Industrial Mid-Year Report_Q2 2019_FINAL

Industrial Insider M I D -Y E A R R E P O R T | Q 2 2 0 1 9

Cushman &Wakefield Dallas/Fort Worth

2

Q2 2019

Industrial Insider Mid-Year Report

Table of Contents

MID-YEAR UPDATE

4

DALLAS MARKET OVERVIEW

6

DFW OVERVIEW: SUPPLY

12

DFW OVERVIEW: DEMAND

18

SUBMARKET SNAPSHOTS

26

28

Allen/McKinney

32

Alliance/North Fort Worth

40

Brookhollow/Trinity

45

DFW Airport

50

East Fort Worth

54

Far North/I-35

58

Garland/Mesquite

66

Great Southwest

72

North Dallas/Metropolitan

76

Pinnacle/Turnpike

80

Redbird

84

Richardson/Plano

88

South Dallas

94

South Fort Worth

98

Valwood/N Stemmons

102

Walnut Hill/Stemmons

Q2 2019

3

Cushman &Wakefield Dallas/Fort Worth

75

35

AUBREY

MELISSA

380

DECATUR

380

DENTON

MCKINNEY

FARM

35W

Allen/McKinney

287

Far North/I-35

ALLEN

35E

PLANO

75

Richardson/Plano

FLOWER MOUND

Valwood/ N Stemmons

Alliance

RICHARDSON

COPPELL

North Dallas/ Metropolitan

ROWLETT

30

KELLER

35E

DFW Airport

35W

Garland

Walnut Hill/ Stemmons

12

North Fort Worth

IRVING

635

East D

75

Brookhollow/Trinity

Central Dallas

HALTOM CITY

DAL LAS

West Fort Worth

Pinnacle/Turnpike

East Fort Worth

Mesquite

30

ARLINGTON

Central Fort Worth

GRAND PRAIRIE

30

20

Great Southwest

FORT WORTH

20

12

Redbird

20

20

BENBROOK

DUNCANVILLE

35W

South Dallas

175

South Fort Worth

CEDAR HILL

LANCASTER

287

BURLESON

FERRIS

CRESSON

34

45

35E

MIDLOTHIAN

35W MID-YEAR NET ABSORPTION (11 MSF) OUTPACES MID-YEAR CONSTRUCTION COMPLETIONS (9.8 MSF) TIGHTENING THE OVERALL VACANCY TO 6.9% (LOWER 20 BPS FROM 2018 YEAR-END).

4 Q2 2019

Industrial Insider Mid-Year Report

N

Mid-Year Update

Welcome back to The Industrial Insider. We hope everyone is enjoying their summer. Our team is excited to present the year-to-date activity in the Dallas/ Fort Worth market with our Industrial Insider – 2019 Mid-Year Report. In this report, we summarize the performance of the DFW industrial market year-to-date and inform you on what can be expected for the second half of 2019. The DFW industrial market had two strong quarters of overall net absorption, surpassing 11 MSF at mid- year. This puts us on track to reach 20 MSF of overall net absorption for the fifth consecutive year. Net absorption outpaced the 9.8 MSF of mid-year

construction completions, tightening the overall vacancy rate to 6.9% (lower by 20 basis points from 2018 year-end). Construction activity remains elevated with 30.1 MSF of new supply under construction today, of which 10.7 MSF is build-to-suit or preleased product. Looking ahead to the rest of 2019, we believe the DFW market will continue to see robust supply and demand activity. Mid-year active tenant requirements look strong at approximately 22 MSF. We hope you find this special 2019 Mid- Year Report edition of our Industrial Insider informative. The mid-year numbers leave us optimistic for the remainder of 2019.

RSVILLE

380

ROYSE CITY

llas

34

TERRELL

KAUFMAN

175

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 2019

5

Cushman &Wakefield Dallas/Fort Worth

DFW Overview

6 Q2 2019

Industrial Insider Mid-Year Report

Q2 2019

7

Cushman &Wakefield Dallas/Fort Worth

DFW Overview

The Dallas/Fort Worth industrial market continues to impress us at the mid-year point for 2019 as it remains a leader among major U.S. gateway markets from both a supply and demand perspective. Attention and focus on the DFW industrial market from tenants, developers and investors is at an all-time high. DFW’s spot as #1 in both population growth and job growth, as well as its thriving economy remain essential contributors to the robust industrial market. Strong industrial demand in the DFW market continues at mid-year, as demonstrated by the 11 MSF+ of net absorption and 14.6 MSF of leasing activity year-to date. Despite the delivery of nearly 9.8 MSF of new

supply during the first two quarters, the DFW industrial market’s vacancy tightened to 6.9%, down 20 bps from 2018 year-end. The DFW Airport submarket leads the greater DFW market in both net absorption (3.3 MSF) and new supply (3.4 MSF). The South Dallas submarket leads in year-to-date leasing activity with 4 MSF. Alliance leads in construction activity with 8.1 MSF of product under construction. Looking ahead, we don’t see any near-term slowdown in the Dallas/ Fort Worth industrial market and we anticipate DFW will again reach 20 MSF of net absorption for the fifth straight year.

