Market Brief...
Dallas/Fort Worth
INDUSTRIAL
4Q19 Property Pictured Above: 3130 N Longhorn Drive | Lancaster, Texas 75134
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.
DFW Airport Northeast Dallas South Dallas Northwest Dallas 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
THOMAS GRAFTON
Partner - Texas Leasing jbrice@hldallas.com 972.280.8306
Partner - Managing Principal mcarthey@hlfortworth.com 817.710.1111
Managing Principal cshoults@hldallas.com 972.280.8328
Senior Vice President jgorman@hldallas.com 214.920.9800
Senior Vice President jbarnes@hldallas.com 972.280.8353
Market Director agilbert@hldallas.com 972.280.8312
Market Director bwallace@hldallas.com 972.421.1966
Market Associate tgrafton@hlfortworth.com 817.632.6152
GEORGE JENNINGS
KEATON DUHON
MADDY CANTY
HOGAN HARRISON
HARRISON PUTT
BO PUCKETT
BLAKE TROIANI
Market Associate gjennings@hlfortworth.com 817.632.6151
Market Associate kduhon@hlfortworth.com 817.284.5555
Market Associate mcanty@hldallas.com 972.280.8325
Market Associate hharrison@hlfortworth.com 817.710.7058
Market Associate hputt@hldallas.com 972.265.0124
Market Analyst bpuckett@hldallas.com 972.265.0123
Market Analyst btroiani@hldallas.com 972.265.0126
5
HLC OUTLOOK Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
8,607,160
4,062,741
6,902,318
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
6.6%
6.2%
6.3%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
11,327,816
13,638,320
15,908,191
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
28,491,067
35,755,046
32,281,181
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
12,434,809
2,557,587
6,199,769
The Dallas-Fort Worth industrial market ended 2019 with record levels of construction and absorption. It continues to be one of the strongest industrial markets in the country. Previously considered fourth among the preferred locations, Dallas has recently overtaken Chicago as the third most sought-after market for both national logistics distribution and institutional capital. At year-end 2019, CoStar reported net positive absorption of 25.25M SF which set a new high watermark for the DFW Industrial market. DFW industrial construction reached a new peak as well with 29.7M SF being delivered in 2019 and 28.5M SF currently under construction. Subsequently, the overall market vacancy has remained stable at a healthy 6.6% +/since 1Q 2016. While construction numbers appear to be significantly higher when compared to previous years, it is worth noting that 8.8M SF is either pre-leased or a build-to-suit project. In South Dallas, leasing activity is on the rise and construction activity is slowing considerably. Therefore, we expect the vacancy rate in this particular market to return to a healthy balance. Attention is now shifting toward the 10.8M SF of new construction in North Fort Worth. Given the lack of available portfolio opportunities and the increasing demand from investors we expect speculative development will remain strong in the coming year.
6
HLC DFW
INDUSTRIAL TRENDS & TRANSACTIONS TRENDS & TRANSACTIONS
TOP LEASE TRANSACTIONS
• Need For Speed - More spec offices
• DHL has signed a 489,796 SF lease in 121 Lakepointe Crossing with Stockbridge.
• Desire For Flexibility - Requested expansion options and/or phased in occupancy
• Amazon has signed a 419,626 SF lease in 8901 Forney Road with Dalfen.
• 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 • Concessions are Still Prevalent Yet Measured - 2 to 4 months free for 10-year deals • TI Requests And Costs Continue To Increase • Pre-Leasing - 8.8M SF is pre-leased or build-to-suit projects
• Benjamin Moore has signed a 237,926 SF lease in 2525 E State Highway 121 with Stockbridge. • Dal-Tile las signed a 156,293 SF lease in 510 N Peachtree Road with Clarion Partners. • Hayes Retail Services has signed a 154,191 SF sublease in 3901 W Miller Road with Fossil. • Pratt Industries has signed a 145,967 SF lease in 3800 Leon Drive with IDI Logistics. • Walls + Forms has signed a 95K SF lease in 15000 Grand River Road with Scannell.
TOP HLC LEASE TRANSACTIONS • Vital Pharmaceuticals has signed a 217,537 SF lease in 160 W Everman Parkway with TA Realty.
