Q2 2023 DFW Industrial Market Report

Property: Stoneridge 20

DFW INDUSTRIAL Market Experts

HLC OUTLOOK

The DFW industrial market experienced continued (but measured) growth and activity during the second quarter of 2023. Tenant demand for industrial space remained steady, fueled by the region’s strong economy and favorable business climate. Q2 2023 marked the 51st consecutive quarter of positive net absorption (more than 12 years). The market posted 6.7M SF of positive net absorption at Q2, and totals 16M SF positive net absorption for mid-year 2023. The DFW industrial market is still on pace to outperform historical annual absorption figures.

Although the under-construction figures hit a new high watermark at YE 2022, supply and demand remain relatively healthy. Q2 2023 reported 16M SF of new product delivered and consequently, the overall DFW vacancy rate increased approximately 100 basis points to 7.2%. Roughly 12% of the new deliveries were pre-leased. Going forward, new construction starts will continue to taper as the capital markets settle towards a new equilibrium. Under construction figures are down from a Q4 2022 historical high of 80M SF to 63.5M SF reported in Q2 2023. Mid-year leasing activity remained strong at over 12.5M SF reported in Q2 and 29.5M SF for YTD figures. The robust leasing activity figures will translate to additional net positive absorption.

Rental rates are continuing to rise especially in the “Infill” submarkets. Furthermore, with less than 30% of new construction located within the “Infill” submarkets, we expect the substantial rent growth within the city’s core to continue. Preleasing activity is still prevalent but concerns over delivery dates have increased due to the continued material shortages and delays. Such delays have encouraged many landlords to increase the amount of spec work including office, lights and levelers in a race to provide “operational” space for incoming prospective tenants.

As we enter the second half of 2023, we expect the overall industrial market to remain relatively stable. E-commerce, logistics, and distribution companies continue to be among the key drivers of absorption, as the region’s strategic location and excellent transportation infrastructure attract businesses. We also expect DFW to outperform other parts of the country as it continues to be the biggest benefactor of large-scale relocation efforts and population growth.

MARKET OBSERVATIONS

• With the recent changes in the debt markets, the development wave has slowed down. Continued tenant demand has helped counter this by giving developers confidence in increased rental rates.

• Fundamentals of what makes DFW appealing are unchanged. Population growth, lower cost of living, pro-business environment, central location and connectivity will continue to be attractive to businesses and capital markets.

• Continued tenant demand is evident as shown by 51 consecutive quarters of positive net absorption.

• New frontier markets are benefiting from established submarkets reaching full capacity in certain size ranges.

DFW INDUSTRIAL Trends & Transactions

TRENDS

Cost Stabilizing

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

Delayed Delivery

• Dock levelers, steel, HVAC, and roofing materials are all significantly delayed.

• Spec work has started to also include dock packages due to extended lead times.

Rental Rates

• Continue to increase despite increased construction.

• Annual increases continue to creep upwards with Landlords testing the waters on every deal.

Drive To Increase Efficiency

• Increased car and trailer parking requirements.

Increased Attention On Workforce

• Where are they coming from?

• Better work environment (Ex. HVAC Warehouse)

Pre-Leasing Activity Remains Strong but might be later in construction phase due to uncertain delivery timelines.

MARKET TRENDS

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

• Entitlements and building permits continue to be delayed as municipalities are overloaded with requests.

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

• 3PLs continue to account for a significant portion of the overall positive absorption.

• Sublease listings appear to be on the rise and currently account for 0.8% of the overall reported vacancy.

TOP LEASE TRANSACTIONS

• Southwire has signed a 1,076,459 SF lease at Alliance Westport with Hillwood.

• Cart.com has signed a 766K SF lease at 301 Apache Trail with FGT Holdings.

• Canadian Solar Inc. has signed a 753K SF lease at 3000 Skyline with Capstar.

• Ariat Boots has signed a 609K SF lease on Western Boulevard in Denton with Exeter.

