C&W Industrial Insider Mid-Year Report -Q2 2018

Industrial Insider

M I D -Y E A R R E P O R T | Q 2 2 0 1 8

Kurt Griffin, SIOR Executive Managing Director +1 972 663 9818 kurt.griffin@cushwake.com

Nathan Orbin, SIOR Executive Managing Director +1 972 663 9819 nathan.orbin@cushwake.com

Ann Jaggars Analyst +1 972 663 9775 ann.jaggars@cushwake.com

Cushman &Wakefield Dallas

2

Q2 2018

Industrial Insider Mid-Year Report

Table of Contents

4

Mid-Year Update

6

Dallas Market Overview

18

Allen/McKinney

22

Alliance/North Fort Worth

28

Brookhollow/Trinity

32

DFW Airport

38

East Fort Worth

42

Far North/I-35

46

Garland/Mesquite

52

Great Southwest

58

North Dallas/Metropolitan

62

Pinnacle/Turnpike

66

Redbird

70

Richardson/Plano

74

South Dallas

80

South Fort Worth

84

Valwood/N Stemmons

88

Walnut Hill/Stemmons

Q2 2018

3

Cushman &Wakefield Dallas

75

380

380

35

35E

380

35W

ALLEN/MCKINNEY

287

FAR NORTH I-35

75

35E

121

114

RICHARDSON/PLANO

VALWOOD/ STEMMONS

114

35W

NORTH DALLAS/ METROPOLITAN

35E

121

75

287

ALLIANCE

635

GARLAND

DFW AIRPORT

114

635

WALNUT HILL/ STEMMONS

360

635

114

121

12

NORTH FORT WORTH

12

35E

30

199

183

183

CENTRAL DALLAS

BROOKHOLLOW/ TRINITY

820

75

820

EAST FORT WORTH

35W

80

PINNACLE/ TURNPIKE

121

WEST FORT WORTH

360

30

MESQUITE

CENTRAL FORT WORTH

30

12

35E

30

GREAT SOUTHWEST

20

45

30

12

820

175

287

20

12

20

REDBIRD

20

820

20

20

67

35E

175

20

SOUTH DALLAS

287

377

45

360

35W

SOUTH FORT WORTH

67

35E

LEASING VELOCITY AND ABSORPTION CURRENTLY OUTPACE DELIVERIES AND MID-YEAR ACTIVE TENANT REQUIREMENTS IS STRONG AT 25.9 MSF

4 Q2 2018

Industrial Insider Mid-Year Report

Mid-Year Update

Welcome back to our Industrial Insider report. We hope everyone is enjoying their summer. Our team has experienced a lot of positive feedback over the last 12 months, and we are excited to present our new and improved Industrial Insider - Mid-Year Update. In this report, we present the latest DFW industrial market activity and paint a picture of our current cycle’s speed and stamina. Our market is experiencing a time unlike any other and we continue to witness strong growth and activity in every statistical metric. For the first half of 2018, we tracked 11.7 MSF of overall net absorption, putting the greater DFW industrial market on track to exceed 20 MSF for the fourth straight year.

Construction activity is topping record highs in the DFW market with mid- year completions at 10.8 MSF and 22.6 MSF of new supply currently under construction, 74% of which is speculative product. This influx of speculative product in the construction pipeline may raise concerns from a vacancy perspective, but leasing velocity and absorption currently outpace deliveries and mid-year active tenant requirements look strong at 25.9 MSF. We hope you find this special Mid-Year Update edition of our Industrial Insider informative. We trust the content of the data validates our excitement for the direction our market is heading. Wishing everyone success throughout the remainder of 2018.

30

ROCKWALL

Kurt Griffin, SIOR Executive Managing Director +1 972 663 9818 kurt.griffin@cushwake.com

Nathan Orbin, SIOR Executive Managing Director +1 972 663 9819 nathan.orbin@cushwake.com

Ann Jaggars Analyst +1 972 663 9775 ann.jaggars@cushwake.com

Q2 2018

5

Cushman &Wakefield Dallas

6 Q2 2018

Industrial Insider Mid-Year Report

DFW Overview

Q2 2018

7

Cushman &Wakefield Dallas

DFW Overview

Dallas-Fort Worth’s industrial market continues to see enthusiastic interest from tenants, developers, and in- vestors. The thriving DFW economy remains an essential contributor to the industrial market as population and employment growth persist. At mid-year, strong industrial demand throughout the DFW market prevails, as seen by the 11.7 MSF of net absorp- tion and 12.1 MSF of leasing activity year-to-date. Despite the 10.8 MSF of new supply year-to-date, the DFW industrial mar- ket has sustained a tightened overall vacancy of 6.4% over the first two quarters of 2018.

Great Southwest continues to be the hottest submarket in DFW. It account- ed for 6.8 MSF of overall net absorp- tion for the first half of 2018. GSW’s level of market activity was followed by South Dallas, with 2.7 MSF of net absorption. Alliance and DFW Airport were not far behind, each posting 1.2 MSF of net absorption. Looking ahead, we don’t see any near-term slowdown in the Dallas-Fort Worth industrial market. We are very optimistic as DFW is well positioned to continue to see elevated demand and activity through the rest of the year.