HLC Deal
• Tenet Healthsystems Medical has signed a 81,644 SF lease in 1150 Hayden Drive with AEW.
HLC Deal
• Dakota Premium Hardwoods has signed a 77,415 SF lease in 631 – 641 W Mockingbird Road with TA Realty.
HLC Deal
HLC DFW FACTS & FIGURES
Market
Existing Inventory
# Bldgs.
Total RBA
14,000,000
9.0%
12,000,000
8.0% 10,000,000
7.0% 6.0%
8,000,000
5.0% 6,000,000
4.0%
Vacancy
Direct SF
OVERALL DFW
10.0%
3.0%
4,000,000
2.0%
Total SF
Vac. %
DFW Airport
633
79,848,670
5,266,412
5,594,696
7.0%
East Dallas
609
47,482,163
3,477,145
3,574,359
7.5%
Great SW/Arlington
1,111
113,298,155
6,117,180
6,275,714
5.5%
Henderson County
18
1,204,851
29,387
29,387
2.4%
North Fort Worth
697
100,431,123
6,713,213
7,090,673
7.1%
Northeast Dallas
1,511
111,345,715
7,453,072
8,464,289
7.6%
2,000,000
1.0% 0.0%
0 4Q 16
1Q 17
2Q 17
3Q 17
4Q 17
1Q 18
2Q 18
Absorption
3Q 18
4Q 18
1Q 19
2Q 19
Deliveries
3Q 19
4Q 19
Vacancy
VACANCY - OVERALL DFW
10.0% 9.0% 8.0%
6.6%
6.1%
6.3%
5.9%
7.0% 6.0% 5.0% 4.0% 3.0% 2.0%
1,353
110,324,045
4,891,578
5,212,250
4.7%
NW Dallas Outlying
24
2,185,084
72,321
72,321
3.3%
South Dallas
691
102,512,153
10,359,437
10,359,653
10.1%
South Fort Worth
1,426
79,393,501
4,279,198
4,350,602
5.5%
South Stemmons
2,076
114,856,357
5,590,600
5,827,272
5.1%
Totals
10,149
862,881,817
54,249,543
56,851,216
6.6%
1.0% 0.0%
4Q 16
Northwest Dallas
0.3%
0.2% 1Q 17
2Q 17
3Q 17
4Q 17
1Q 18
2Q 18
Direct
3Q 18
4Q 18
1Q 19
2Q 19
Sublet
3Q 19
4Q 19
Total
ABSORPTION - OVERALL DFW 22,500,000 20,000,000 17,500,000 15,000,000 12,500,000 10,000,000 7,500,000 5,000,000 2,500,000 0 4Q 16
YTD Net Absorption
YTD Deliveries
Under Construction SF
YTD Leasing Activity
DFW Airport
3,041,841
3,228,537
4,369,907
5,775,080
East Dallas
1,458,921
2,558,682
1,200,000
1,938,301
Great SW/Arlington
3,095,990
4,306,810
3,466,210
4,794,327
3,200
0
0
0
Market
1Q 17
2Q 17
3Q 17
4Q 17
1Q 18
2Q 18
3Q 18
Total Net
4Q 18
1Q 19
2Q 19
3Q 19
4Q 19
Leasing Activity
CONSTRUCTION - OVERALL DFW 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000
Henderson County
15,000,000 10,000,000 5,000,000 0 4Q 16
North Fort Worth
5,477,187
5,450,337
10,790,476
5,401,679
Northeast Dallas
91,495
2,172,478
2,632,124
5,655,599
Northwest Dallas
2,328,151
2,715,623
827,364
7,028,305
44,479
72,900
86,000
16,763
South Dallas
5,984,863
3,137,425
3,219,942
6,878,335
South Fort Worth
(377,196)
1,193,745
1,510,222
2,717,961
South Stemmons
4,103,870
4,871,394
388,822
7,200,287
25,252,801
29,707,931
28,491,067
47,406,637
NW Dallas Outlying
Totals
1Q 17
2Q 17
3Q 17
4Q 17
1Q 18
Delivered Inventory
2Q 18
3Q 18
4Q 18
1Q 19
2Q 19
3Q 19
4Q 19
Under Construction
NET ABSORPTION/DELIVERIES 2010 - 2019
7 Source: CoStar 4Q 2019 Industrial Report
SUBMARKET INTELLIGENCE GREAT SOUTHWEST/ARLINGTON
HLC OUTLOOK
14+ YEARS CRE EXPERIENCE
The Great Southwest (GSW) industrial submarket consists of approximately 113M SF and had a strong performance throughout 2019. Per CoStar reporting, GSW experienced positive absorption of 3,095,990 SF with 4.8M SF of leasing activity through year-end 2019. GSW reported year end new construction completions of 4.3M SF (78% pre-leased with GM accounting for 1.2M SF) and an additional 3.5M SF of product currently under construction (53% preleased with Home Depot accounting for 1.5M SF). The 4Q 2019 vacancy rate decreased slightly to 5.5% versus 5.7% in 3Q 2019. As we enter 2020, we expect GSW to remain strong and stable as leasing activity remains consistent.
