Q4 2022 DFW Industrial Market Report

Property: Stoneridge 20

DFW INDUSTRIAL Submarket

DFW INDUSTRIAL Market Experts

HLC OUTLOOK

The Dallas-Fort Worth industrial market concluded Q4 2022 with continued momentum by reporting the 49th consecutive quarter of positive net absorption (more than 12 years). Although the under construction figures have reached a new high watermark, supply and demand remained at a healthy balance during 2022. While missing the record breaking 2021 figure of 42M SF, the 2022 annual absorption totaled a very strong 39.8M SF. Rental rates are continuing to rise especially in the “Infill” submarkets as vacancy rates continue to remain at a stable +/-5.3% market wide. 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.

The outlying submarkets continue to grow at an unprecedented pace due to land availability, interstate connectivity, capital markets interest and consistent demand from occupiers. We expect the development figures to decrease during 2023 due to continued changes from the Fed which will likely allow for rental rates to grow steadily as inventory is absorbed.

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 2023, we expect the overall industrial market to continue strong as tenant demand in the market is still very active. We also expect DFW to outperform other parts of the country as it continues to be the biggest benefactor of largescale 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 make DFW appealing are unchanged. Population growth, lower cost of living, pro business environment, central location and connectivity will continue to be attractive to both businesses and capital markets.

• Continued tenant demand is evident as shown with very strong year end positive absorption figuresonly 3M SF shy of the record breaking 2021 figures.

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

DFW INDUSTRIAL Trends & Transactions

TRENDS

Cost Increases

• Shell construction and finish out costs continue to increase 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. Amazon has recently pulled back on their expansion but other large retailers and household brands are catching up.

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

• Sublease listings appear to be on the rise.

TOP LEASE TRANSACTIONS

• ITS Logistics has signed a 1,038,000 SF lease at Intermodal Logistics Center with NorthPoint Development.

• Careismatic Brands leased 1,013,075 SF from ARES Capital Mgt at I-20 & Cedardale Road in Dallas off I-20.

• Ryder Logistics leased 826,620 SF from Exeter at 210 Sunridge Boulevard off I-45.

• Masonite has signed a 626,718 SF lease at 905 Airport Boulevard with Dalfen Industrial.

• Hayes Retail has signed a 621,874 SF lease at 1075 S Gateway Boulevard with GreenLaw Partners.

• Best Buy renewed their 600,200 SF lease at 609 Enterprise Drive in Flower Mound with Clarion Partners.

• RJW Logistics has signed a 592,995 SF lease at SWC E Scyene Road & Faithon P Lucas Senior Boulevard with Urban Logistics Realty.

• NFI leased the residual 510,805 SF in a sublease from JLA at 2101 Millers Ferry Road off I-45.

• Armada Warehouse Solutions signed a 462,400 SF lease at 101 Enterprise Drive in Flower Mound with Clarion Partners.

• Beauty Manufacturing Solutions Corp. has signed a 445,870 SF lease at Alliance Gateway 2 with Hillwood.

• Grainger has signed a 441,720 SF lease at Alliance Center North with Hillwood.

• Selery Fulfillment has expanded and their SF occupied now totals 380,000 SF with Prologis at 1809 W Frankford Road in Carrollton.

• Coleman Powersports has signed a 379,616 SF lease at 4120 E Scyene Road with Dalfen Industrial.

• MEI Rigging signed a 378K SF lease at 650 S Royal Lane in Coppell with IDI.

• TTI, Inc. signed a 334,750 SF lease at Meacham Commerce Center with McCormack Development.

• Estes Express Lines has signed a 305,000 SF lease at 3254 W Trinity Boulevard with Principal Real Estate Investors.

• SupplyOne leased 288,292 SF from Principal Real Estate Investors at 2271 French Settlement Rd in Dallas off I-30.

• Fiat Chrysler has renewed their 255,422 SF lease at 2205 E Belt Line Road in Carrollton.

• Shipmonk has signed a 250,965 SF lease at Sylvania Crossing with Ares.

• SolArk has signed a 195,743 SF lease at 915 Enterprise Boulevard with Link.