• Lennox has signed a 499K SF lease with Weber Gruene located at their DFW Logistics Hub development on Airport land.

• EMLS signed a 419K SF lease on Western Boulevard in Denton with Scannell.

• LX Pantos USA, Inc. has signed a 405,785 SF lease at Northlake Logistics Center with Ares.

• Reece Morsco leased 326,728 SF from Crow Holdings at 1001 E Wintergreen Road in DeSoto, Texas just south of I-20.

• Fed Ex has renewed their 279,330 SF lease with LaSalle at 840 W Sandy Lake Road within their Coppell Trade Center project.

• PGL has signed a 263,900 SF lease at Carter Park Distribution with TA Realty.

• HD Supply renewed a 260,429 SF lease at 3101 High River Road with Barings.

• General Dynamics has signed a 239,918 SF lease at 19800 IH 635 with Creation Equity.

• Ryder Logistics has signed 234,478 SF lease at Northmark Commerce Center with Crow/Creation

• Molson Coors has signed a 218,282 SF lease at Carter Distribution Center with Cabot Properties.

• Southwest ADI signed a 200,546 SF lease at 820 Crossing with Scannell.

• Fleco Industries has signed a 184,902 SF lease with Lincoln Property Company on 2055 Luna in Carrollton.

• Volvo has signed a 172,620 SF lease and a 180,504 SF lease at Northlake 35 with Clarion.

• Pegasus has signed a 171,398 SF lease at 424 Wilmeth Road with ML Realty.

• Johnson Development leased 167,490 SF at 505 N Wildwood Drive to an Undisclosed user.

• Flexpipe Systems has signed a 157,065 SF lease at 1515 Corporate Crossing with Westcore.

• Refresco signed a 148,357 SF lease at 14500 FAA Boulevard with Link.

• Dallas Airmotive has signed a 145,776 SF lease with HLCI at their DFW Walnut Hill development at Passport Park.

• Dakota Hardwoods expanded and extended their lease in 133,000 SF at 631-641 W Mockingbird with TA Realty.

• Nautilus Hyosung has signed a 125,443 SF lease with Stream Realty at their Passport 125 development at Passport Park.

• Freight Krafters signed a 100,807 SF lease at 2001 Ave K East with DWS.

DFW INDUSTRIAL Facts & Figures

OVERALL

CURRENT EVENTS

At mid-year, the Great Southwest (GSW) industrial submarket ended Q2 2023 in a relatively stable position. Per CoStar reporting in Q2, GSW reported slight positive net absorption of 21,505 SF. This is primarily due to the delivery of 641,232 SF of new construction and 1.6M SF of deliveries YTD. At Q2 2023, GSW reported a total of 2,478,362 SF of new projects currently under construction.

Despite the Q2 slight positive absorption, the GSW Q2 vacancy rate was 3.9%. Increasing 0.5% from Q1 reported vacancy rate of 3.4%. This ranks GSW second among the major submarkets with the lowest vacancy rates (behind only Northeast Dallas). Projecting forward to the rest of 2023, we expect the GSW market to remain one of the top-performing submarkets with continued rent growth as tenant demand remains strong across the DFW market. Additionally, GSW remains one of the tightest submarkets for bulk spaces above 200K SF.

TOP LEASE TRANSACTIONS

• HD Supply renewed a 260,429 SF lease at 3101 High River Road with Barings.

• Refresco signed a 148,357 SF lease at 14500 FAA Boulevard with Link.

• Freight Krafters signed a 100,807 SF lease at 2001 Ave K East with DWS.

• Scholastic renewed an 85,046 SF lease at 3470 S Watson with Morgan Stanley.

• Office Star Products signed a 76,631 SF lease at 1600 Tech Centre Parkway with East Group Properties.

DEALS IN THE MARKET

• Oxford Properties is selling two assets in the GSW submarket: 1375 Ave S and 1169 113th.