CANON SHOULTS Managing Principal cshoults@hldallas.com 972.280.8328
TOP LEASE TRANSACTIONS Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
1,049,816
(922,073)
1,655,700
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
5.5%
5.8%
4.6%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
1,169,059
1,791,760
3,380,104
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
3,466,210
3,645,912
6,962,038
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
755,825
485,901
604,986
VITAL STATS
10.0%
3,500,000
9.0%
3,000,000
8.0%
2,500,000
7.0%
2,000,000
6.0%
1,500,000
5.0%
• Poly America has signed a 190K SF lease in 850 State Highway 161 with Heller Industrial Parks. • Walls + Forms has signed a 95K SF lease in 15000 Grand River Road with Scannell. • CDI Technologies has signed a 79K SF lease in 951 Valley View with Liberty Property Trust/ProLogis. • Paragon Furniture has signed a 52K SF expansion in 918 113th Street with Sealy.
HLC Deal
DEALS IN THE MARKET • Stonelake Urban Logistics Portfolio – Stonelake is selling a 3.1M SF portfolio with two (2) buildings in the GSW submarket. • Dallas Infill Industrial Portfolio – Rialto sold a 1.5 M SF package to Sealy. Three (3) buildings are in the GSW submarket. • Oakdale Logistics Center – PLR is selling a 400K SF shell building. • Ironwood I-30 – Iron Wood is selling a 193K SF building and is currently under contract with Office Star Products.
1,000,000
4.0%
500,000
3.0%
0
2.0%
(500,000)
1.0% 0.0%
(1,000,000) 4Q 16
1Q 17
2Q 17
Absorption
3Q 17
4Q 17
1Q 18
2Q 18
3Q 18
Deliveries
4Q 18
1Q 19
2Q 19
3Q 19
4Q 19
Vacancy
Source: CoStar 4Q 2019 Industrial Report
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NEW DEVELOPMENTS • Dallas Global Industrial Center | 9314 W Jefferson Boulevard – a 1.5M SF built-to-suit for Home Depot with NorthPoint Development • 1113 W Oakdale Road – a 576,123 SF spec development with Crow Holdings Industrial • Cooper I-20 Building C | 1131 W Bardin Road – a 420K SF spec development with Flaherty Development/Barings • Oakdale Logistics Center | 949 W Oakdale Road – a
401,557 SF spec development with PLR • Wildlife 11 | 747 Refuge Way – a 312K SF development with Crow Holdings Industrial, pre-leased to NTW, Inc. • 3301 E Park Row Drive – a 155,730 SF spec development with LaSalle/Stream Realty • Wildlife 7 | 2515 N Belt Line Road – a 100,800 SF spec development with Crow Holdings Industrial
LARGE EXISTING VACANCIES • Oakdale Logistics Center | 949 W Oakdale Road – 401K SF • 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
SUBMARKET INTELLIGENCE DFW AIRPORT
HLC OUTLOOK
7+ YEARS
The Dallas-Fort Worth (DFW) Airport industrial submarket vacancy rate is 7.0% at the end of 4Q 2019 with year-to-date absorption totaling 3,041,841 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@hldallas.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 2 to 4 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
397,989
577,097
683,803
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
7.0%
7.5%
7.1%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
1,135,066
1,789,159
2,569,891
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
4,369,907
4,269,907
3,228,537
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
-
-
(1,823,937)
VITAL STATS
9.0%
2,965,000
8.0% 2,465,000
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.