DFW INDUSTRIAL SUBMARKET LEADERS AT MID- YEAR ARE GREAT SOUTHWEST, SOUTH DALLAS, ALLIANCE AND DFW AIRPORT WITH NET ABSORPTIONS OF 6.8 MSF, 2.7 MSF, 1.2 MSF AND 1.2 MSF, RESPECTIVELY

MARKET SUMMARY

2010 2011

2012 2013 2014 2015 2016 2017 2018 YTD

614.9 616.9 619.0 626.4 643.5 663.1 684.3 713.5 725.5

Inventory (MSF) Overall Net Absorption (MSF) Overall Vacancy

2.9 12.5 12.1

17.4 15.6 20.2 23.7 25.9 11.7

12.1% 10.4% 8.7% 7.0% 7.1% 6.8% 6.0% 6.5% 6.4%

Completions (MSF)

1.5

2.0 2.1

7.4

17.1

19.6 21.2 29.2 10.8

Under Construction (MSF)

1.4

2.0 4.0 13.9 16.6 20.3 26.6 19.3 22.6

8 Q2 2018

Industrial Insider Mid-Year Report

VACANCY

HISTORICAL AVERAGE = 8.2%

NET ABSORPTIONS / COMPLETIONS

NEW SUPPLY

HISTORICAL AVERAGE = 12.5 MSF

NET ABSORPTION / COMPLETIONS

35.0

30.0

25.0

20.0

15.0 Millions

10.0

5.0

0.0

2010 2011

2012

2013

2014 2015

2016 2017 YTD 2018

OVERALL NET ABSORPTION COMPLETIONS

Q2 2018

9

Cushman &Wakefield Dallas

10 Q2 2018

Industrial Insider Mid-Year Report

DFW Overview

Overall Vacancy Rate

2018 YTDNet Absorption

Under Construction

2018 YTD Completions

Building Size (SF)

Inventory

Allen/McKinney

7,661,057

2.7%

140,000

0

140,000

Brookhollow/Trinity

48,802,343

2.1%

20,578

0

0

Central Dallas

14,424,995

2.5%

0

0

0

DFW Airport

79,757,076

6.4%

1,200,570

5,401,564

444,429

Far North/I-35

18,406,188

4.5%

84,530

335,094

336,494

Garland

43,930,950

6.2%

354,236

1,038,497

0

Great Southwest

110,749,911

6.9%

6,818,521

1,654,986

3,826,733

Mesquite

17,997,954

10.9%

-440,860

2,340,730

0

North Dallas/Metropolitan

19,367,912

6.0%

-272,846

0

0

Pinnacle/Turnpike

27,774,375

7.8%

-712,173

0

189,200

Redbird

22,284,459

4.1%

-171,300

0

154,960

Richardson/Plano

36,171,641

6.4%

82,898

284,908

0

Rockwall

2,729,554

0.1%

0

0

0

South Dallas

48,804,025

19.5%

2,729,030

4,667,783

3,711,610

Valwood/N Stemmons

50,362,030

4.1%

200,995

235,900

0

Walnut Hill/Stemmons

22,165,365

2.4%

-29,634

0

0

DALLAS TOTAL

571,389,835

6.7%

10,004,545

15,959,462

8,803,426

Alliance

39,936,038

6.6%

1,222,808

4,654,370

1,362,203

Central Fort Worth

16,008,482

1.8%

-79,277

0

0

East Fort Worth

23,482,411

6.0%

67,826

0

0

North Fort Worth

42,826,217

3.1%

162,296

1,465,155

221,000

South Fort Worth

27,204,944

7.9%

240,000

478,939

308,061

West Fort Worth

4,344,345

9.7%

90,000

0

90,000

FORT WORTH TOTAL

153,802,437

5.4%

1,703,653

6,598,464

1,981,264

DFW TOTAL

725,192,272

6.4%

11,708,198

22,557,926

10,784,690

Q2 2018

11

Cushman &Wakefield Dallas

Supply

Completed Construction

Completed Construction

398,719

816,504

41,324 82,289

747,500

84,948

378,959

FIRST GENERATION VACANCIES

6,453,091

2,866,835

50,387

1,136,620

189,200

Allen/McKinney Far North/I-35 Mesquite Pinnacle/Turnpike Redbird

Alliance Garland N Stemmons/Valwood South Dallas East Ft. Worth

DFW Airport GSW North Ft Worth South Ft Worth Frisco

12 Q2 2018

Industrial Insider Mid-Year Report

SUM OF AVAILABLE SPACE - Completed Construction

Building Size (SF)

100,000-249,999 250,000-499,999 500,000-749,999 750,000+

Grand Total

Alliance

234,277

312,733

269,494

816,504

DFW Airport

452,705

294,795

747,500

East Ft Worth

41,324

41,324

Far North/I-35

82,289

82,289

Garland

378,959

378,959

GSW

682,015

2,184,820

2,866,835

N Stemmons/Valwood

50,387

50,387

North Ft Worth

407,229

564,670

164,721

1,136,620

Pinnacle/Turnpike

189,200

189,200

South Dallas

537,034

1,672,648

1,280,350

2,963,059

6,453,091

South Ft Worth

43,598

355,121

398,719

Frisco

84,948

84,948

GRAND TOTAL

2,713,295

5,855,457

1,714,565

2,963,059

13,246,376

COUNT OF AVAILABLE SPACE - Completed Construction

(VACANCY WITHIN RANGE)

Building Size (SF)

100,000-249,999 250,000-499,999 500,000-749,999 750,000+

Grand Total

Alliance

1

1

1

3

DFW Airport

4

1

5

East Ft Worth

1

1

Far North/I-35

1

1

Garland

1

1

GSW

6

11

17

N Stemmons/Valwood

1

1

North Ft Worth

2

2

1

5

Pinnacle/Turnpike

1

1

South Dallas

4

4

2

4

14

South Ft Worth

1

2

3

Frisco

1

1

GRAND TOTAL

21

24

4

4

53

Q2 2018

13

Cushman &Wakefield Dallas

Supply

Under Construction

317,446

323,845

2,503,937

2,605,226

UNDER CONSTRUCTION VACANCIES

1,452,485

234,904

3,930,751

976,300

2,157,693

1,013,497

Allen/McKinney Far North/I-35 Mesquite Pinnacle/Turnpike Redbird

Alliance Garland N Stemmons/Valwood South Dallas East Ft. Worth

DFW Airport GSW North Ft Worth South Ft Worth Frisco

14 Q2 2018

Industrial Insider Mid-Year Report

SUM OF AVAILABLE SPACE - Under Construction

Building Size (SF)