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

VITAL STATS

NEW DEVELOPMENTS

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

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

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

• Wildlife Commerce Park – A 1M SF three (3) building spec development with Crow Holdings Industrial

• MacArthur Grand Logistics Center – A 602,355 SF development with Brookfield that was pre-leased to Conn’s Furniture

• Shady Grove Logistics Crossing – A three (3) building spec development with Scannell/Crow Holdings totaling 999,322 SF

LARGE EXISTING VACANCIES

• 14900 Trinity Boulevard – 310K SF

• 1600 S Great Southwest Parkway – 298,506 SF

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

• 502 Fountain Parkway – 214,684 SF

• 7009 S Cooper Street – Building 3 - 204,565 SF

• 804 Shady Grove Road – 203,430 SF

DFW AIRPORT

VITAL STATS

CURRENT EVENTS

The Dallas-Fort Worth (DFW) Airport industrial submarket finished Q2 2023 with a 5.4% vacancy rate. That is a slight uptick compared to the 5.0% vacancy rate at the end of the Q1 due to new delivered product at Passport Park and Highway 121 which will likely be leased prior to the end of the year. The sweet spot size range remains in the 200K - 500K SF size range as there are only two options readily available in that size today. Expect rates to continue to rise as Passport Park and Highway 121 become fully built out with minimal options available.

TOP LEASE TRANSACTIONS

• Lennox has signed a 499K SF lease with Weber Gruene located at their DFW Logistics Hub development on Airport land.

• Fed Ex has renewed their 279,330 SF lease with LaSalle at 840 W Sandy Lake Road within their Coppell Trade Center project.

• Dallas Airmotive has signed a 145,776 SF lease with HLCI at their DFW Walnut Hill development at Passport Park.

• Nautilus Hyosung has signed a 125,443 SF lease with Stream Realty at their Passport 125 development at Passport Park.

DEALS IN THE MARKET

• DFW Airport/Valwood Portfolio – KKR is selling a five (5) building project totaling nearly 600K SF.

• North Dallas Infill Portfolio – TA is selling six buildings totaling over 500K SF in the Airport, Valwood, Metro and Richardson submarkets.

NEW DEVELOPMENTS

• Royal 114 – A 430K SF four (4) building project with Archway Properties and Nuveen, set to deliver in Q3 2023.

• Passport 125 – A 125K SF development with Stream Realty Partners at Passport Park, set for completion in Q3 2023. This building has been pre-leased.

• DFW Logistics Hub – A three (3) building project totaling 1.5M SF developed by Weber & Company and Gruene Real Estate located on Airport land, set for delivery in Q4 2023.

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

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

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

• Skyway Logistics Center – Box Investment Group has broken ground on their freestanding 84K SF development in Irving just east of DFW Airport.

• Airport Corporate Center – Leon Capital Group is under construction at 4500 N Belt Line on their 60,400 SF building, set to deliver Q3 2023.

The bulk of warehouse rental rates are increasing into the $7.50 - $8.00 range, dependent on building age. In the 50K to 100K SF range, for functional shallow bay product, we are seeing rates from $9.50 to $10.50 depending on the finish level and age. Rental abatements are still prevalent depending on renewal versus new deals and the size of the lease transaction. Tenant improvement costs remained high because of increasing construction costs.

DFW International Airport is ranked as one of the largest cargo airports in the country. It boasts a high proportion of newer buildings since 2000 and, as a result, the submarket has a high concentration of efficient product with clear heights and dock configurations suitable for modern distribution. The submarket consists of large big-box users including Amazon, Uline, PPG, Bed Bath & Beyond, McKesson and many others.

CURRENT EVENTS

The East Dallas submarket ended Q2 with the second highest vacancy rate across DFW. While alarming, it is important to understand that it consists of three distinctly different micro-markets. Central East Dallas, East Dallas/ Mesquite and Forney/Terrell each tell a different story so the data must be examined closely.