TOP LEASE TRANSACTIONS • Ericsson has signed a 306,280 SF lease in Majestic Airport Center with Majestic Realty. • International Auto Logistics has signed a 246,400 SF lease in 1717 W Airfield with Clarion Partners. • Waterlogic has signed a 111,012 SF lease in the Prologis Freeport Corporate Center at 3175 Bass Pro with Prologis. • Exponential Property Materials has signed a 106,500 SF lease in 8600 N Royal Lane with Sovereign Investments. • Grimco has signed a 67,080 SF lease in 200 Northpoint Drive with DRA Advisors. • Concord Industries has signed a 51,345 lease in 4155 Patriot Drive with JP Morgan.
7.0% 6.0%
1,965,000
5.0% 1,465,000 4.0% 3.0%
965,000
2.0% 465,000 1.0% 0.0%
(35,000) 4Q 16
1Q 17
2Q 17
Absorption
3Q 17
4Q 17
1Q 18
2Q 18
3Q 18
Deliveries
4Q 18
1Q 19
2Q 19
3Q 19
4Q 19
Vacancy
NEW DEVELOPMENTS
• 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) building project with Clarion, set for completion in 2Q 2020 • Prologis Park 121 – a 240K SF two (2) building project with Prologis, they are expected to be completed at the beginning of 2Q 2020
LARGE EXISTING VACANCIES • • • • •
2601 S Airfield Drive – 1,000,584 SF 2700 Market Street – 375,400 SF 2600 Market Street – 267,254 SF 1717 W Airfield Drive – 252,400 SF 204 Airline Drive – 147,174 SF
• 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 project with Prologis
Source: CoStar 4Q 2019 Industrial Report
9
SUBMARKET INTELLIGENCE NORTHEAST & EAST DALLAS
HLC OUTLOOK
11+ YEARS
While Northeast and East Dallas reported negative net absorption in 4Q 2019, the final year-to-date absorption was favorable and the vacancy rate remained at a reasonable level. Looking forward, the development wave is still rising in the Northeast and East Dallas industrial submarkets as evidenced by the newly announced projects. With limited land sites available in the more mature submarkets, developers are reaching as far north as McKinney and to the eastern boundaries of Mesquite. Leasing activity submarket-wide has remained strong and we continue to see rental rates climb steadily. Second generation vacancies have continued to do well as a lower cost alternative to the premium new developments. With the next wave of construction underway, we anticipate lease rates in the short term to hold the line due to the increased competition in the future.
CRE EXPERIENCE JOSH BARNES
Principal jbarnes@hldallas.com 972.280.8353
TOP LEASE TRANSACTIONS • Amazon has signed a 419,626 SF lease in 8901 Forney Road with Dalfen.
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
Peachtree Road with Clarion Partners.
• Pratt Industries has signed a 145,967 SF lease in 3800 Leon Drive with IDI Logistics.
2,354,363
2,160,702
1,472,802
vs. Prev. Qtr
vs. 12 Mths Ago
• Petrochoice has signed a 52,690 SF renewal in 12001 – 12003 Corporate Drive with Proterra.
3,832,124
4,670,594
5,048,180
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
485,546
• Hayes Retail Services has signed a 154,191 SF sublease in 3901 W Miller Road with Fossil.
U/C SF
1,102,062
• Dal-Tile has signed a 156,293 SF lease in 510 N
• Ultrachase has signed a 36,409 SF lease in 3901 W Miller Road with First Industrial.
901,318
• Alliance Communication has signed a 35,609 SF lease in 3901 W Miller Road with First Industrial.
VITAL STATS
8.0%
1,950,000 1,700,000 1,450,000
6.0%
1,200,000 950,000 700,000
4.0%
450,000 200,000 (50,000)
2.0%
(300,000)
DEALS IN THE MARKET • 4040 Forest Lane – Fort Capital is selling a 649,361 SF building, currently occupied primarily by At Home. • Shutterfly BTS – Core 5 is selling a 237K SF buildto-suit project.