100,000-249,999 250,000-499,999 500,000-749,999 750,000+

Grand Total

Allen/McKinney

317,446

317,446

Alliance

809,628

705,956

1,089,642

2,605,226

DFW Airport

827,631

1,354,336

747,984

1,000,800

3,930,751

Garland

685,897

327,600

1,013,497

GSW

465,117

1,168,116

524,460

2,157,693

Mesquite

393,100

583,200

976,300

N Stemmons/Valwood

234,904

234,904

North Ft Worth

432,485

270,000

750,000

1,452,485

South Dallas

237,678

1,221,612

1,044,647

2,503,937

South Ft Worth

323,845

323,845

Grand Total

3,918,103

3,929,680

4,533,212

3,135,089

15,516,084

Frisco

84,948

84,948

GRAND TOTAL

3,694,518

4,751,298

2,682,972

4,933,159

16,061,947

COUNT OF AVAILABLE SPACE - Under Construction

(VACANCY WITHIN RANGE)

Building Size (SF)

100,000-249,999 250,000-499,999 500,000-749,999 750,000+

Grand Total

Allen/McKinney

2

2

Alliance

2

1

1

4

DFW Airport

5

5

2

1

13

Garland

4

1

5

GSW

3

3

1

7

Mesquite

2

1

3

N Stemmons/Valwood

1

1

North Ft Worth

2

1

1

4

South Dallas

1

2

1

4

South Ft Worth

2

2

Grand Total

22

12

8

3

45

Frisco

1

1

GRAND TOTAL

21

14

4

5

44

Q2 2018

15

Cushman &Wakefield Dallas

Demand

ACTIVE REQUIREMENTS TOTALING*

AVERAGE REQUIREMENT

25,970,000 SF 519,400 SF

*NOTE: 150,000 SF +

ESTIMATED OCCUPANCY TIMELINE

1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 5,000,000

0 500,000

3Q 2018 4Q 2018

2019

1Q 2019 2Q 2019 3Q 2019 4Q 2019

HISTORICAL REQUIREMENTS (SF)

12 14 15 17 18 20 21 23 24 26

0 2 3 5 6 8 9 11

Millions

16 Q2 2018

Industrial Insider Mid-Year Report

REQUIREMENTS BY SIZE

Size (SF)

Requirements

1,000,000 +

7

500,000 - 999,999

15

250,000 - 499,999

14

100,000 - 249,999

14

REQUIREMENTS BY BROKERAGE FIRM (SF)

# Tenants

Cushman & Wakefield CBRE Colliers ESRP Fischer Holt Lunsford Jackson Cooksey JLL Lee & Associates NAI Paladin Partners

2% 2%

6%

2%

ushman & Wakefield BRE olliers SRP ischer olt Lunsford ackson Cooksey LL ee & Associates AI aladin Partners

20%

4%

12%

18%

6%

2%

avills Studley tream Realty

2%

8%

16%

Savills Studley Stream Realty

REQUIREMENTS BY SUBMARKET (SF)

Pinnacle Mesiqute Redbird

200,000

500,000

800,000

Market Wide DFW Airport GSW South Dallas Alliance Ft. Worth

1,075,000

1,500,000

2,965,000

4,025,000

4,590,000

13,595,000

0

5,000,000

10,000,000

15,000,000

TA B L E O F CON T E N T S

Q2 2018

17

Cushman &Wakefield Dallas

18 Q2 2018

Industrial Insider Mid-Year Report

Allen/McKinney

Q2 2018

19

Cushman &Wakefield Dallas

Allen/McKinney

OBSERVATIONS & TRENDS

75

• Located on the northernmost edge of the DFW market with heavy residential surrounding population • Most new supply to this submarket comes from built-to- suit, shallow bay, and high-finish deals (flex space) • Low vacancy and positive overall absorption has motivated planning and ground breaking of several speculative new developments –– Hunt Southwest delivering speculative 202K SF front- park, rear-load in Q3 2018 at I-75 and Wilmeth Road –– Dalfen delivering McKinney Fulfillment Center, a speculative 115K SF front-park, rear-load at the SEC of Redbud Blvd and Corporate Drive in McKinney in Q4 2018 SELECT NEW DEVELOPMENTS:

380

ALLEN/MCKINNEY

ALLEN

75

MURPHY

RICHARDSON

75

30

MARKET SUMMARY

635

ND

2010 2011

2012 2013 2014 2015 2016 2017 2018 YTD

30

6.4

6.7

6.7

6.8

6.9

6.9

7.3

7.5

7.7

Inventory (MSF)

LAS

80

Overall Net Absorption (MSF)

(224,973) 98,155

32,900 194,810 499,072 338,526 470,371 106,799 140,000

13.8% 16.3% 15.8% 13.8% 8.0% 3.1% 2.3% 3.4% 2.7%

Overall Vacancy

FORNEY

45

12

108,000 305,000 20

0

66,000 117,261

0

423,927 198,000 140,000

175

Completions (MSF)

BALCH SPRINGS

20

Under Construction (MSF) HUTCHINS

0

66,000 66,000 117,261

0

291,620 108,000 140,000 317,446

175

45

ANCASTER

WILMER

20 Q2 2018

Industrial Insider Mid-Year Report

VACANCY

Historical Average = 7.4% ISTORICAL AVERAGE = 7.4%

18.0%

16.0%

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

Q2 2012

Q2 2013

Q2 2014

Q2 2015

Q2 2016

Q2 2017

Q2 2018

OVERALL VACANCY RATE

HISTORICAL AVERAGE

NET ABSORPTIONS / COMPLETIONS

NET ABSORPTION / COMPLETIONS

0.6

0.5

NET ABSORPTION / COMPLETIONS

0.4

0.6

0.5

0.3

0.4

Millions

0.2

0.3

Millions

0.2

0.1

0.1

0.0

0.0

2012 2013 2014 2015 2016 2017 2018 YTD 2012 2013 2014 2015 16 2017 2018 YTD OVERALL NET ABSORPTION COMPLETIONS OVERALL NET ABSORPTION COMPLETIONS