• Better Home Products renewed a 179,875 SF lease at 600 109th Street with ProLogis.

• Western BRW has renewed their 157,973 SF lease with Link at 1800 Kelly Boulevard in Carrollton.

• WAC Lighting leased 147,079 SF from Hillwood at 1700 S Elmer Frwy, Dallas off of Highway 67.

• DWC Wire & Cable signed a 139K SF lease at Brookfield’s recently completed development located in Coppell at 910 Exchange Circle.

• Signet EV has signed a 136,210 SF lease at 4101 E Plano Parkway with Trident.

• ELM Fieldsight has signed a 126,480 SF lease at Link’s Live Oak development in The Colony.

• Dien leased 109,200 SF at 9749 Clifford Drive with Link.

• Siemens signed a 100K SF lease at 1225 N 28th Avenue on Airport land with Prologis.

DFW INDUSTRIAL Facts & Figures

GSW/ARLINGTON

CURRENT EVENTS

Per CoStar reporting, the Great Southwest (GSW) industrial submarket concluded Q4 2022 in a strong position. At year end 2022, GSW reported positive net absorption of 1,394,622 SF and posted outstanding leasing activity numbers of more than 6.9M SF. Additionally, GSW reported 1,957,484 SF of new construction completions YTD and a total of 4,210,829 SF of new projects currently under construction.

The Q4 2022 vacancy rate decreased slightly to 3.0% versus 3.4% at Q3 2022. This ranks GSW second among the major submarkets with the lowest vacancy rates (behind only DFW Airport). Projecting forward to 2023, we expect the GSW market to remain one of the top performing submarkets with continued rent growth as tenant demand continues to expand across the DFW market. Additionally, GSW remains one of the tightest submarkets for bulk spaces above 200K SF.

TOP LEASE TRANSACTIONS

• Estes Express Lines has signed a 305,000 SF lease at 3254 W Trinity Boulevard with Principal Real Estate Investors.

• Better Home Products renewed a 179,875 SF lease at 600 109th Street with ProLogis.

• Packaging Corporation of America renewed a 92,828 SF lease at 1305 Ave. H with LINK / Cabot.

• Re-Teck signed a 90,880 SF lease at 3400 E. Randol Mill Road with GID Industrial.

• RaceTrac renewed a 73,901 SF lease at 3110 Roy Orr Boulevard with LINK / Cabot.

• Adtec Colorant Corporation renewed a 60,206 SF lease at 514 Great Southwest Pkwy with GID Industrial.

NEW DEVELOPMENTS

• Wildlife Commerce Park – a 1,000,000 SF three-building spec development with Crow Holdings Industrial.

• Prologis Great Southwest | 4 Building spec development with Prologis totaling 742,543 SF.

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

VITAL STATS

• GSW Commerce Center at 161 - 2 Building spec development with Molto totaling 464,495 SF.

• 1600 S Great Southwest Parkway – a 298,506 SF spec development with IDI Logistics.

• Cooper Commerce Center | 7007-7011 S Cooper Street | Buildings 3 and 4 – a 205K and 191K SF spec project with NorthPointe Development.

• 2001 E Avenue K - a 200,175 SF spec development with DWS.

• Bardin Crossing | Building 2 – a 154,440 SF spec development with Ironwood Realty Partners/Cabot.

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

• 1600 Tech Center Parkway - a 76,631 SF spec development with EastGroup Properties.

LARGE EXISTING VACANCIES

• 14900 Trinity Boulevard – 310,000 SF

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

• 502 Fountain Parkway – 214,684 SF

• 804 Shady Grove Road – 203,430 SF

• 3405 Roy Orr Boulevard – 184,283 SF

DFW AIRPORT

VITAL STATS

CURRENT EVENTS

The Dallas-Fort Worth (DFW) Airport industrial submarket closed 2022 with a vacancy rate of 2.9% compared to a 7.9% vacancy rate 24 months prior. The vacancy rate has dropped drastically as the submarket has seen a strong influx of leasing for big blocks of space in Passport Park and Perot/Invesco’s 161 project as well as a flurry of leasing between 100K and 400K SF suites. There is currently only one availability at the airport that can accommodate a 200K to 400K SF user. Rates in that size should continue to rise at a rapid pace.