(550,000) 0.0%
(800,000) 4Q 16
1Q 17
2Q 17
Absorption
3Q 17
4Q 17
1Q 18
2Q 18
3Q 18
Deliveries
4Q 18
1Q 19
2Q 19
3Q 19
4Q 19
Vacancy
Source: CoStar 4Q 2019 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 • Cowboys Merchandising Center BTS – a 407,918 SF cross-dock build-to-suit development with Blue Star Land • 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 • Shiloh Business Center – a 131,960 SF cross-dock spec development with TA Realty
LARGE EXISTING VACANCIES • 3000 West Kingsley – 341,840 SF • 915 Enterprise Boulevard – 195,743 SF • 15815 Executive Drive – 187,108 SF • 1501 Kings Road – 154,394 SF • 2600 McCree Road – 152,139 SF
SUBMARKET INTELLIGENCE NORTHWEST DALLAS
HLC OUTLOOK
7+ YEARS
CRE EXPERIENCE
Through 4Q 2019, the Northwest Dallas industrial submarket continued to be one of the strongest submarkets in the Dallas-Fort Worth metroplex. The submarket posted a 4.73% vacancy rate at the end of 4Q which is up from the 4.3% rate at the end of 2Q 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@hldallas.com 972.280.8312
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
357,450
653,121
919,286
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
4.7%
4.1%
4.5%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
1,261,042
1,775,888
3,058,157
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
827,364
1,368,217
2,630,203
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
1,036,596
677,240
507,500
TOP TRANSACTIONS • DHL has signed a 489,796 SF lease in 121 Lakepointe Crossing with Stockbridge.
• Benjamin Moore has signed a 237,926 SF lease in 2525 E State Highway 121 with Stockbridge.
• Swiss American has signed a 131,760 SF lease in 1540 Luna Road with RREEF.
• Amerisource has signed a 121,400 SF lease in 2828 Trade Center with Morgan Stanley
• Shearer Supply has signed a 111,272 SF lease in 1500 Luna Road with Link Industrial.
• Tenet Healthsystems Medical has signed a 81,644
HLC Deal
VITAL STATS 7.0%
2,250,000
6.0% 1,750,000 5.0% 1,250,000
4.0% 3.0%
750,000
2.0% 250,000 1.0% 0.0%
(250,000) 4Q 16
1Q 17
2Q 17
Absorption
3Q 17
4Q 17
1Q 18
2Q 18
3Q 18
Deliveries
4Q 18
1Q 19
2Q 19
3Q 19
4Q 19
Vacancy
SF lease in 1150 Hayden Drive with AEW.
DEALS IN THE MARKET • Stonelake Urban Logistics Portfolio – Stonelake is selling a 3M SF portfolio across Dallas, Houston and San Antonio with five (5) buildings in the submarket (600K SF). • 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 • First Park 121 – a five (5) building project with First Industrial totaling over 1.1M SF. 434,000 SF is under construction which is 75% leased • 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 – a 159,405 SF development with Panattoni, set for completion in 2Q 2020 • Creekview 121 – a 137,333 SF two (2) building project with Eastgroup, demissable to 15K SF
LARGE EXISTING VACANCIES • 1800 Waters Ridge Drive – 267,902 SF • 1900 N Josey Lane – 259,900 SF • 1001 Lakeside Parkway – 234,224 SF • 2150 Midway Road 219,808 SF • 1625 Hutton – 118,195 SF
Source: CoStar 4Q 2019 Industrial Report
11
SUBMARKET INTELLIGENCE SOUTH DALLAS
HLC OUTLOOK
30+ YEARS
The South Dallas industrial submarket, as surveyed, is 127M SF and is now 9.6% vacant which is 0.6% lower than reported in 3Q 2019. In accordance with the area surveyed, CoStar is reporting 3.3M SF of net absorption for South Dallas in 4Q 2019. South Dallas has 3.5M SF under construction in the I-30 and I-20 corridors combined, and it continues to outpace absorption. However, 50% or 1.75M SF of the new construction is for build-to-suit or design build assignments. The remaining 50%, or 1.75M SF, under construction is speculative development and 672K SF of that, along interstate 30, was leased to Geodis in 4Q 2019. 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 has assisted the South Dallas submarket which has had relatively low deal velocity to join the remaining Dallas submarkets with single digit vacancy of 9.6%.