DFW INDUSTRIAL SUBMARKET DEMAND LEADERS AT MID-

YEAR ARE DFW AIRPORT, GREAT SOUTHWEST AND

ALLIANCE WITH NET ABSORPTIONS OF 3.3 MSF, 2.8 MSF AND 1.5 MSF, RESPECTIVELY.

MARKET SUMMARY

2011

2012 2013 2014 2015 2016 2017 2018 YTD 2019

627.2

629.4

636.8 653.9

673.4

694.5

722.8

750.9

760.7

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

12.5

12.1

17.4

15.6

20.2

23.7

25.9

22.9

11.1

10.4% 8.7% 7.0% 7.1% 6.8% 6.0% 6.5% 7.1% 6.9%

Completions (MSF)

2.0

2.1

7.4

17.1

19.6

21.2

29.2

26.9

9.8

Under Construction (MSF)

2.0

4.0

13.9

16.6

20.3

26.6

19.3

21.7

30.1

8 Q2 2019

Industrial Insider Mid-Year Report

DFW Overview

OVERALL NET ABSORPTION 11.1 MSF 6.9% 9.8 MSF 30.1 MSF OVERALL VACANCY

COMPLETIONS

UNDER CONSTRUCTION

HISTORICAL DFW INDUSTRIAL ABSORPTION

30 MSF

25 MSF

20 MSF

15 MSF

10 MSF

5 MSF

MSF

2010

2011

2012

2013

2014

2015

2016

2017

2018

Est 2019

NET ABSORPTION NET ABSORPTION

20 MSF THRESHOLD 20 MSF THRESHOLD

Q2 2019

9

Cushman &Wakefield Dallas/Fort Worth

VACANCY

15-Year Historical Average = 8.8% 15-YEAR HISTORICAL AVERAGE = 8.8%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