Central East Dallas includes primarily older buildings on the outskirts of Dallas’ CBD. Although reporting a vacancy rate of 15.6%, it should also be noted that the overall availability rate for this micro-market is only 5.1% currently. The broader view by those focused on institutional-grade industrial projects should not be influenced too heavily by this micro-market. Much of it has been previously redeveloped or is planning to be redeveloped as opposed to new industrial development. Crow Holdings does have a proposed project on the far east side of this pocket which will compete more with the East Dallas/Mesquite submarket.

East Dallas/Mesquite holds the “bread and butter” of the submarket. While reporting an 12.5% vacancy rate, it is important to note that a 753K SF former data center (3.0% of the micro-market) recently signed a deal with Canadian Solar. With several new buildings being recently delivered and a few new subleases hitting the market there are now more options than we have seen in the past 2 years. There are little to no options available in the nearby NE Dallas/Garland submarket which should push leasing activity to this pocket. Leasing activity still remains steady but this pocket should be watched closely with more deliveries on the way.

Forney/Terrell is the new frontier and is seeing a significant amount of speculative development due to land availability, compared to the other established micromarkets. As speculative projects have been completed, Hayes Retail has been the most active tenant in the market, absorbing the first 2 projects to be delivered. With the development activity consisting mostly of 500K+ buildings and the newness of the overall micro-market, the vacancy figures have the potential to make some large swings in the future, if delivered vacant. We do expect this corridor to remain active as it provides excellent access to critical supply chain arteries and the labor required to operate.

TOP LEASE TRANSACTIONS

• Cart.com has signed a 766K SF lease at 301 Apache Trail with FGT Holdings.

• Canadian Solar Inc. has signed a 753K lease at 3000 Skyline with Capstar.

• General Dynamics has signed a 239,918 SF lease at 19800 IH 635 with Creation Equity.

• Peach State Hobby has signed a 93,322 SF lease at 300 US Hwy 80 with Barings.

DEALS IN THE MARKET

• 635 Military Parkway is a 725K SF three (3) building portfolio with Huntington located in Mesquite.

NEW DEVELOPMENTS

• Gateway Crossing Logistics Park – A 1,762,886 SF three (3) building project in Forney with Principal and Holt Lunsford Commercial Investments (a 1,024,549 SF cross-dock, a 473,397 SF cross-dock, and a 264,940 SF cross-dock)

• Innovation Ridge Logistics Park – A 1,137,650 SF three (3) building project in Forney with Lovett (a 817,538 SF cross dock, a 175,092 front load, and a 145,020 SF front load)

• Platform 80/20 – A 942,659 SF two (2) building project in Forney with Intrepid Equity (a 512,223 SF cross-dock and a 430,436 SF cross-dock)

• 20 East Trinity Pointe | Phase I – A 1.8M SF three (3) building project in Forney with Stream Realty Partners

• Mesquite 635 – A 555,790 SF three (3) building spec project in Mesquite with LGE (a 239,918 SF front load, a 159,728 SF rear-load, and a 156,144 SF rear load)

• East Dallas Commerce Center – A 373,322 SF spec development in Mesquite with IDI Logistics

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

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

• 635 Military Parkway – A 532,972 SF three (3) building development in Mesquite with Huntington Industrial Partners

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

• 635 Commerce Center - A 262,322 SF two (2) building project located in Mesquite with Stonelake

LARGE EXISTING VACANCIES

• 2700 E Scyene Road - 325,218 SF

• 5351 Samuell Boulevard – 260,600 SF (Sublease)

• 1130 E Kearney Street – 244,200 SF

• 2401 E Meadows Boulevard – 216K SF

• 5151 Samuell Boulevard – 211,234 SF (Sublease)

• 4401 Samuell Boulevard – 186,720 SF

• S Buckner Boulevard – 102,206 SF

NORTHEAST DALLAS

VITAL STATS

CURRENT EVENTS

Northeast Dallas consists of three primary areas that are unique in their tenant base, maturity and overall landscape. It is important to examine each micromarket separately as it is rare to see tenants consider space from one to the next. NE Dallas/Garland, Plano/ Richardson, and Allen/McKinney/Frisco as a whole reported one of the lowest vacancy rates in the overall market and are well-positioned for the future.