CRE EXPERIENCE JOHN GORMAN Senior Vice President jgorman@hldallas.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
2,151,521
2,705,996
1,333,776
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
10.1%
10.8%
13.3%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
1,397,541
1,288,036
1,866,519
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
3,219,942
4,429,992
4,396,231
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
1,660,050
320,000
499,678
TOP LEASE TRANSACTIONS • Zume has signed a 1,044,647 SF lease in 4700
VITAL STATS
16.0%
3,600,000
14.0%
3,100,000 12.0% 2,600,000 10.0% 2,100,000 8.0%
Cleveland Road with Hines Industrial. • Geodis has signed a 672,775 SF lease in 1401 Chalk Hill Road with Clarion. • Supply Chain Management has signed a 337,931 SF lease in 1200 W Wintergreen with Core 5 Industrial Partners. • Allied Stone has signed a 226,983 SF lease in 1240 E Centre Park Boulevard with Morgan Stanley. • Pierce Hardy has signed a 66,970 SF lease in 3625 La Reunion Parkway with Taurus Investment Holdings. • Atlantic Packaging has signed a 50,390 SF lease in 3801 La Reunion Parkway with Prologis. • FreshOne has signed a 42,071 SF lease in 4001 Adler Road with Brookfield.
1,600,000 6.0%
1,100,000
4.0%
600,000
2.0%
100,000
0.0%
(400,000) 4Q 16
1Q 17
2Q 17
Absorption
3Q 17
4Q 17
1Q 18
2Q 18
3Q 18
Deliveries
4Q 18
1Q 19
2Q 19
3Q 19
4Q 19
Vacancy Source: CoStar 4Q 2019 Industrial Report
12
DEALS IN THE MARKET • Turnpike Distribution Center – Stonelake is selling a 1,272,837 SF portfolio.
• Wintergreen Distribution Center – Core 5 Industrial is selling a 754,897 SF building at 1200 W Wintergreen Road. • Intermodal Business Center – Bradford Companies is selling 1704 S Interstate 45.
NEW DEVELOPMENTS • 1230 E Cleveland Road – a 1,004,674 SF development with Seefried Properties • 5300 Mountain Creek Parkway – a 863,328 SF development with First Industrial • 1401 Chalk Hill Road – a 672,775 SF development with Clarion Partners • 820 E. Wintergreen Road – 615,060 SF development with Jones Development Company • 1501 Chalk Hill Road – a 608,939 SF development with Clarion Partners • 4025 E Interstate 30 – a 296,615 SF development with Stream Realty
LARGE EXISTING VACANCIES • Liberty Property Trust | 3535 N Houston School Road – 900,043 SF
• 3300 Cedardale Road | Building 1 – a 776,630 SF vacancy with Morgan Stanley
• SouthPointe 20/35 | Building 2 – a 660,312 SF spec vacancy with UBS
• NFI Logistics Center | 9890 Bonnie View Road – 626,439 SF
• I-35 Logistics Crossing | 2801 N Houston School Road – a 610,086 SF vacancy with Crow Holdings
SUBMARKET INTELLIGENCE SOUTH STEMMONS
HLC OUTLOOK
14+ YEARS
At the end of 4Q 2019, HLC’s South Stemmons industrial submarket posted a 3.78% 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. Absorption for 4Q 2020 totaled a negative 500K SF. This is because demand is not as strong for over 50K SF in the Brookhollow submarket as it is for the smaller spaces. It is expected that the negative absorption number will reverse as we move into 4Q 2020 due to the lack of development sites in the submarket as well as new deals that were signed this quarter. 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%. This is a key statistic as this size encompasses the majority of spaces in the submarket.
