers have banded together and hired Ernst & Young to assist them in obtaining the Triple Freeport Tax Exemption for all buildings south of the airport located in Passport Park. The goal is to have the exemption in place by the end of 2020 which will dramatically increase the deal flow for bulk product in the southern portion of the submarket.
2Q 19
3Q 19
4Q 19
1Q 20
Vacancy
• Passport Park – a 2M SF four (4) building project with Trammell Crow set for completion in 2Q 2020 • Passport Logistics Center – a 1.2M SF three (3) building project with Dalfen Industrial • Mustang Park – a 1M SF three (3) building development with Prologis • 2900 Genesis Way – a 404K SF build-to-suit development for The Trade Group with 85K SF available to be leased • DFW Airfield Logistics Center – a 355K SF two (2)
Source: CoStar 1Q 2020 Industrial Report
9
SUBMARKET INTELLIGENCE NORTHEAST & EAST DALLAS
HLC OUTLOOK
12+ YEARS
Although COVID-19 has had its effect, Northeast and East Dallas are off to a great start, reporting positive absorption in 1Q 2020. The best performing sector was East Dallas/Mesquite Industrial and the worst performing was Richardson Flex. However, Richardson Industrial was among the best performing sectors as evidenced by the leasing activity outlined below. Leasing activity submarket-wide has remained relatively strong and we continue to see leases signed. The recent effects of COVID-19 have taken a larger toll on locally owned “mom and pop” operations while the activity for larger corporations has remained steady. With most of the businesses in these micro markets being categorized as “essential” and showings still taking place we don’t expect to see a dramatic spike in vacancy.
CRE EXPERIENCE JOSH BARNES
Principal jbarnes@holtlunsford.com 972.280.8353
TOP LEASE TRANSACTIONS • Tosca Services has signed a 152K SF renewal in 4009 Distribution Drive with Barings.
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
(301,863)
(761,083)
436,062
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
7.6%
6.7%
5.7%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
in 1601 S Shiloh with TA Realty.
2,160,702
1,472,802
vs. Prev. Qtr
vs. 12 Mths Ago
• Dobinsky DBA Section Stack has signed a 31,458 SF
HLC Deal
lease with Jackson Shaw.
3,832,124
4,670,594
5,048,180
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
DEALS IN THE MARKET • 4040 Forest Lane – Fort Capital is selling a
901,318
VITAL STATS
8.0%
• GenMega has signed a 50,452 SF lease in 11011 Regency Crest Drive with Link Industrial.
2,354,363
485,546
• Mygrant Glass Company has signed a 93,079 SF
HLC Deal
lease in 2940 Telecom Parkway with Jackson Shaw.
U/C SF
1,102,062
• Synnex Corporation has signed a 117,206 SF lease
HLC Deal
2,050,000 1,800,000
7.0%
1,550,000 6.0%
1,300,000
5.0%
1,050,000
4.0%
649,361 SF building and is currently under contract with Xebec Realty. This warehouse is currently occupied primarily by At Home. • Shutterfly BTS – Core 5 is selling a 237K SF buildto-suit building
800,000 550,000
3.0%
300,000 2.0% 50,000 1.0%
(200,000)
0.0%
(450,000) 1Q 17
2Q 17
3Q 17
Absorption
4Q 17
1Q 18
2Q 18
3Q 18
4Q 18
Deliveries
1Q 19
2Q 19
3Q 19
4Q 19
1Q 20
Vacancy
Source: CoStar 1Q 2020 Industrial Report
10
NEW DEVELOPMENTS • Urban District 30 – a 980,700 SF five (5) building spec project with Urban Logistics Realty • East Dallas Logistics Center – a 545,547 SF two (2) building spec project with Dalfen • CORE5 Logistics at McKinney | Phase 1 – a 431,234 SF two (2) building spec project with Core5 Industrial Partners • McKinney Trade Center – a 367,455 SF three (3) building spec project with ML Realty Partners
• Marquis Distribution Center – a 355,071 SF two (2) building spec project with Huntington/Link Industrial • 5351 Samuell Boulevard – a 198,109 SF two (2) building spec project with Conor Commercial • 2900 E Plano Parkway – a 176,854 SF two (2) building spec project with Provident • Star Commerce Center II – a 141K SF rear-load spec development with Blue Star Land • Cowboys Merchandising Distribution Center - a 407,918 SF build-to-suit with Blue Star Land • Shiloh Business Center – a 131,960 SF cross-dock spec development with TA Realty
LARGE EXISTING VACANCIES • 3000 Skyline Drive – 753K SF • 4624 Clover Haven Street – 584,089 • 5151 Samuell Boulevard – 442,035 SF • 3605 East Plano Road – 200,640 SF • 915 Enterprise Boulevard – 195,743 SF
SUBMARKET INTELLIGENCE NORTHWEST DALLAS
HLC OUTLOOK
8+ YEARS
CRE EXPERIENCE
Through 1Q 2020, the Northwest Dallas industrial submarket continued to be one of the strongest submarkets in the Dallas-Fort Worth metroplex. The submarket posted a 5.4% vacancy rate at the end of 1Q which is up from the 4.7% rate at year-end 2019. The last few smaller land sites are tied up as Billingsley, Panattoni, and Longpoint all have either broken ground or plan to break ground this year. All three of the new developments will range from 159K to 178K SF. The size that generates the most demand in Northwest Dallas is between 25K and 100K SF. The three aforementioned developments can be demised to accommodate this ideal range. Eastgroup and First Industrial are currently under construction on the next phase of their developments in Lewisville on Highway 121.