NE Dallas/Garland is the oldest and most mature micro-market consisting of supply chain companies as well as manufacturing. Posting a 2.1% vacancy rate is proof of the pressure that exists for tenants to find space here. The last few sites are currently under construction and the focus has shifted to covered land plays and redevelopment. With close proximity to the core population of DFW, rental rate growth is still expected here as it has not quite reached the marks of other comparable submarkets such as Valwood and South Stemmons.

TOP LEASE TRANSACTIONS

• Pegasus has signed a 171,398 SF lease at 424 Wilmeth Road with ML Realty.

• Flexpipe Systems has signed a 157,065 SF lease at 1515 Corporate Crossing with Westcore.

• LiteOn has signed a 79,720 SF lease at 3605 E Plano Parkway with Equus.

• Blovelight has signed a 74,758 SF lease at 1102 S Jupiter Road with Reserve Capital

DEALS IN THE MARKET

• Dallas Northeast Logistics Portfolio is a 219,049 SF five (5) building portfolio owned by KKR.

• Berkeley Partners recently purchased a two (2) building portfolio from TA Realty which included a 281,643 SF building at 2755-2975 Miller Park in Garland.

NEW DEVELOPMENTS

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

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

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

• M-75 Commerce Center – A 304,576 SF spec development with CA Ventures

• Central Circle Logistics Park – A 172,640 SF two (2) building spec project in McKinney with Stonelake

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

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

• Wylie Business Center – A 274,416 SF spec development in Wylie with Lovett

LARGE EXISTING VACANCIES

Plano/Richardson has certainly continued to experience an identity shift as it no longer relies solely on the tech industry. As DFW has grown, this area has transformed and attracted a more diverse tenant base focused on fulfilling supply chain needs while still remaining attractive to tech companies because of the proximity to skilled labor. A 5.2% vacancy rate consists primarily of specialized flex space and the majority of leasing activity is focused on the few new developments in the area.

Allen/McKinney/Frisco is the newest micro-market and is seeing the most development activity due to the availability of land. With 2.5M SF under construction from Frisco to McKinney, development is slightly outpacing demand however the current vacancy is only at 4.3%. We expect this area to remain attractive for investors and tenants due to continued population growth.

NORTHWEST DALLAS

CURRENT EVENTS

Through Q2 2023, the northwest Dallas industrial submarket continues to be one of the strongest-performing submarkets in DFW. Valwood is a haven for building supply companies as well as 3PL’s with direct access to I-35. Billingsley, Longpoint, Panattoni, and TA Realty have leased their recent developments in Valwood. The Metropolitan/Addison submarket is extremely tight from a vacancy standpoint as there are no more available sites for development. Lastly, as developers move north to track down sites in Denton and Sanger, Highway 121 is now centrally located in the DFW market and an extremely desirable location for users. The northwest Dallas submarket finished Q2 with a 4.4% vacancy rate which will stay along that number throughout the year as the final wave of developments on Highway 121 deliver, which will be leased soon after delivery.

TOP LEASE TRANSACTIONS

• Ariat Boots has signed a 609K SF lease on Western Boulevard in Denton with Exeter.

• EMLS signed a 419K SF lease on Western Boulevard in Denton with Scannell.

• Fleco Industries has signed a 184,902 SF lease with Lincoln Property Company on 2055 Luna in Carrollton.

• Stone Resources has signed their 91K SF renewal at 2425 Carter with Taurus Investment Holdings in Carrollton.

DEALS IN THE MARKET

• Mary Kay Distribution Center has 186K SF currently on the market for sale located in the Frankford Trade Center pocket in Valwood. This deal is under contract.

• DFW Airport/Valwood Portfolio consists of five (5) buildings totaling nearly 600K SF. KKR is the seller.

• North Dallas Infill Portfolio – TA Realty is selling six (6) buildings totaling over 500K SF in the Airport, Valwood, Metro and Richardson submarkets.