TA B L E O F CON T E N T S

Q2 2018

21

Cushman &Wakefield Dallas

22 Q2 2018

Industrial Insider Mid-Year Report

Alliance/ North Fort Worth

Q2 2018

23

Cushman &Wakefield Dallas

Alliance/North Fort Worth

The North Fort Worth and Alliance submarkets are situated along I-35W on the northwest edge of DFW. Both submarkets benefit from proximity to Alliance’s Global Logistics Hub, which includes the BNSF Railway Intermodal Terminal, Alliance Airport, and UPS and FedEx hubs. While Alliance has traditionally been a finite submarket mostly controlled by Hillwood, other developers are entering the area. However, limited land availability will constrict opportunities for competing projects. North Fort Worth is an infill submarket with few remaining large land parcels available for development. The DENTON 35E 35

submarket’s tenant base has a high percentage of rail users and light manufacturing. Both Alliance and North Fort Worth have been active in construction activity over the last several years and continue to experience impressive leasing velocity. Since 2015, the combined submarkets have delivered 14.2 MSF and have posted an overall net absorption of 15.1 MSF. Of the speculative assets delivered in both submarkets since 2015, 82% has leased. Both North Fort Worth and Alliance will remain important players for DFW as dynamic industrial submarkets. 75

ALLIANCE AND NORTH FORT WORTH COMBINED HAVE 4.6 MSF OF SPECULATIVE PRODUCT SET TO DELIVER BY YEAR-END

380

380

LITTLE ELM

CORINTH

35W

FRISCO

87

ALLEN

OBSERVATIONS & TRENDS HIGHLAND VILLAGE

75

PLANO

• New supply delivered in 2018 is expected to hit 6.4 MSF, more than doubling submarket deliveries for 2017 • Hillwood has plans to break ground on two new speculative buildings in Alliance next month (780K SF and 500K SF) and are in the design phase of their next 1 MSF speculative building that will be expandable to 1.5 MSF • New 203 acre development by DHL Real Estate Solutions, Elizabeth Creek Gateway, is expected to bring nearly 4 MSF of new product and represents one of few remaining non-Hillwood controlled developments RICHARDSON FARMERS BRANCH HIGHLAND PARK ADDISON CARROLLTON 30 635 635 635 35E 35E 35E 12 114 114 121 183 121 12 75

FLOWER MOUND

114

MURPHY

ROANOKE

114

SOUTHLAKE

35W

GRAPEVINE

287

ALLIANCE

KELLER

NORTH RICHLAND HILLS

360

COLLEYVILLE

121

NORTH FORT WORTH

BEDFORD

SAGINAW

EULESS

183

HALTOM CITY

IRVING

820

75

820

35W

DALLAS

80

121

360

30

30

WHITE SETTLEMENT

GRAND PRAIRIE

ARLINGTON

12

FORT WORTH

35E

30

45

12

820

175

24 Q2 2018

287

BALCH SPRINGS

12

20

820

20

20

Industrial Insider Mid-Year Report

MARKET SUMMARY - Alliance

2010 2011

2012 2013 2014 2015 2016 2017 2018 YTD

27.6

27.6

27.6

28.8 31.5 34.5

36.4 38.1

39.9

Inventory (MSF)

Overall Net Absorption (MSF)

169,458 746,052

1.4

1.4

1.4

1.3

2.5

4.0

1.2

16.4% 13.8% 8.9% 7.5% 11.2% 15.1% 12.4% 6.0% 6.6%

Overall Vacancy

243,496 25,000

0

1.1

2.7

3.0

1.8

1.7

1.4

Completions (MSF)

73,726

48,726

48,726

3.8

2.8

1.2

1.7

2.7

4.7

Under Construction (MSF)

MARKET SUMMARY - North Fort Worth

2010 2011

2012 2013 2014 2015 2016 2017 2018 YTD

35.8

35.9

36.0

36.0

36.6

37.1

40.6

42.6 42.8

Inventory (MSF)

Overall Net Absorption (MSF)

367,833 541,333 328,639 373,041 309,287 (837,861) 4.5

2.3

162,296

6.6% 5.3% 4.9% 3.8% 4.4% 8.1% 4.7% 4.0% 3.1%

Overall Vacancy

0

58,603 188,000

0

541,216 559,367

3.4

2.1

221,000

Completions (MSF)

0

188,000

0

0

0

3.3

1.4

1.1

1.5

Under Construction (MSF)