TOP LEASE TRANSACTIONS

• Best Buy renewed their 600,200 SF lease at 609 Enterprise Drive in Flower Mound with Clarion Partners.

• Armada Warehouse Solutions signed a 462,400 SF lease at 101 Enterprise Drive in Flower Mound with Clarion Partners.

• MEI Rigging signed a 378,000 SF lease at 650 S Royal Lane in Coppell with IDI.

• DWC Wire & Cable signed a 139,000 SF lease at Brookfield’s recently completed development located in Coppell at 910 Exchange Circle.

• Siemens signed a 100,000 SF lease at 1225 N 28th Avenue on Airport land with Prologis.

NEW DEVELOPMENTS

• DFW Commerce Center – a 2M SF three (3) building project with CLX on Airfield Drive, set for delivery in Q1 2023.

• Royal 114 – a 430K SF four (4) building project with Archway Properties and Nuveen, set to deliver in Q2 2023.

• Freeport Commerce Center – a 328,175 SF two (2) building project with Alliance Industrial Company, set for completion in Q1 2023.

• Sandy Lake 121 – a 130K SF development with Myers & Crow at Sandy Lake and Highway 121 in Coppell, set for delivery in Q1 2023.

• Passport 125 – a 125K SF development with Stream Realty Partners at Passport Park, set for completion in Q1 2023.

• Valley View Point - ICM Asset Management is under construction on a single building development totaling 120,900 SF on Airport land.

• DFW Logistics Hub - Three (3) building project totaling 1.5M SF developed by Weber & Company and Gruene Real Estate located on Airport land.

• DFW Walnut Hill - HLCI has broken ground on their freestanding 145K SF building located at Passport Park on Airport land.

• Mustang Court - Brookfield is kicking off construction on their 3-building development in Southlake totaling 335,401 SF.

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

The bulk of warehouse rental rates are increasing into the mid $7.00 range, dependent on building age. In the 50K to 100K SF range, for functional shallow bay product, we are seeing rates from $8.50 to $9.50 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 the year with the 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 and present data that must be examined closely.

Central East Dallas includes primarily older buildings on the outskirts of Dallas’ CBD. Reporting a vacancy rate of 15% is due most notably to a 2M SF facility formerly occupied by Sears; a 5-story project built in 1972 accounts for 3.2% of the overall East Dallas submarket. If excluded, the overall submarket vacancy rate would show 8.2%. It should also be noted that the overall availability rate for this micromarket is only 4.5% with the aforementioned project listed as only vacant, but not available. 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.

East Dallas/Mesquite holds the “bread and butter” of the submarket. While reporting a 7.4% vacancy rate, it is important to note that a 753K SF former data center accounts for 3.0% of the micro-market. There are multiple new developments underway with almost all seeing pre-leasing activity. Leasing activity is outpacing deliveries as there is very little space available for immediate occupancy. Two of the largest deals of the quarter, as noted to the right, were completed in this micro-market and more are expected soon. We expect this micro-market to perform very well with increased leasing demand overflowing from NE Dallas/Garland.

Forney/Terrell is the new frontier and is seeing a significant amount of speculative development due to land availability, compared to the other established micro-markets. 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 that are larger 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. However, we believe it is positioned well to see continued leasing demand, as it sits between Hwy 80 and I-20 providing unparalleled access to critical supply chain arteries and the labor required to operate.

EAST DALLAS

TOP LEASE TRANSACTIONS

• Masonite has signed a 626,718 SF lease at 905 Airport Boulevard with Dalfen Industrial.

• Hayes Retail has signed a 621,874 SF lease at 1075 S Gateway Boulevard with GreenLaw Partners.

• RJW Logistics has signed a 592,995 SF lease at SWC E Scyene Road & Faithon P Lucas Senior Boulevard with Urban Logistics Realty.

• Coleman Powersports has signed a 379,616 SF lease at 4120 E Scyene Road with Dalfen Industrial.