NEW DEVELOPMENTS

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

• Denton Crossing 1 and 2 – A 699K SF two (2) building crossdock project with Scannell, set for completion in Q2 2023

• Urban District 35 – A 441K SF four (4) building project with Urban Logistics Realty located in Denton with I-35 frontage, set for completion in Q3 2023

• ICC-35 – A 1.1M SF three (3) building project with CLX Ventures located directly off of Loop 288 and I-35 in Denton, set for completion in Q4 2023

• 3333 University Drive – Billingsley is under construction on a two (2) building project in Denton totaling over 900K SF, set for completion Q4 2023.

• 288/380 Logistics Park – A 800K SF four (4) building project with Velocis in Denton located at Loop 288 and 380, set for completion in Q3 2023

• Live Oak Logistics Park, Phase II – They are under construction on their final phase with two buildings totaling 240K SF, set for completion in Q3 2023

• Red River Business Park – Hines is under construction on their three (3) building development in Lewisville at Highway 121 and I-35. The SF totals 248,936 set for completion in Q3 2023.

SOUTH DALLAS

VITAL STATS

CURRENT EVENTS

The overall South Dallas Industrial submarket as surveyed of I-30 west of downtown, I-20, & I-45 is approximately 167 Million SF. In accordance with the area surveyed, CoStar is reporting positive Net Absorption of 2,110,296 SF for South Dallas in Q2 2023. Despite the positive Net Absorption this combined sector of the industrial market is now 12.4% vacant which is 2.1% higher than reported in Q1 2023. According to CoStar research, South Dallas delivered 5.6 Million SF in Q2 of 2023 and still has 12.3 Million SF remaining under construction in the I-30, I-20, & I-45 corridors. Various developers have secured land positions in this submarket for future development. In total there are approximately 18 Million SF of planned development projects that are currently on hold.

TOP LEASE TRANSACTIONS

• Reece Morsco leased 326,728 SF from Crow Holdings at 1001 E Wintergreen Road in DeSoto, Texas just south of I-20.

• RE Logistics leased 74,781 SF from TA Realty at 1800 N Polk St in DeSoto, Texas just south of Interstate 20.

• Overhead Door Corporation renewed their lease for 61,560 SF from Dogwood at 2170 French Settlement Rd in Dallas, Texas just north of I-30 in the Eastern Lonestar/Turnpike submarket.

• Exegistics renewed their lease for 59,517 SF from Dogwood at 2130 French Settlement Road in Dallas, Texas just north of I-30 in the Eastern Lonestar/Turnpike submarket.

• Lanter Distribution renewed their lease for 52K SF from IDI at 4721 Mountain Creek Parkway in Dallas, Texas just north of I-20 in the Mountain Creek submarket.

DEALS IN THE MARKET

• 2130-2180 French Settlement Road – Dogwood (Seller) offering 1.3M SF across DFW

• 2100 Jo Drive – USAA (Seller) offering 489,310 SF leased to Kenco

LARGE EXISTING VACANCIES

• 1301 & 1501 Southport Parkway (Building 1 & 2) for 2,126,880 SF with XEBEC in Wilmer, Texas

• 3486 Cedardale Road – 1,084,460 SF spec with Trammell Crow Company

• 950 N Interstate Highway 45 – 1,013,833 SF with Majestic Realty

• 4235 Singleton Boulevard – 1,005,200 SF with LOVETT Commercial (shell complete)

• 3636 Mountain Creek Parkway – 802,206 SF spec with Prologis

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

• 3584 Mountain Creek Parkway – 504,500 SF spec with Prologis

• 4601 Langdon Road – 488,780 SF with LINK (2nd generation)

• Crystal Lake Boulevard & Dan Morton – 467,541 SF with Eider Creek Capital (shell complete)

• 2001 N Hampton Road – 421,890 SF spec with HLCI

• 4501 Cleveland Road – 413,480 SF spec with Robinson Weeks Partners

• 2935 Danieldale Road – 393,899 SF with KKR (2nd generation)

• 2200 Danieldale Road – 393K SF with Principal (2nd generation)

For the past 3 years, the South Dallas submarket of I-30, I-20, and I-45 has enjoyed an average single-digit vacancy rate of 7.1%. However, the rapid pace of an abundance of construction projects and deliveries has flooded this submarket with inventory. Deliveries have outpaced tenant demand in the changing macro-economic environment hence washing away the previous single-digit vacancy along Interstate 20 and Interstate 30.