CRE EXPERIENCE
CANON SHOULTS Managing Principal cshoults@hldallas.com 972.280.8328
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
4,274,018
(2,952)
253,216
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
5.1%
4.9%
4.7%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
2,093,190
2,025,819
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
388,822
5,067,216
4,574,714
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
193,000
-
VITAL STATS
8.0%
lease in 1242 Regal Row with Keating Resources.
• Dakota Premium Hardwoods has signed a 77,415
HLC Deal
2,449,061
4,678,394
TOP TRANSACTIONS • Lone Star Electric Supply has signed a 136,362 SF
4,700,000 7.0%
4,200,000
SF lease in 631-641 W Mockingbird Road with TA Realty. • St. Clair Real Estate has closed on a 38,940 SF acquisition for 9259 King Arthur Drive. • White Glove Storage and Delivery has signed a 47, 600 SF lease in 1210 Inwood with Hines. • Link Design Solutions has signed a 41,947 SF lease in 2007 Royal Lane with DRA Advisors. • RSI Building Products of Texas has signed a 41,081 SF lease in 1211 Regal Row with Stonelake.
HLC Deal
NEW DEVELOPMENTS • Core 35 Logistics Center – a 388,822 SF two (2) building project with Crow Holdings. The project is located at Walnut Hill and I-35 and is expected to be completed in 1Q 2020.
LARGE EXISTING VACANCIES • 8801 Ambassador Row – 183,443 SF • 7600 Ambassador Row – 66,915 SF • 111 Regal Row – 59,440 SF • 2007 Royal Lane – 45,777 SF
3,700,000
6.0%
3,200,000 5.0%
2,700,000 2,200,000
4.0%
1,700,000 3.0%
1,200,000 700,000
2.0%
200,000 1.0%
(300,000)
0.0%
(800,000) 4Q 16
1Q 17
2Q 17
Absorption
3Q 17
4Q 17
1Q 18
2Q 18
3Q 18
Deliveries
4Q 18
1Q 19
2Q 19
3Q 19
4Q 19
Vacancy
Source: CoStar 4Q 2019 Industrial Report
DEALS IN THE MARKET • DFW Shallow Bay Portfolio – Fort Capital is selling a portfolio totaling over 600,000 SF which includes two (2) buildings in the South Stemmons submarket, totaling 120,000 SF. • 1330 Regal Row – a 250,770 SF building currently located in the heart of Brookhollow. This is the former Mary Kay facility. • 415 Regal Row – a 44K SF building currently on the market in Brookhollow
13
SUBMARKET INTELLIGENCE NORTH FORT WORTH
HLC OUTLOOK
7 YEARS
As anticipated, the North Fort Worth submarket saw a slight spike in vacancy rate in 4Q to 7.1%, up from a five-quarter low of 5.4%. The spike, however, is relatively low considering only 3,056,882 SF of expected 5.3M SF delivered before year-end. Regardless of the vacancy rate North Fort Worth still saw a healthy absorption of 1,272,899 SF which was only outpaced twice (1Q and 3Q 2019) over the past 2 years. The submarket’s vitality for the 2019 calendar year was highlighted by the year-end, positive net absorption of 5,477,187 SF over the 5,450,337 SF of deliveries, and further by the influx of new tenants into the market with the likes of CTDI, Schluter Systems, Bombardier, and KT&G all executing leases. Although all signs point to the continuation of a vibrant and growing submarket, expect to see a sustained uptick in the vacancy rate in 2020 as another 10M SF is set to hit the market.
CRE EXPERIENCE GEORGE JENNINGS Market Associate gjennings@hlfortworth.com 817.632.6151
TOP LEASE TRANSACTIONS Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
1,272,899
1,754,793
645,049
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
7.1%
5.4%
7.5%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
570,877
1,970,191
667,821
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
10,790,476
10,637,986
4,146,030
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
3,056,882
95,900
1,737,124
VITAL STATS
10.0%
3,350,000
2,850,000 8.0% 2,350,000 6.0%
1,850,000
1,350,000
4.0%
850,000 2.0% 350,000
0.0%
(150,000) 4Q 16
1Q 17
2Q 17
Absorption
3Q 17
4Q 17
1Q 18
2Q 18
3Q 18
Deliveries
4Q 18
1Q 19
2Q 19
3Q 19
4Q 19
Vacancy Source: CoStar 4Q 2019 Industrial Report
14
• Walmart has signed a 213K SF lease in Park 820 Building 2. • Bell Textron has signed a 138,821 SF lease in Fossil Creek Crossing 3. • Precision Transmission has signed an 80,600 SF lease in Mark IV Commerce Park 2. • The Goodness Project has signed a 71,400 SF lease in 2550 McMillian Parkway. • KT&G has signed a 56,609 SF expansion in Fossil Creek Crossing 2.