• Lowe’s has signed a 78,523 SF lease at 2601 E Meadows Boulevard with Landmark Companies.

• Frito Lay has signed a 55,750 SF lease at 19800 IH 635 with LGE and Crow Holdings.

DEALS IN THE MARKET

• Cantex recently sold a five (5) building 689,497 SF portfolio to Shopoff Investments with buildings in Mesquite and Garland.

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.

• Clements/Highway 80 – a 1,029,110 SF two (2) building project in Forney with Exeter (a 529,047 SF cross dock and a 500,063 SF cross dock).

• East Scyene Road – a 918,173 SF two (2) building project in Mesquite with Urban Logistics Realty (a 592,995 SF spec cross dock and a 325,218 SF spec cross dock).

• 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.

• 1515 Corporate Crossing – a 301,120 SF spec development in Rockwall with Stream Realty Partners and Westcore.

• E Scyene Road – a 310,900 SF rear load BTS for Vehicle Accessories Group in Mesquite with Jackson Shaw.

• Meadows Road – a 216,000 SF spec development in Mesquite with Landmark Companies.

LARGE EXISTING VACANCIES

• 11333 County Road 212 - 904,495 SF

• 3000 Skyline Drive - 753,000 SF

• 1130 E Kearney Street - 244,200 SF

• 2401 E Meadows Boulevard - 216,000 SF

• 4401 Samuell Boulevard - 186,720 SF

• S Buckner Boulevard - 102,206 SF

• 100 N Sam Houston - 81,000 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 micro-market separately as it is rare to see tenants consider space from one to the next. NE Dallas/Garland, Plano/Richardson and Allen/ McKinney 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 micromarket consisting of supply chain companies as well as manufacturing. Posting a 1.8% vacancy rate at the end of 2022 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 a 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

• SolArk has signed a 195,743 SF lease at 915 Enterprise Boulevard with Link.

• Signet EV has signed a 136,210 SF lease at 4101 E Plano Parkway with Trident.

• Endeavor Managed Services expanded into 89,909 SF at 310 Wilmeth Road with ML Realty Partners.

• Nordgear signed a 85,078 SF lease at 350 Cypress Hill with AC Industrial.

• PODS Enterprises has signed a 83,270 SF lease at 1600 S Airport Drive with HLCI.

• Simpson Strongtie signed a 78,000 SF lease at Harry McKillop Drive with Transwestern Development.

• Ericcson has signed a 70,458 SF lease at 3101 Summit Ave with Link.

• ILS Gummies has signed a 67,060 SF lease at 350 Cypress Hill Drive with AC Industrial Properties.

• Dynamic Systems signed a 64,941 SF lease at 3601 N McDonald with AC Industrial.

• Lurin Advisors has signed a 54,600 SF lease at 1330 S Jupiter Road with Langford Property Company.

DEALS IN THE MARKET

• DFW Infill - a 717,592 SF nine (9) building portfolio with Prologis, two (2) of the buildings are in Plano.

• Cantex recently sold a five (5) building 689,497 SF portfolio to Shopoff Investments with buildings in Mesquite and Garland.

• Frisco Center - a 282,807 SF seven (7) building portfolio with Sinacola Companies.

NEW DEVELOPMENTS

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

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

• McKinney National | Phase 2 – a 481,158 SF three (3) building spec project in McKinney with Transwestern Development.

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

• McKinney Airport Trade Center | Phase 1 – a 320K SF three (3) building spec project in McKinney with Greystar.

• 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 Trade Center Phase 2 – a 171,400 SF spec development in McKinney with ML Realty.

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

• Jupiter Road – a 194,029 SF two (2) building spec project in Garland with SRS Industrial.

• 751 S International Road - a 69,780 SF spec project in Garland with Cohen Asset Management.