EXPERTS

CURRENT EVENTS

The outlook for South Stemmons remains positive as we head into 3Q 2023. Per Costar reporting, leasing activity showed a positive absorption of 153,602 SF, which is partially due to the YTD delivery of 1M SF of new construction. This number includes larger blocks of space in West Turnpike. South Stemmons ended the quarter with 5.3% vacancy, and continues to be a tight market with increasing demand. Rental rates and price per SF continue to rise as landlords continue to capitalize on the submarket’s infill location. South Stemmons, historically known as a user-owned market, has become primarily institutionally owned, which in turn has improved a lot of the building offerings for tenants with a lot of capital projects underway. For tenants looking in the market, location has continued to outweigh functionality due to the close proximity to Dallas CBD, the Medical District, and immediate access to thriving Dallas suburbs.

TOP LEASE TRANSACTIONS

• CanTex Capital leased their 101,939 SF vacancy at 1011 Regal Row to an Undisclosed User.

• Johnson Development leased 167,490 SF at 505 N Wildwood Drive to an Undisclosed user.

• Dakota Hardwoods expanded and extended their lease in 133K SF at 631-641 W Mockingbird with TA Realty.

• Wilson Bauhaus leased 69,256 SF at 2343 Walnut Hill Lane with Crow Holdings.

• Texas Envelope Manufacturing Company renewed their lease of 33K SF at 10647 Shady Trail with TA Realty.

NEW DEVELOPMENTS

• Trinity Industrial Park - A two (2) building development with GTC Real Estate Investments totaling 82,773 SF.

LARGE EXISTING VACANCIES

• 8611 Ambassador Row – 100K SF

• 17175 Market Center Boulevard – 71,562

• 10733 Spangler Road – 54,550 SF

• 134-170 Pittsburg Street – 61K SF

• 3202 Manor Way – 52,841 SF

• 4919 Woodall – 50,508 SF

NORTH FORT WORTH

VITAL STATS

CURRENT EVENTS

North Fort Worth continues to perform as a top DFW submarket through the end of June posting yet another quarter of over 2M square feet of positive absorption with an approximate number at 2.5M. This now marks the fourth consecutive quarter of 2M SF or greater in absorption for the submarket. New development projects that started mid to late 2022 are now starting to deliver and through the halfway point of 2023, North Fort Worth has posted a year to date stat of 6.3M SF. This influx of deliveries has negatively affected the vacancy rate for Q2 pushing it up from 6.0% to 8.1% but this should not be a cause for concern given the sustained positive absorption and continued tenant activity coupled with the lack of new projects breaking ground thus far in 2023.

TOP LEASE TRANSACTIONS

• Ryder Logistics has signed 234,478 SF lease at Northmark Commerce Center with Crow/Creation.

• Southwire has signed a 1,076,459 SF lease at Alliance Westport with Hillwood.

• LX Pantos USA, Inc. has signed a 405,785 SF lease at Northlake Logistics Center with Ares.

• Southwest ADI signed a 200,546 SF lease at 820 Crossing with Scannell.

• Volvo has signed a 172,620 SF lease and a 180,504 SF lease at Northlake 35 with Clarion.

DEALS IN THE MARKET

• GSW & North Fort Worth Infill Portfolio is a 673,075 SF Class B six (6) building portfolio.

• DFW Logistics Portfolio is a 1,322,919 Class B nine (9) building portfolio.