ANDREW GILBERT
Market Director agilbert@holtlunsford.com 972.280.8312
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
(157,145)
574,862
140,755
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
5.4%
5.0%
4.7%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
1,740,728
2,192,699
2,545,745
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
2,529,574
1,456,814
3,279,075
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
307,938
1,235,450
344,945
1270 Champion Circle with ML Realty Partners.
• Wirepath Home Systems has signed a 72,153 SF
HLC Deal
lease in 2901 Trade Center Drive with Prologis.
• Acme Brick Company has signed a 58,296 SF lease in 2244 Luna Road with Billingsley.
• Hanaro OneWay has signed a 55,542 SF lease in 2840 Commodore Drive with Morgan Stanley.
DEALS IN THE MARKET • Stonelake Urban Logistics Portfolio – Stonelake is
VITAL STATS
6.0%
TOP TRANSACTIONS • United Laboratories signed a 131,840 SF renewal in
2,000,000 1,750,000
5.0% 1,500,000 4.0%
1,250,000 1,000,000
3.0% 750,000 2.0%
500,000
selling a 3M SF portfolio across Dallas, Houston and San Antonio with five (5) buildings, a total of 600K SF, in the submarket • DFW Shallay Bay Industrial Portfolio – Fort Capital is selling a 609,639 SF eight (8) building portfolio with 155K SF located in the submarket.
NEW DEVELOPMENTS • Denton Crossing @ I-35 – a 1.2M SF four (4) building project with Ironwood Realty Partners
• First Park 121 – a 1.1M SF five (5) building project with First Industrial
• Point 35/190 – a 178,500 SF development with Longpoint set to break ground in 1Q 2020
• Mercer Business Park – a 175K SF development with Billingsley set for completion in July 2020
• Valley View Crossing – a 159,405 SF development with Panattoni set for completion in 2Q 2020
LARGE EXISTING VACANCIES • 350 Lakeside Parkway – 274,994 SF • 1910 N Josey Lane – 259,900 SF • 2150 Midway Road – 219,808 SF • 2040 McKenzie Drive – 129,611 SF • 1625 Hutton Drive – 118,195 SF
250,000 1.0% 0 0.0%
(250,000) 1Q 17
2Q 17
3Q 17
Absorption
4Q 17
1Q 18
2Q 18
3Q 18
4Q 18
Deliveries
1Q 19
2Q 19
3Q 19
4Q 19
1Q 20
Vacancy
Source: CoStar 1Q 2020 Industrial Report
11
SUBMARKET INTELLIGENCE SOUTH DALLAS
HLC OUTLOOK
30+ YEARS
The South Dallas industrial submarket as surveyed is 128M SF and is 8.1% vacant which is 1.5% lower than reported in 4Q 2019. In accordance with the area surveyed, CoStar is reporting 3.5M SF of net absorption for South Dallas in 1Q 2020. South Dallas has 1.9M SF under construction in the I-30, I-20, & I-45 corridors combined. Of that construction, 48% or 923K SF of the new construction is for build-to-suit or design build assignments. The remaining 52% or 1M SF under construction is speculative development. The southern corridors along I-20, I-30, and I-45 continue to produce new opportunities for development. Fortunately, the previous halt of construction by capital sources along I-20 and I-45 assisted the South Dallas submarket these past six months to join the remaining Dallas submarkets with single digit vacancy of 8.1%.
CRE EXPERIENCE JOHN GORMAN
Senior Vice President jgorman@holtlunsford.com 214.920.9800
Please note: The area CoStar uses for the South Dallas Submarket differs slightly from the Submarket John covers. Numbers may vary.