LARGE EXISTING VACANCIES

• 350 Cypress Hill Drive – 150,898 SF

• 3901 E Plano Parkway - 100,000 SF

• 3712 E Plano Parkway – 100,000 SF

• 11025-11035 Switzer Avenue - 92,647 SF

• 2821 Telecom Parkway - 86,606 SF

• 2651 Santa Anna Avenue - 83,000 SF

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 4.9% 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 is the newest micro-market and is seeing the most development activity due to the availability of land. With 2.7M SF under construction from Frisco to McKinney, development is slightly outpacing demand. However, leasing activity has remained steady with 11 new leases signed during the second half of the year totaling over 775K. We expect this area to remain attractive for investors and tenants due to continued population growth.

CURRENT EVENTS

Through Q4 2022, 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 not any 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 ended 2022 with a 3.4% vacancy rate which will continue to drop as the final wave of developments on Highway 121 will be delivered in early 2023, to be leased soon after delivery.

NORTHWEST DALLAS

VITAL STATS

TOP LEASE TRANSACTIONS

• Selery Fulfillment has expanded and their SF occupied now totals 380K SF with Prologis at 1809 W Frankford Road in Carrollton.

• Fiat Chrysler has renewed their 255,422 SF lease at 2205 E Belt Line Road in Carrollton.

• Western BRW has renewed their 157,973 SF lease with Link at 1800 Kelly Boulevard in Carrollton.

• ELM Fieldsight has signed a 126,480 SF lease at Link’s Live Oak development in The Colony.

• Arrowhead Trim and Stairs signed a 96,617 SF lease at 13755 Diplomat in Valwood with ML Realty Partners.

• Star Pipe signed a 90,270 SF lease with GID at 1515 Monetary Lane in Carrollton.

• Vehicle Leasing renewed their 80K SF lease with Taurus at 14335 Inwood Road.

• Communications Conveyor Company signed a 61,898 SF lease with Urban Logistics Realty at their UD-35 development in Denton.

DEALS IN THE MARKET

• Denton Point I and II - TA Realty is selling the two-building project in Denton totaling 242K SF and is fully leased. The project is currently under contract.

NEW DEVELOPMENTS

• Exeter Westpark II – a 1.1M SF development with Exeter in Denton, set for completion in Q1 2023.

• Exeter Westpark III - a 421,200 SF development with Exeter in Denton, set for completion in Q2 2023.

• Denton Crossing 1 and 2 – a 699K SF two (2) building crossdock project with Scannell, set for completion in Q1 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 Q1 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 900,000 SF, set for completion Q3 2023.

• 288/380 Logistics Park - an 800,000 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 – an 800K SF three (4) building project with Link Industrial, set for completion in Q1 2023.

• 280 E Corporate Drive – a 117,843 SF development in Lewisville, currently under contract to be sold to an investor.

SOUTH DALLAS

VITAL STATS

CURRENT EVENTS

TOP LEASE TRANSACTIONS

• Careismatic Brands leased 1,013,075 SF from ARES Capital Mgt at I-20 & Cedardale Road in Dallas off I-20.

• Ryder Logistics leased 826,620 SF from Exeter at 210 Sunridge Boulevard off I-45.

• NFI leased the residual 510,805 SF in a sublease from JLA at 2101 Millers Ferry Road off I-45.

• SupplyOne leased 288,292 SF from Principal Real Estate Investors at 2271 French Settlement Road in Dallas off Interstate 30.

• WAC Lighting leased 147,079 SF from Hillwood at 1700 S Elmer Frwy, Dallas off of Highway 67.

• Brunton International leased 92,400 SF from AEW at 4051 La Reunion Parkway, Dallas TX off I-30.

DEALS IN THE MARKET

• 3800 Cedardale Road – Arcapita (Seller) offering 776,629 SF leased to FedEx off I-20.

• Loop 12 – 267,560 SF, 3 buildings off Loop 12 by Harlan Crow & Jim Hendricks (Seller) to Foundry/UBS (Buyer).

• 1600 N Polk Street – 350,798 SF offered by Modlo.

NEW DEVELOPMENTS

• I-20 at Cedardale Road – 2,056,615 SF by Ares.

• 3486 Cedardale Road – 1,084,460 SF spec development by Trammell Crow.

• 3701 Midpoint Drive – 1,037,316 SF spec development by MetLife with Panattoni.