NEW DEVELOPMENTS

• Northlake 35 – A 2,571,480 SF six (6) building project with Clarion

• Alliance Center North 4 – A 615,694 SF development with Hillwood

• Elizabeth Creek Gateway C – A 1,510,500 SF development with DHL

• Silver Creek Business Park – A 1,108,938 SF development with Majestic Realty

• Intermodal Logistics Center 6 – A 1,008,416 SF development with Northpoint Development

• 114 Logistics Park – A 1,004,400 SF development with Logistics Property Company

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

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

• Westport Parkway Commerce Center – A 400,565 SF development with Molto Properties

• Mercantile I-35 – A 718,705 SF two (2) building project with MCW Capital, LLC

• Blazing Trail – A 657,562 SF four (4) building project with USAA

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

• Westport 25 – A 1,076,459 SF development with Hillwood

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

• Speedway 3 – A 683,140 SF three (3) building project with Scannell

• Mercantile Logistics Station – A 816K SF two (2) building project with Velocis

LARGE EXISTING VACANCIES

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

• Northlake Logistics Crossing | Building 1 – 985,800 SF

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

• Cowtown Crossing | Building 1 – 553,383 SF

• Speedway Logistics Crossing | Building 3 – 384,716 SF

• Cowtown Crossing | Building 3 - 304,665 SF

• Elizabeth Creek Gateway Building D – 286,467 SF

• DFW Point 35 | Building 1 – 267,280 SF

• DFW Point 35 | Building 2 – 218,400 SF

• Northlink | Building C –

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

SOUTH FORT WORTH

CURRENT EVENTS

The South Fort Worth industrial submarket continues to have strong leasing activity across all product types. Vacancy rates have stayed between 5% and 6% for the past three quarters with approximately 1.8M SF delivering during that time period. A trend that kept up in Q2 2023 with ~664K SF of new deliveries and ~608K SF in absorption. We expect to see this streak snap in Q3 and Q4 of this year with 2.4M SF slated to deliver and approximately only ~1.3M SF of active deals tracking. However, we believe the vacancy rate will ultimately drop in the second half of 2024 given the slowdown in speculative development. Only two projects totaling 381K SF have announced Q3/4 2023 groundbreaks. Specifically, this pipeline consists of the Falcon Development single 237K SF rear-load dubbed “Oak Creek Distribution” and Empire Equities four (4) building 144K SF single tenant grade level concept at Campus Park.

TOP LEASE TRANSACTIONS

• PGL has signed a 263,900 SF lease at Carter Park Distribution with TA Realty.

• Molson Coors has signed a 218,282 SF lease at Carter Distribution Center with Cabot Properties.

• Packaging Exchange has signed a 98,280 SF lease at 46 Ranch Logistics with Nuveen.

• Hood Industries has signed a 90K SF lease at 8932 South Freeway with Hickman Properties.

• Frito Lay has signed a 45,870 SF lease at 8100 South Freeway with Cabot Properties.

DEALS IN THE MARKET

• Mansfield Commerce Park is a 520K SF four (4) building portfolio and is currently under contract with HCP & Exline Capital.

• I-30 Shallow Bay is a 452,721 SF sixteen (16) building portfolio and is currently under contract with Basis Industrial.

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

VITAL STATS

NEW DEVELOPMENTS

• HomeGoods | BTS – A 1,033,760 SF BTS for HomeGoods with Clarion and Crow Holdings Capital

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

• Southland Business Park | Phase 3 – A 781,530 SF building part of a master-planned park with Majestic Realty

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

• Greenbay Packaging | BTS – A 750K SF BTS for Greenbay Packaging with Jackson Shaw

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

• Point South Commerce – A 258,100 SF development with Alliance

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

LARGE EXISTING VACANCIES

• Fort Worth Logistics Hub | Building 2 – 606,480 SF

• Carter Park East | Building 1 – 549,780 SF

• Southwest Crossing Logistics Center – 213,546 SF

• South Fort Worth Commerce Center | Building 2 – 180,556 SF

• Fort Worth South Business Park | Building 6 – 91,077 SF

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