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
3,262,561
2,151,721
99,654
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
8.4%
10.1%
13.2%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
878,974
1,779,361
2,307,873
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
1,584,737
2,419,088
4,700,513
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
1,635,088
1,660,050
0
TOP LEASE TRANSACTIONS • Solar Turbine has signed a 90K SF lease in 2050 Kestrel Avenue with Exeter. • Eatery Essentialshas signed a 399,971 SF lease in 2425 W Danieldale Road with AEW. • Eaton Corp. has signed a 358,238 SF lease in 9890 Bonnie View Road with NFI.
HLC Deal
DEALS IN THE MARKET • Turnpike Distribution Center – Stonelake is selling a 1,272,837 SF portfolio
• Wintergreen Distribution Center | 1200 W
VITAL STATS 14.0%
3,600,000
12.0%
3,100,000
10.0%
2,600,000 2,100,000
8.0%
1,600,000 6.0% 1,100,000 4.0%
600,000
2.0%
100,000
0.0%
(400,000) 1Q 17
2Q 17
3Q 17
Absorption
4Q 17
1Q 18
2Q 18
3Q 18
4Q 18
Deliveries
1Q 19
2Q 19
3Q 19
4Q 19
1Q 20
Vacancy Source: CoStar 1Q 2020 Industrial Report
12
Wintergreen Road – Core 5 Industrial is selling a 754,897 SF building • Intermodal Business Center | 1704 S Interstate 45 – Bradford Companies is selling a 120,960 SF building
NEW DEVELOPMENTS • 1011 MacArthur Boulevard – a 391,470 SF spec development with Trammell Crow Company
• 9186, 9190 & 9280 Van Horn Drive – a 616,043 SF three (3) building project with Trammell Crow Company • 1101 E Pleasant Run – a 450K SF development with Ace Hardware Company
LARGE EXISTING VACANCIES • 3535 N Houston School Road – a 900,043 SF vacancy with Liberty Property Trust • 3300 Cedardale Road | Building 1 – a 776,630 SF vacancy with Morgan Stanley • SouthPointe 20/35 | Building 2 – a 660,312 SF vacancy with Barings • I-35 Logistics Crossing at 2801 N. Houston School Road – 610,086 SF with Crow Holdings • Southwest Distribution Center | 5450 Kiest Boulevard – a 500K SF vacancy
SUBMARKET INTELLIGENCE SOUTH STEMMONS
HLC OUTLOOK
14+ YEARS
At the end of 1Q 2020, HLC’s South Stemmons industrial submarket posted a 3.91% vacancy rate and continues to be one of the strongest performing submarkets in Dallas. Leasing activity is strong throughout the submarket for tenants between 10K and 50K SF. This is due to these tenants relocating to Brookhollow from the Design District and more tenants taking advantage of the infill nature of the submarket. Absorption for 1Q 2020 totaled a negative 36K SF. This is because demand is not as strong for over 50K SF in the Brookhollow submarket as it is for the smaller spaces. Since 2013, rental rates in the submarket have increased 40% for space under 50K SF and, in some cases, renewals have increased more than 50%. Regarding the smaller spaces, renewals have increased up to 100% in some cases. The massive demand for the 10K and 20K SF users in this market is steadily increasing as the need for accessibility and convenience increases. This is a key statistic as this size encompasses the majority of spaces in the submarket.
CRE EXPERIENCE
CANON SHOULTS
Managing Principal cshoults@holtlunsford.com 972.280.8328
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
79,111
1,943,790
(434,878)
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
5.1%
4.9%
4.7%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
816,884
3,373,126
1,384,051
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
3,080,292
2,688,822
5,015,954
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
-
2,378,394
-
VITAL STATS
8.0%
2,850,000
7.0% 2,350,000 6.0% 1,850,000 5.0% 1,350,000
4.0%
850,000
3.0%
350,000
2.0%
(150,000)
1.0% 0.0%
(650,000) 1Q 17
2Q 17
3Q 17
Absorption
4Q 17
1Q 18
2Q 18
3Q 18
4Q 18
Deliveries
1Q 19
2Q 19
3Q 19
4Q 19
1Q 20
Vacancy
Source: CoStar 1Q 2020 Industrial Report
TOP TRANSACTIONS • Jenny Beauty Supply Co. has signed a 124,043 SF lease in 2527 Willowbrook Road with Ace Manor Property Management. • Carcon Industries has purchased a 30,030 SF building at 535 Regal Row. • Stonelake has purchased a 22,402 SF building at 9224 King Arthur Drive. • Oro Verde has signed a 19,791 SF lease in 5145 Norwood Road with Stonelake.