• Core 45 Building 2 – 1,027,068 SF spec development by TRG/Grandview Partners.

• 3636 Mountain Creek Parkway – 802,206 SF by Prolgis.

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 with Trammell Crow Company.

• 3701 Midpoint Drive – 1,037,316 SF with MetLife/Panattoni.

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

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

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

• 2900 West Drive – 603,378 SF spec with AEW.

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

• Crystal Lake Blvd & Dan Morton – 467,541 SF with

• Eider Creek Capital (shell complete).

The overall South Dallas Industrial submarket as surveyed of I-30, I-20, & I-45 is 158 Million SF and is now 6.5% vacant which is 0.2% higher than reported in Q3 2022. In accordance with the area surveyed, CoStar is reporting positive 3,299,176 SF of Net Absorption for South Dallas in Q4 2022. South Dallas has 26.8 Million SF under construction in the I-30, I-20, & I-45 corridors combined with another 23.2 Million in the pipeline. Of the existing 23.2 Million SF under construction, 21.7% or 5.0 Million SF is for Build-to-Suit or Design Build assignments or has been pre-leased. The remaining 78.3% or 18.2 Million SF under construction is speculative development. For the past 12 months, the South Dallas submarket of I-30, I-20 and I-45 averaged a single digit vacancy rate of 5.85%. However, many expect that single digit vacancy to continue to rise at a rapid pace along I-20 and I-45 as construction projects from various developers are expected to outpace tenant demand and absorption in the changing macro-economic environment.

Please note: CoStar’s South Dallas boundaries do not include the west Dallas I-30 corridor. As such, their data in the charts will vary.

CURRENT EVENTS

The South Stemmons industrial submarket continues to perform as one of the tighter markets in the DFW Metroplex. Per Costar reporting, leasing activity rounded out Q4 2022 with a positive 1.3M SF, and with YTD leasing activity reported at 5.3M SF. YTD vacancy was recorded at 3.8%, which speaks to the strength, and lack of availability within the submarket. Rental rates and price per SF continue to rise while landlords continue to capitalize on the submarket’s irreplicable infill location. South Stemmons, historically known as a user-owned market, has become primarily institutionally owned. 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.

SOUTH STEMMONS

TOP LEASE TRANSACTIONS

• Dien leased 109,200 SF at 9749 Clifford Drive with Link.

• Foundation Building Materials renewed their lease of 30,547 SF at 8301 John Carpenter Freeway with Brennan Investment Group.

• Heritage Landscape Supply leased 25,489 SF at 11106-11130 N Stemmons Freeway.

• Gulfstream signed a 23,040 SF lease at 3200 Irving Boulevard (Proto Park) with M2G Ventures / Pennybacker Capital.

NEW DEVELOPMENTS

• Core35 Logistics Center III | Building A – a 69,256 SF development with Crow Holdings Industrial.

• Core35 Logistics Center III | Building A - A 289,564 SF development with Crow Holdings Industrial.

• Core35 Logistics Center III | Building B – a 142,966 SF development with Crow Holdings Industrial.

• Trinity Industrial Park | Building A - 39,774 SF development with GTC Real Estate Investments.

• Trinity Industrial Park | Building B - 42,999 SF development with GTC Real Estate Investments.

LARGE EXISTING VACANCIES

• 505 N Wildwood Drive - 167,490 SF

• 11420 Mathis Avenue - 138,716 SF

• 1011 Regal Row - 101,939 SF

• 3202 Manor Way - 52,841 SF

NORTH FORT WORTH

VITAL STATS

CURRENT EVENTS

North Fort Worth finished the year off extremely strong posting a Q4 absorption of 2.4M SF and bringing the 2023 annual absorption to just under 13M SF** which was nearly double the submarket’s previous high watermark set in 2021. With continued capital market uncertainty, many proposed development projects are now being sidelined and looking for strategic buildto-suit opportunities which will likely continue to be the case for the first couple of quarters in 2023. Given the market’s three year low vacancy rate of 6.1%, the slowing development pipeline will help to perpetuate future rental rate growth as new supply lessens.