DEALS IN THE MARKET
• Fort Worth ISD Campus – a 274,118 three (3) building portfolio • 3200 Northern Cross Boulevard –118,749 SF
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 • 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 • 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 • Alliance Northport 4 – a 225,472 SF development with Hillwood
LARGE EXISTING VACANCIES • • • • • • • •
15245 Heritage Parkway – 1,089,642 SF 1511 NE Loop 820 – 1,023,488 SF 2112 Eagle Parkway – 407,800 SF 4801 Westport Parkway – 400K SF 700-724 Henrietta Creek Boulevard – 384K SF 5650 Alliance Gateway Freeway – 303,458 SF 400 E Industrial Ave – 299,810 SF 4100 E Sam Lee Lane – 225,930 SF
SUBMARKET INTELLIGENCE SOUTH FORT WORTH
HLC OUTLOOK The South Fort Worth industrial submarket posted a 4Q 2019 vacancy of 5.5%, a figure up from 4.7% in 3Q 2019. This is an interesting statistic as 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, has been brought to 56% occupancy with prospects close on an additional 11% of the vacancy which should bring it to more than 60% leased by the end of 1Q 2020. Crow Holdings and Rob Riner Companies have broken ground on a 1,058,844 SF four (4) building spec project, while Black Creek Group has closed and begun moving dirt 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 newest announcement in the submarket is Industrial Realty Group’s 212,175 SF front-load spec development that is expected to break ground in 1Q 2020. At the end of 4Q 2019, there is upward of 5.2M SF of proposed development in the pipeline. We don’t expect groundbreaking on the majority of these projects to hit at once as Majestic, Mereken Land, Jackson Shaw, Carter Foundation, Hillwood, and TCRG control most of the developable tracts. That said, multiple build-to-suits currently in the market could make within the next six months, landing on these controlled sites.
16+ YEARS CRE EXPERIENCE MATT CARTHEY
Partner mcarthey@hlfortworth.com 817.710.1111
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
(635,860)
88,290
997,626
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
5.5%
4.5%
3.6%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
990,807
797,331
865,578
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
1,510,222
1,610,222
1,247,348
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
120,000
300,000
125,766
VITAL STATS
6.0%
1,250,000 1,050,000
5.0%
850,000 650,000
4.0%
TOP LEASE TRANSACTIONS • Vital Pharmaceuticals has signed a 217,537 SF lease HLC Deal
in 160 W Everman Parkway with TA Realty.
• Finishmaster has signed a 12K SF lease in 3316 S Jones Avenue.
DEALS IN THE MARKET • 3030 W Bolt Street – a 136,570 SF building • 3000 W Pafford – a 53,489 SF building • 1741 Commerce Drive – a 43,700 SF building • 8900 Forum Way – 20,000 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 • 425 W Everman Parkway – a 650K SF build-to-suit development with Ball Corporation • 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 • 5054 South Freeway – a 212,175 SF development with Industrial Realty Group • 501 Easy Drive – a 173,603 SF building expansion with Klein Tools
450,000 3.0%
250,000 50,000
2.0%
-150,000 -350,000
1.0%
-550,000 0.0%
-750,000 4Q 16
1Q 17
2Q 17
3Q 17
Absorption
4Q 17
1Q 18
2Q 18
3Q 18
Deliveries
4Q 18
1Q 19
2Q 19
3Q 19
4Q 19
Vacancy
LARGE EXISTING VACANCIES • 7550 Oak Grove Road – 471,847 SF • 301 E Risinger Road – 148,450 SF • 1400 Everman Parkway – 145K SF • 8300 South Freeway – 106,308 SF
Source: CoStar 4Q 2019 Industrial Report
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