NET ABSORPTIONS/ COMPL TIONS

VACANCY

NET ABSORPTION / COMPLETIONS ALLIANCE/NORTH FORT WORTH COMBINED

Historical Combined Average = 6.9% HISTORICAL AVERAGE = 6.9%

8.0

14.0%

7.0

12.0%

6.0

10.0%

5.0

8.0%

4.0

6.0%

Millions

3.0

4.0%

2.0

2.0%

1.0

0.0%

Q2 2012

Q2 2013

Q2 2014

Q2 2015

Q2 2016

Q2 2017

Q2 2018

0.0

OVERALL VACANCY RATE

HISTORICAL AVERAGE

2012 2013 2014 2015 2016 2017 2018 YTD

OVERALL NET ABSORPTION COMPLETIONS

Q2 2018

25

Cushman &Wakefield Dallas

Alliance/North Fort Worth

SELECT LEASING ACTIVITY Tenant Building

Location

SF Leased

Stanley Black & Decker

Alliance Northport - Bldg 3

I-35W & Sam Lee Ln, Northlake

1,214,000

3M

300 Gateway

300 Gateway Pky, Roanoke

603,050

XPO Logistics

Alliance Center North 15

3300 Eagle Pky, Fort Worth

318,768

CEVA Logistics

Synergy Crossing - Bldg 200

1101 I-35W, Fort Worth

300,000

Carolina Beverage

Alliance Gateway 57

1051 Republic Dr, Roanoke

201,204

ATAC

Alliance Westport 3

920 Westport Pky, Haslet

183,908

Mattel

Prologis Meacham Crossing

4601 Gold Spike Dr, Fort Worth

183,832

Lanter Delivery Systems Alliance Gateway 49

899 Henrietta Creek Rd, Roanoke

170,000

Alliance Sports Group Alliance Gateway 2

5650 Alliance Gateway Fwy, Fort Worth

142,000

SkyCam

Parc North - Bldg 3

2751 Northern Cross Blvd, Fort Worth

74,623

Wise Foods

Railhead Business Station

800 Railhead Rd, Fort Worth

33,673

NEW DEVELOPMENTS

Completed - Last 12Months

Building

Developer/Owner

RBA SF Available % Leased

TDC Park 35/820

Transpacific Development Company

712,842

0

100%

35/820 @ Mercantile Center

Hunt Southwest

657,043

164,721

75%

TTI Distribution Facility

TTI, Inc

600,000

0

100%

Synergy Crossing - Bldg 200

Ironwood Realty/TCRG Properties

503,500

202,000

60%

Ridge Railhead - Bldg 2

Ridge Development/LaSalle Inv Mgmt

362,670

362,670

0%

TCC 35 Eagle - Bldg H

Trammell Crow

312,733

312,733

0%

TCC 35 Eagle - Bldg J

Trammell Crow

234,277

234,277

0%

Park 820 - Bldg 1

Scannell

220,229

220,229

0%

TOTALS

58.5%

26 Q2 2018

Industrial Insider Mid-Year Report

Under Construction

Building

Developer/Owner

RBA

SF Available

Est. Delivery

TCC 35 Eagle - Bldg A

Trammell Crow

1,089,642

1,089,642

Jul-18

Fossil Creek Crossing - Bldg 1

Huntington / JDA

219,396

219,396

Jul-18

Fossil Creek Crossing - Bldg 2

Huntington / JDA

213,089

213,089

Jul-18

Andrews Distributing at Railhead

Ridge Development

400,000

0

Aug-18

Park 820 - Bldg 2

Scannell

270,000

270,000

Aug-18

Speedway Distribution Ctr - Bldg C

IDI Logistics

316,128

316,128

Oct-18

Synergy Crossing - Bldg 500

Ironwood / TCRG Properties

750,000

750,000

Dec-18

Elizabeth Creek Gateway - Bldg A

DHL

705,956

705,956

Dec-18

Elizabeth Creek Gateway - Bldg B

DHL

493,500

493,500

Dec-18

Alliance Northport 3

Hillwood

1,029,846

0

Jun-19

Alliance Center North 3

Hillwood

780,000

780,000 Break Ground 3Q 2018

Alliance Northport 1

Hillwood

500,000

500,000 Break Ground 3Q 2018

FORECAST The construction pipeline for both Alliance and North Fort Worth will remain active throughout the remainder of 2018 and well into 2019. An increase in vacancy for both submarkets is likely - a result of the 4.6 MSF of speculative product set to deliver by year-end. Competitive developers will continue their effort to overcome Alliance’s barriers to entry with acquisition and development of non-developer controlled sites in the area.

TA B L E O F CON T E N T S

Q2 2018

27

Cushman &Wakefield Dallas

28 Q2 2018

Industrial Insider Mid-Year Report

Brookhollow/ Trinity

Q2 2018

29

FRISCO

Cushman &Wakefield Dallas

ALLEN

LAND AGE

75

PLANO

Brookhollow/Trinity 121

35E

MURPHY

ADDISON

OBSERVATIONS & TRENDS

RICHARDSON

CARROLLTON

35E

121

75

• The majority of Brookhollow/Trinity’s building stock was built several cycles ago and struggles to meet modern day supply chain and distribution demands • Demand in this submarket is driven by companies with smaller operations and/or local, last mile fulfillment and distribution • This infill submarket is primarily built-out and new supply isn’t likely until vacancy increases and developers can make sense of redeveloping old product 30 30 80

635

FARMERS BRANCH

114

635

635

114

12

12

HIGHLAND PARK

35E

183

BROOKHOLLOW/ TRINITY

IRVING

75

DALLAS

30

GRAND PRAIRIE

12

35E

FORNEY

45

12

175

20

BALCH SPRINGS

12

20

20

HUTCHINS

67

35E

175

DUNCANVILLE

MARKET SUMMARY

45

DESOTO

2010 2011 LANCASTER

2012 2013 2014 2015 2016 2017 2018 YTD WILMER

67

35E

47.9

47,.9

47.9

47.9

48.3

48.3

48.3

48.3

48.8

Inventory (MSF)

Overall Net Absorption (MSF)

(1.1)

398,419 137,953 245,991

1.2

572,730 532,986 64,042 20,578

8.1% 7.3% 7.0% 6.6% 4.7% 3.5% 2.4% 2.2% 2.1%

Overall Vacancy

0

21,400

0

34,400 353,161

0

0

0

0

Completions (MSF)

Under Construction (MSF)

21,400

0

139,561 185,161

0

0

0

0

0

30 Q2 2018

Industrial Insider Mid-Year Report

VACANCY

Historical Average =4.4% HISTORICAL AVERAGE = 4.4%

8.0%

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

Q2 2012

Q2 2013

Q2 2014

Q2 2015

Q2 2016

Q2 2017

Q2 2018

OVERALL VACANCY RATE

HISTORICAL AVERAGE

NET ABSORPTIONS/COMPLETIONS

NET ABSORPTION / COMPLETIONS

1.4

1.2

NET ABSORPTION / COMPLETIONS

1.0

0.6

0.8

0.5

0.6

0.4

Millions

0.3

0.4

Millions

0.2

0.2

0.1

0.0

0.0

2012 2013 2014 2015 2016 2017 2018 YTD 2012 2013 2014 2015 2016 2017 2018 YTD OVERALL NET ABSORPTION COMPLETIONS OVERALL NET ABSORPTION COMPLETIONS