TOP LEASE TRANSACTIONS

• ITS Logistics has signed a 1,038,000 SF lease at Intermodal Logistics Center with NorthPoint Development.

• Beauty Manufacturing Solutions Corp. has signed a 445,870 SF lease at Alliance Gateway 2 with Hillwood.

• Grainger has signed a 441,720 SF lease at Alliance Center North with Hillwood.

• TTI, Inc. signed a 334,750 SF lease at Meacham Commerce Center with McCormack Development.

• Shipmonk has signed a 250,965 SF lease at Sylvania Crossing with Ares.

NEW DEVELOPMENTS

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

• Alliance Center North – a 1,057,414 SF two (2) building project with Hillwood.

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

• Northlake Logistics Crossing – a 1,391,800 SF two (2) building project with Scannell Properties.

• Mecham Commerce Center – a 1,311,911 SF four (4) building project with McCormack Commercial Development.

• Alliance Center East 1 – a 1,240,584 SF development with Hillwood.

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

• Cowtown Crossing – a 1,021,129 SF three (3) building project with TDC.

• 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.

• DFW Point 35 – a 485,680 SF two (2) building project with Stonemont.

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

• 820 Crossing – a 335,004 SF development with Scannell Properties.

• Champion Crossing – a 317K SF development with Greystar.

• 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 Lincoln.

• Trammell Crow at 35 Eagle - a 2,125,159 SF five (5) building project with Trammell Crow.

LARGE EXISTING VACANCIES

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

• Mark IV Commerce Park | Building 1 – 581K

CURRENT EVENTS

The South Fort Worth industrial submarket posted a Q4 2022 vacancy of 4.0%, which is a record low for the submarket and a figure down from the 5.7% rate recorded in Q3 2022. We expect to see this vacancy figure continue to decrease through the first half of 2023 with an uptick in Q3 and Q4 due to a large wave of speculative development that is slated to deliver during that time.

South Fort Worth as a whole continues to have solid leasing activity on all existing and new products. This is showcased through its 2022 total absorption figure of 4.17M SF, which is a record for the submarket, beating out 2021’s record 3.65M SF year. Furthermore, outside of its north Fort Worth counterpart, south Fort Worth is the only DFW submarket where absorption significantly outpaced deliveries. This further validates its position as one of the top performing submarkets in the metroplex.

Looking forward to 2023, the South Fort Worth speculative development pipeline is currently on pace to deliver over 2.82M SF. If this number holds firm through the year, it will be the first time since 2020 where the submarket delivered less than 3M SF of speculative product. The previous two years were at 3.01M SF in 2022 and 3.76M SF in 2021.

TOP LEASE TRANSACTIONS

• Midwest Food Bank has signed a 34,625 SF lease at Midway Logistics Park with Stream Data Centers.

• Jortsin Transportation Services has signed a 34,473 SF lease at Everman Trade Center with Cabot Properties.

• SCP Distributors has signed a 27,500 SF lease at Midway Business Park with Cohen.

DEALS IN THE MARKET

• Mansfield Commerce Park – a 520K SF four (4) building portfolio .

• 820 Industrial Park – a 75k SF four (4) building portfolio.

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.

• Misfits Market – a 353,970 SF BTS with Rob Riner Companies and Miramar Capital.

• Everman Trade Center | Building E – an 80,300 SF development with Cabot Properties.

• Fort Worth Logistics Hub | Building 2 – 607,074 SF development with VanTrust.

• Carter Park East | Phase 2 - a 558,569 SF three (3) building project with Clarion.

• Junction 20-35 - a 139,496 SF development with CIM.

• Benbrook Business Park - a 917,374 SF four (4) building project with Jackson Shaw.

LARGE EXISTING VACANCIES

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

• Carter Park Distribution | Building 2 – 263,900 SF

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

• Fort Worth South Business Park | Building 6 – 159,932 SF

• 46 Ranch Logistics Park Building 3 – 154,440 SF

• Fort Worth South Business Park | Building 5 – 129,070 SF

• 46 Ranch Logistics Park Building 2 – 113,400 SF