HLC Deal
HLC Deal
NEW DEVELOPMENTS • Core 35 Logistics Center – a 388,822 SF two (2) building project with Crow Holdings set for completion in 1Q 2020
LARGE EXISTING VACANCIES • 8801 Ambassador Row – 183,443 SF • 9203 Chancellor Row – 95,549 SF • 7600 Ambassador Row – 66,915 SF • 10155 E Technology Row – 62K SF
DEALS IN THE MARKET • 4900 Singleton Boulevard – a 30.64 acre tract of land with Koch-Glitsch under contract with Bandera • DFW Shallow Bay Portfolio – Fort Capital is selling a more than 600K SF portfolio with two (2) buildings in the submarket totaling over 120K SF • Central Transportation Portfolio – a 217,652 SF two (2) building portfolio with Denley currently under contract with CanTex Capital • 1330 Regal Row – a 250,770 SF building • 415 Regal Row – a 44K SF building 13
SUBMARKET INTELLIGENCE NORTH FORT WORTH
HLC OUTLOOK
8+ YEARS
Over 1Q 2020, North Fort Worth saw the vacancy rate continue to gradually increase to 8.3% from a 2019 fiscal yearend rate of 7.1% which was propelled by the delivery of an additional 2.5M SF to the submarket. Pushing vacancy rate aside, the real indicator of the market’s sustained viability can be found in the year’s 1Q leasing activity which remained strong with more than 2.6M SF of transactions, surpassing all other submarkets in the DFW area during that time. Another positive sign lies within the 1.5M SF of net absorption which came primarily from the lease up of larger, speculative blocks of vacancy that had recently come online. Expect these trends of strong leasing activity, with absorption chasing deliveries, to continue throughout the next couple of quarters as North Fort Worth still has an active 11M SF currently under construction with delivery dates staggered through the year.
CRE EXPERIENCE GEORGE JENNINGS Market Director gjennings@holtlunsford.com 817.632.6151
TOP LEASE TRANSACTIONS Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
1,552,209
1,447,846
1,461,551
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
8.3%
7.5%
8.2%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
2,632,416
712,318
2,197,766
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
12,229,765
7,845,317
vs. Prev. Qtr
vs. 12 Mths Ago
3,329,812
1,958,145
VITAL STATS
10.0%
3,850,000 3,350,000
8.0%
2,850,000 2,350,000
6.0%
1,850,000 4.0%
1,350,000 850,000
2.0% 350,000 0.0%
(150,000) 1Q 17
2Q 17
3Q 17
Absorption
4Q 17
1Q 18
2Q 18
3Q 18
4Q 18
Deliveries
1Q 19
2Q 19
3Q 19
4Q 19
1Q 20
Vacancy Source: CoStar 1Q 2020 Industrial Report
14
• AmerCare Royal has signed a 390K SF lease in Speedway Logistics Crossing with Scannell. • Wesco Aircraft has signed a 349,425 SF lease in 4250 Dale Earnhardt Way with Clarion.
DEALS IN THE MARKET
11,330,794 Delivered SF 2,530,697
• National Distribution Centers has signed a 472,500 SF lease in 4798 Henrietta Creek Drive with J.P. Morgan.
• DFW Shallow Bay Industrial Portfolio – Fort Capital is selling a 609,639 SF eight (8) building portfolio • 5501 Alliance Gateway – St. Croix Capital is selling a 215K SF building
NEW DEVELOPMENTS • Northlink A, B & C – a 1,685,781 SF three (3) building project with Hines • Speedway Logistics Crossing – a 1,594,020 SF three (3) building project with Scannell • Westport 11 – a 1,200,536 SF development with Hillwood • Northwest Commerce Park – a 1,051,240 SF three (3) building project with Stream • Mark IV Commerce Park – a 1,025,500 SF three (3) building project with Crow Industrial • Intermodal Logistics Crossing – a 1,007,000 SF development with NorthPoint Development • Loop 820 & Anderson Boulevard – a 951,316 SF four (4) building development with Carefree Partners
• Westport Logistics Park – a 882,565 SF two (2) building project with CT Realty • Alliance Center North 7 – a 810,908 SF development with Hillwood • Alliance Center North 3 – a 810,908 SF development with Hillwood • 1101 Interstate 35 W – a 707,940 SF development with TCRG Properties • SWC I-35W & Golden Triangle – a 644,989 SF four (4) building project with M2G Ventures • Alliance Northport 2 – a 460,248 SF development with Hillwood • Stanley Black & Decker – a 425K SF development • Southlake/Grapevine project – a 327,219 SF four (4) building project with Frontier Equity
LARGE EXISTING VACANCIES • • • • • • • •
15245 Heritage Parkway – 1,089,642 SF 1511 NE Loop 820 – 1,023,488 SF 2 Haslet County Road – 1,007,000 SF 4901 Henrietta Creek Road – 860,100 SF 401 Westport Parkway – 677,429 SF 2112 Eagle Parkway – 407,800 SF 5650 Alliance Gateway Freeway – 303,458 SF 400 E Industrial Avenue – 299,810 SF
SUBMARKET INTELLIGENCE SOUTH FORT WORTH
HLC OUTLOOK The South Fort Worth industrial submarket posted a 1Q 2020 vacancy of 4.4%, a figure down from 5.5% in 4Q 2019, which is the lowest 1Q vacancy rate out of all major industrial DFW submarkets. This decrease in vacancy is due to no new deliveries yet in 2020 coupled with the fact that the submarket had a large portion of its new construction leased. Spec developments owned by Cabot, Majestic, and Hunt Southwest are all 100% leased. Everman Trade Center, a 457K SF four (4) building project, is 56% leased with leases out that will push the project to 60% leased.