TA B L E O F CON T E N T S

Q2 2018

31

Cushman &Wakefield Dallas

32 Q2 2018

Industrial Insider Mid-Year Report

DFW Airport

Q2 2018

33

Cushman &Wakefield Dallas

DFW Airport

The DFW Airport industrial submarket has a central location with excellent access to multiple major transportation arteries in the greater DFW metroplex and enjoys the highest tenant demand for warehouse/ distribution space. The submarket’s inventory stock is composed of both fee simple ownership and DFW Airport ground leased developments. Since 2015, demand has kept up with new supply and the DFW Airport submarket has played a leading role in absorption for the overall DFW market. 380

Developable infill sites in the DFW Airport submarket are nearly non-existent. This, along with the submarket’s strong leasing velocity on the northern side of the airport, motivated DFW Airport to open up the southern end for ground leased development opportunities. The first wave of new inventory from this opportunity has about 3.1 MSF delivering by year-end. As vacancy remains below the historical average, rates continue to drive upward to meet the elevated demand. 75

OVER THE LAST 12 MONTHS, DFW AIRPORT HAS

ABSORBED 5.4 MSF, NEARLY DOUBLE THE AMOUNT OF NEW DELIVERIES.

DENTON

35

35E

LITTLE ELM

380

CORINTH

35W

FRISCO

ALLEN

HIGHLAND VILLAGE

75

PLANO OBSERVATIONS & TRENDS

35E

121

FLOWER MOUND

MURPHY • Strong leasing velocity of new supply in the submarket, as 81% of deliveries over the last 12 months has leased • DFW Airport closed the first half of 2018 with a record high level of construction activity, at 5.4 MSF of new supply under construction • Of DFW Airport’s 5.4 MSF under construction, 3.9 MSF is set to deliver by year-end, 87% of which is speculative product • The submarket’s mid-year leasing activity was 1.9 MSF, the majority of which will be absorbed in 3Q and 4Q of this year RICHARDSON HIGHLAND PARK 30 30 635 12 75 75

E

114

ADDISON

SOUTHLAKE

CARROLLTON

35E

121

GRAPEVINE

635

FARMERS BRANCH

DFW AIRPORT

114

635

TH LAND LS

360

COLLEYVILLE

114

121

12

BEDFORD

EULESS

35E

183

183

IRVING

820

DALLAS

80

360

30

30

GRAND PRAIRIE

ARLINGTON

12

35E

FORNEY

45

12

175

34 Q2 2018

20

BALCH SPRINGS

12

20

20

20

Industrial Insider Mid-Year Report

MARKET SUMMARY

2010 2011

2012 2013 2014 2015 2016 2017 2018 YTD

62.8

62.9

63.0

65.7 70.4

74.0

76.1

79.3

79.8

Inventory (MSF)

Overall Net Absorption (MSF)

920,319

3.6

2.4

4.5

2.4

3.2

4.6

3.2

1.2

19.2% 13.5% 9.9% 6.8% 9.5% 9.7% 6.1% 5.8% 6.4%

Overall Vacancy

776,483 28,417

85,500

2.7

4.6

3.7

2.1

3.2

444,429

Completions (MSF)

Under Construction (MSF)

0

85,500

1.1

4.5

3.6

2.3

3.7

1.6

5.4

COMPLETIONS / NET ABSORPTIONS

VACANCY

NET ABSORPTION / COMPLETIONS

Historical Average = 8.2% HISTORIC L AVERAGE = 8.2%

2.0 2.5 3.0 3.5 4.0 4.5 5.0

14.0%

12.0%

10.0%

8.0%

6.0%

Millions

4.0%

1.0 1.5

2.0%

0.0 0.5

0.0%

Q2 2010 Q2 2011

Q2 2012 Q2 2013 Q2 2014 Q2 2015 Q2 2016 Q2 2017 Q2 2018

2012 2013 2014 2015 2016 2017 2018 YTD

OVERALL VACANCY RATE

HISTORICAL AVERAGE

OVERALL NET ABSORPTION COMPLETIONS

Q2 2018

35

Cushman &Wakefield Dallas

DFW Airport

SELECT LEASING ACTIVITY Tenant Building

Location

SF Leased

PPG

Lakeside Ranch 530

1001 Lakeside Pky, Flower Mound

449,220

VIRA Insight

Majestic Airport Center DFW - Bldg 6

2701 S Valley Pky, Lewisville

329,060

American Hotel Register International Logistics Center - Bldg C

3801 S 20th Ave, DFW Airport

227,924

Confidential

Prologis Park 121 - Bldg 3

220 N Freeport Pky, Coppell

211,000

DHL

DFW Global Logistics Centre - Bldg 1

1225 Mustang Dr, DFW Airport

117,000

Sunbelt Marketing

Majestic Airport Center DFW - Bldg 5

2900 S Valley Pky, Lewisville

109,588

Sourcecrop/Source HOV Parc Royal - Bldg 5

3750 W Royal Ln, Irving

99,451

Crestron

International Logistics Center - Bldg B

3711 S 20th Ave, DFW Airport

81,627

American Airlines

DFW Global Logistics Centre - Bldg 2

1275 Metro Cir, DFW Airport

81,000

AIT Worldwide Logistics DCT DFW Trade Center

4301 Patriot Dr, Grapevine

53,778

Confidential

Logistics Center V

750 Royal Ln, DFW Airport

52,500

Network Logistics

Logistics Center V

750 Royal Ln, DFW Airport

42,600

Hankyu Hanshin

DFW Global Logistics Centre - Bldg 1

1225 Mustang Dr, DFW Airport

24,446

Stevens Global

DFW Global Logistics Centre - Bldg 3

1215 Metroplace Dr, Grapevine

20,112

NEW DEVELOPMENTS

Completed - Last 12Months

Building

Developer/Owner

RBA SF Available % Leased

Logistics Center II

Gramercy

1,008,176

0

100%

Prologis Park 121 - Bldg 3

Prologis

424,080

0

100%

Valley View DFW Airport

KKR

294,795

294,795

0%

DFW Global Logistics Ctr - Bldg 1

Ascendant Commercial/Clarion Partners

158,466

0

100%

DCT Freeport West - Bldg 2

DCT

111,012

111,012

0%

DFW Global Logistics Ctr - Bldg 2

Ascendant Commercial/Clarion Partners

108,300

0

100%

TOTALS

80.7%

36 Q2 2018

Industrial Insider Mid-Year Report

Under Construction

Building

Developer/Owner

RBA SF Available

Est. Delivery

Int’l Logistics Center - Bldg B

Stream/Cabot Properties

203,476

121,849

Jul-18

Int'l Logistics Center - Bldg A

Stream/Cabot Properties

118,634

118,634

Jul-18

Int’l Logistics Center - Bldg C

Stream Cabot Properties

324,686

96,762

Aug-18

Prologis Park 121 - Bldg 5B

Prologis

125,520

125,520

Sep-18

Gateway Logistics Center - Bldg 1

Bandera Ventures/Long Warf

309,240

309,240

Oct-18

Gateway Logistics Center - Bldg 2

Bandera Ventures/Long Warf

211,316

211,316

Nov-18

Copeland Commercial/ Goldman Sachs

DFW Commerce Center - Bldg 1

1,000,584 1,000,584

Dec-18

Airport South Logistics Center

Robinson Weeks Partners

562,640

562,640

Dec-18

Gateway Logistics Center - Bldg 3 Bandera Ventures/Long Warf

374,900

374,900

Dec-18

Gateway Logistics Center - Bldg 4 Bandera Ventures/Long Warf

250,312

250,312

Jan-19

Gateway Logistics Center - Bldg 5 Bandera Ventures/Long Warf

267,254

267,254

Feb-19

Majestic Airport Center - Bldg 7

Majestic Realty

306,280

306,280

Mar-19

Lakeside Ranch 530

Duke

634,564

185,344

Apr-19

TCC Passport Park - Bldg 1

Trammell Crow Company

1,021,440 1,021,440 Break Ground 3Q 2018

TCC Passport Park - Bldg 2

Trammell Crow Company

711,360

711,360 Break Ground 3Q 2018

FORECAST Expect to see an uptick in vacancy as 6.5 MSF of new supply is set to deliver throughout the second half of 2018 and throughout 2019. About 82% of this new product delivering is located on DFW Airport ground leased land just north of GSW. Looking ahead, tenants will continue to be attracted to the submarket, and we anticipate elevated absorption numbers to remain consistent.

TA B L E O F CON T E N T S

Q2 2018

37

Cushman &Wakefield Dallas

38 Q2 2018

Industrial Insider Mid-Year Report

East Fort Worth

Q2 2018

39

ALLEN

HIGHLAND VILLAGE

Cushman &Wakefield Dallas

75

PLANO

35E

121

FLOWER MOUND

4

East Fort Worth ROANOKE SOUTHLAKE 114

MURPHY

ADDISON

RICHARDSON

CARROLLTON

35W

35E

121

75

GRAPEVINE

287

635

OBSERVATIONS & TRENDS FARMERS BRANCH

114

KELLER

635

NORTH RICHLAND HILLS

360

COLLEYVILLE

635

• Comprised primarily of smaller, multi-tenant product 114

121

12

12

BEDFORD

GINAW

• Limited new development opportunities due to lack of available land and shallow demand • First Industrial sold Midway Business Park, a 93% leased 470K SF shallow bay industrial portfolio located at SH 121 and I-820, to Cohen Asset Management • Hunt Southwest’s speculative 300K SF Riverbend West Distribution Center traded to Pure Industrial at 86% leased HIGHLAND PARK DALLAS 45 30 35E 35E 30 12 12 12 183 75 80 175

EULESS

183

HALTOM CITY

IRVING

820

820

EAST FORT WORTH

35W

121

360

30

GRAND PRAIRIE

ARLINGTON

FORT WORTH

287

20

BALCH SPRINGS

20

820

20

20

HUTCHINS

67

35E

175

20

DUNCANVILLE

FOREST HILL

287

45

360

35W

DESOTO

LANCASTER

WILMER

MANSFIELD

67

35E

MARKET SUMMARY

2010 2011

2012 2013 2014 2015 2016 2017 2018 YTD

22.9

22.9

22.9

22.9

23.0

23.0

23.4 23.5

23.5

Inventory (MSF)

Overall Net Absorption (MSF)

16,690 (54,492) 35,902

97,359 121,025 (127,368) 216,947 23,604

67,826

5.4% 5.7% 5.7% 5.3% 4.9% 5.8% 6.1% 6.4% 6.0%

Overall Vacancy

0

21,208 25,000

0

50,000 79,800 301,500 100,000

0

Completions (MSF)

Under Construction (MSF)

0

0

0

50,000

0

0

0

0

0

40 Q2 2018

Industrial Insider Mid-Year Report

VACANCY

Historical Average = 5.4% ISTORICAL AVERAGE = 5.4%

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

Q2 2012

Q2 2013

Q2 2014

Q2 2015

Q2 2016

Q2 2017

Q2 2018

OVERALL VACANCY RATE

HISTORICAL AVERAGE

NET ABSORPTIONS/COMPLETIONS

NET ABSORPTION / COMPLETIONS

0.2 0.2 0.3 0.3 0.4

NET ABSORPTION / COMPLETIONS

0.6

0.5

0.1 0.1

0.4

Millions

0.3

(0.2) (0.1) (0.1) 0.0

Millions

0.2

0.1

0.0

2012 2013 2014 2015 2016 2017 2018 YTD 2012 2013 2014 2015 16 2017 2018 YTD OVERALL NET ABSORPTION COMPLETIONS OVERALL NET ABSORPTION COMPLETIONS