18+ YEARS CRE EXPERIENCE MATT CARTHEY
Partner mcarthey@holtlunsford.com 817.710.1111
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
610,376
(232,148)
194,027
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
4.4%
5.2%
3.9%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
477,246
1,535,344
827,028
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
HLC Deal
Southwest Drive with Hickman Companies.
• RW Solutions has signed a 21,404 SF lease in 7524
1,487,422
893,603
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
120,000
TOP LEASE TRANSACTIONS • Novinium, Inc. has signed a 25K SF lease in 9300 HLC Deal
2,546,403 -
The South Fort Worth submarket also had an incredible 1Q start with more than 610K SF of absorption, a figure up 4.5 times from 1Q 2019. The market is also incredibly active on the development front. Crow Holdings and Rob Riner Companies are delivering 1,058,844 SF in a four (4) building spec project, while Black Creek Group has pads poured on its 569K SF three (3) building project located on the southwest corner of Joel East and Oak Grove. Finally, the latest groundbreaking is Majestic’s 489,150 SF two (2) building project at its Fort Worth South Business Park. The two newest announcements in the submarket are Jackson Shaw’s three (3) building 562,670 SF spec development, 46 Ranch Logistics Park, and Ascendant Commercial’s 858,420 SF crossdock. Both developments will not begin dirt work till late 2020. While there is still upward of 5.2M SF of proposed development in the pipeline, we don’t expect these sites to be put in production in the near future as Majestic, Mereken Land, Carter Foundation, Hillwood, and TCRG control most of the developable tracts and are currently holding for build-to-suits before building on a speculative basis.
Jack Newell Boulevard with Edificio Building
• Easy Ice has signed a 15K SF lease in 1300 S Forum
457,745
Way with Floyd Ventures.
• OFG, LLC has signed a 12K SF lease at 3333 E Loop
HLC Deal
VITAL STATS
6.0%
1,250,000
820 S with Johnson Properties, LLC.
1,050,000 5.0%
850,000 650,000
4.0%
450,000 3.0%
250,000 50,000
2.0%
-150,000 -350,000
1.0%
-550,000 0.0%
-750,000 1Q 17
2Q 17
3Q 17
4Q 17
Absorption
1Q 18
2Q 18
3Q 18
4Q 18
Deliveries
1Q 19
2Q 19
3Q 19
4Q 19
1Q 20
Vacancy
Source: CoStar 1Q 2020 Industrial Report
DEALS IN THE MARKET • 3131 W Bolt Street – a 136,570 SF building • 600 S 2nd Avenue – a 81,154 SF building • 4709 Edgewood Terrace – a 48,988 SF building • 3535 Alice Street – a 43,280 SF building
NEW DEVELOPMENTS • Carter Distribution Center FED – a 1,058,844 SF HLC Deal
four (4) building project with Rob Riner Companies and Crow Holdings Capital • Joel East and Oak Grove Road – a 569K SF three (3) building project with Black Creek Group • Fort Worth South Business Park | Buildings 2 and 3 – a 489,150 SF two (2) building project with Majestic Realty • 501 Easy Drive – a 173,603 SF building expansion with Klein Tools
LARGE EXISTING VACANCIES • 7550 Oak Grove Road – 471,847 SF • 301 E Risinger Road – 148,450 SF • 1400 W Everman Parkway – 145K SF • 6633 Oak Grove Road – 135,141 SF (Sublease) • 6445 Will Rogers Boulevard – 122,500 SF (Sublease) • 8300 South Freeway – 106,308 SF • 301 E Risinger Road – 71,850 SF 15
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