TA B L E O F CON T E N T S

Q2 2018

41

Cushman &Wakefield Dallas

42 Q2 2018

Industrial Insider Mid-Year Report

Far North/I-35

Q2 2018

43

Cushman &Wakefield Dallas

Far North/I-35

OBSERVATIONS & TRENDS 75

DENTON

380

35

• Submarket surrounded by heavy residential population

35E

LITTLE ELM

380

CORINTH

35W

• Proximity to DFW Airport, rooftops and I-35 drives demand

FRISCO

ALLEN

FAR NORTH I-35

HIGHLAND VILLAGE

75

• Limited available land for development

PLANO

SELECT MARKET ACTIVITY

35E

121

FLOWER MOUND

MURPHY

–– Toyota Motor Sales leased the full 121,188 SF of ML Realty’s 121 Riverview Crossing, a speculative front-park, rear-load building at SH 121 and Midway Rd in Lewisville –– KMM leased 48,111 SF of Lincoln Property Company’s 130,400 SF speculative front-park, rear load building at I-35E and Lakeway Drive in Lewisville 30 635

ROANOKE

114

ADDISON

SOUTHLAKE

RICHARDSON

CARROLLTON

35W

35E

121

75

GRAPEVINE

635

FARMERS BRANCH

114

KELLER

635

NORTH RICHLAND HILLS

360

COLLEYVILLE

114

121

12

12

BEDFORD

HIGHLAND PARK

EULESS

35E

30

183

SELECT NEW DEVELOPMENT

183

HALTOM CITY

IRVING

75

820

–– First Industrial is kicking off Phase I of First Park 121, which includes two speculative front-park, rear-load buildings (Building A – 220,480 SF and Building B – 124,800 SF), located at Midway Rd and FM 544 in Lewisville FORNEY 20 12 80 175

W

DALLAS

121

360

30

30

GRAND PRAIRIE

ARLINGTON

12

RTH

35E

45

287

BALCH SPRINGS

12

20

820

20

20

HUTCHINS

67

35E

175

DUNCANVILLE

REST HILL

MARKET SUMMARY 287

45

360

W

DESOTO

LANCASTER

WILMER

MANSFIELD

67

35E

2010 2011

2012 2013 2014 2015 2016 2017 2018 YTD

15.4

15.4 15.6 15.7

16.0 16.1

16.8

18.1

18.4

Inventory (MSF)

Overall Net Absorption (MSF)

746,641 277,233 457,710 122,750 532,043 146,188 490,918

1.8

84,530

10.7% 9.0% 7.2% 7.0% 5.0% 4.7% 5.9% 2.8% 4.5%

Overall Vacancy

0

23,750 182,125 102,719 231,615 105,004 724,868

1.3

336,494

Completions (MSF)

Under Construction (MSF)

23,750 139,375 74,219 133,787 105,004 377,670

1.3

565,775 335,094

44 Q2 2018

Industrial Insider Mid-Year Report

VACANCY

Historical Average =5.3% ISTORICAL AVERAGE = 5.3%

9.0%

8.0%

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

Q2 2012

Q2 2013

Q2 2014

Q2 2015

Q2 2016

Q2 2017

Q2 2018

OVERALL VACANCY RATE

HISTORICAL AVERAGE

NET ABSORPTIONS/COMPLETIONS

NET ABSORPTION / COMPLETIONS

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0

NET ABSORPTION / COMPLETIONS

0.6

0.5

0.4

Millions

0.3

Millions

0.2

0.1

0.0

2012 2013 2014 2015 2016 2017 2018 YTD 2012 2013 2014 2015 2 16 2017 2018 YTD OVERALL NET ABSORPTION COMPLETIONS OVERALL NET ABSORPTION COMPLETIONS

TA B L E O F CON T E N T S

Q2 2018

45

Cushman &Wakefield Dallas

46 Q2 2018

Industrial Insider Mid-Year Report

Garland/Mesquite

Q2 2018

47

Cushman &Wakefield Dallas

Garland/Mesquite

Located on the eastern edge of the DFW metroplex, the Garland and Mesquite submarkets are attractive for their proximity to abundant labor and Interstate Freeways. Mesquite’s tenant base largely consists of 3PLs and manufacturing parts suppliers, while Garland’s has a higher percentage of owner/user tenants. The majority of Mesquite’s inventory centers around the Union Pacific Intermodal hub. Product type consists of mostly cross dock and front load space that is suitable for modern distribution requirements. The Garland submarket’s product type is more diverse, ranging from 380

multi-tenant office showroom/flex and manufacturing space to warehouse distribution, and is comprised of both older and newer building stock. Historically, the Mesquite submarket’s construction activity has been almost exclusively build to suits, however, there has recently been a shift and speculative developments are starting to balance construction activity. In Garland, developers are actively seeking redevelopment opportunities, and recent speculative developments in both the Garland and Mesquite submarkets have experienced healthy leasing velocity.

OVER THE NEXT 9 MONTHS, MESQUITE WILL DELIVER 2.3 MSF OF PRODUCT, THE MOST NEW INVENTORY THE SUBMARKET HAS SEEN IN TEN YEARS. 75

RISCO

ALLEN

75

PLANO

MURPHY

OBSERVATIONS & TRENDS

SON

RICHARDSON

• Overall vacancy for the Garland and Mesquite submarkets combined sustained its 2017 record low at 7.5% for the first half of 2018 • Despite having zero new supply deliver in both Garland and Mesquite for the first half of the year, the combined submarkets are expected to deliver 2.1 MSF by year-end. • Mesquite’s 2.7% increase in overall vacancy is a direct result of Shippers moving out of 420K SF at Eastpoint Business Center • Exeter Property Group has begun construction on 3 speculative buildings in Mesquite totaling nearly 1 MSF

75

30

GARLAND

635

12

HIGHLAND PARK

30

75

DALLAS

80

MESQUITE

5E

FORNEY

45

12

175

20

BALCH SPRINGS

20

HUTCHINS

35E

175

45

LANCASTER

WILMER

35E

48 Q2 2018