2011

2012

2013

2014

2015

2016

2017

2018

YTD 2019

OVERALL VACANCY RATE

HISTORICAL AVERAGE

NET ABSORPTIONS / COMPLETIONS

NET ABSORPTION / COMPLETIONS

35.0

30.0

25.0

20.0

15.0 Millions

10.0

5.0

0.0

2011

2012

2013

2014

2015

2016

2017

2018 YTD 2019

OVERALL NET ABSORPTION COMPLETIONS

10 Q2 2019

Industrial Insider Mid-Year Report

DFW Overview

Overall Vacancy Rate

YTDNet Absorption

YTD Leasing Activity*

Under Construction

YTD Completions

Submarket

Inventory

Allen/McKinney

10,602,866

7.7%

-126,325

115,475

147,500

102,954

Brookhollow/Trinity

49,164,271

2.6%

-308,273

20,812

0

0

Central Dallas

14,398,395

2.5%

0

0

0

0

DFW Airport

86,489,225

8.8%

3,314,713

1,609,062

4,507,593

3,351,290

Far North/I-35

21,020,767

4.0%

132,175

82,799

484,756

80,000

Garland

44,739,447

8.5%

77,703

209,582

0

249,097

Great Southwest

112,661,257

4.0%

2,827,694

1,936,278

4,753,882

980,497

Mesquite

19,395,850

11.2%

469,695

763,662

1,233,252

877,230

North Dallas/Metropolitan

19,235,891

7.2%

-67,187

166,326

0

0

Pinnacle/Turnpike

27,766,375

6.7%

701,032

1,270,757

2,626,309

12,000

Redbird

22,284,459

3.6%

-16,591

0

863,328

0

Richardson/Plano

36,043,766

8.4%

157,120

253,690

240,654

738,740

East Dallas

10,153,570

1.5%

745,584

112,400

1,207,538

650,000

South Dallas

54,326,643

19.8%

646,458

3,990,190 2,460,820

404,157

Valwood/N Stemmons

50,540,513

5.5%

246,740

1,007,577

674,491

151,176

Walnut Hill/Stemmons

22,165,365

2.7%

-52,699

49,297

389,234

0

DALLAS TOTAL

600,988,660

7.1%

8,747,839

11,587,907

19,589,357

7,597,141

Alliance

43,540,762

9.7%

1,548,994

1,822,396

8,087,783

1,279,500

Central Fort Worth

15,978,726

2.4%

2,009

54,368

0

0

East Fort Worth

23,504,461

6.1%

10,060

25,000

100,167

22,050

North Fort Worth

44,416,401

3.6%

767,813

1,065,109

2,343,477

125,029

South Fort Worth

27,922,429

6.8%

-3,000

0

0

754,585

West Fort Worth

4,344,345

10.2%

-20,400

0

0

0

FORT WORTH TOTAL

159,707,124

6.3%

2,305,476

2,966,873

10,531,427

2,181,164

DFW TOTAL

9,778,305

760,695,784

6.9%

11,053,315

14,554,780 30,120,784

*YTD Leasing Activity exclusive of renewals

Q2 2019

11

Cushman &Wakefield Dallas/Fort Worth

DFW Overview: Supply

12 Q2 2019

Industrial Insider Mid-Year Report

Q2 2019

13

Cushman &Wakefield Dallas/Fort Worth

Supply Completed First Generation Vacancies

COMPLETED FIRST GENERATION VACANCIES

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

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

DFW Airport GSW

North Ft Worth South Ft Worth Richardson/Plano

14 Q2 2019

Industrial Insider Mid-Year Report

SUM OF AVAILABLE SPACE - Completed First Generation Vacancies

Building Size (SF)

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

Grand Total

Allen/McKinney

290,867

290,867

Alliance

234,277

752,589

1,089,642

2,076,508

DFW Airport

639,420

863,549

185,344

1,000,584

2,688,897

Garland

576,136

329,091

905,227

GSW

264,821

843,862

1,108,683

N Stemmons/Valwood

118,195

118,195

North Ft Worth

321,008

270,000

591,008

Richardson/Plano

397,471

397,471

South Dallas

773,256

1,236,929

2,508,363

3,517,827

8,036,375

South Ft Worth

323,845

651,961

975,806

Total

3,939,296

4,947,981

2,693,707

5,608,053

17,189,037

COUNT OF AVAILABLE SPACE - Completed First Generation Vacancies

(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

1

3

1

5

DFW Airport

6

3

1

1

11

Garland

4

1

5

GSW

3

5

8

N Stemmons/Valwood

1

1

North Ft Worth

3

1

4

Richardson/Plano

3

3

South Dallas

4

4

4

5

17

South Ft Worth

2

3

5

Total

29

20

5

7

61

Q2 2019

15

Cushman &Wakefield Dallas/Fort Worth

Supply

Under Construction Vacancies

UNDER CONSTRUCTION VACANCIES

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

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

DFW Airport GSW

North Ft Worth South Ft Worth Richardson/Plano

16 Q2 2019

Industrial Insider Mid-Year Report

SUM OF AVAILABLE SPACE - Under Construction Vacancies

Building Size (SF)

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

Grand Total

Alliance

656,538

1,889,480

1,177,984

2,581,781

6,305,783

DFW Airport

885,114

1,570,044

709,703

1,106,315

4,271,176

Far North/I-35

282,526

282,526

802,672

GSW

716,170

576,123

2,094,965

Mesquite

248,890

111,295

584,089

944,274

North Ft Worth

643,089

581,000

1,023,488

2,247,577

296,615

Pinnacle/Turnpike

193,000

1,281,714

1,771,329

South Dallas

106,700

106,700

Walnut Hill/Stemmons

388,822

388,822

Total

4,120,849

4,670,106

4,910,613

4,711,584

18,413,152

COUNT OF AVAILABLE SPACE - Under Construction Vacancies

(VACANCY WITHIN RANGE)

Building Size (SF)

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

Grand Total

Alliance

3

5

2

3

13

DFW Airport

6

4

1

1

12

Far North/I-35

2

2

GSW

5

2

1

8

Mesquite

1

1

1

3

North Ft Worth

3

1

1

5

Pinnacle/Turnpike

1

1

2

4

South Dallas

1

1

Walnut Hill/Stemmons

2

2

Total

24

13

8

5

50

Q2 2019

17

Cushman &Wakefield Dallas/Fort Worth

DFW Overview: Demand

18 Q2 2019

Industrial Insider Mid-Year Report

Q2 2019

19

Cushman &Wakefield Dallas/Fort Worth

Demand

ACTIVE REQUIREMENTS TOTALING 22,010,000 SF

ESTIMATED OCCUPANCY TIMELINE

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

0 2019/Q3 2019/Q4 2020/Q1 2020/Q2 2020/Q3 2020/Q4 2021/Q1

HISTORICAL REQUIREMENTS (SF)

25,000,000

20,000,000

15,000,000

10,000,000

2015

2016

2017

2018

2019

20 Q2 2019

Industrial Insider Mid-Year Report

REQUIREMENTS BY SIZE

Size (SF)

Requirements

1,000,000 +

8

500,000 - 999,999

11

250,000 - 499,999

18

REQUIREMENTS BY SUBMARKET (SF)*

SOUTH DALLAS

18,725,000

ALLIANCE

13,950,000

13,685,000

DFWAIRPORT

8,950,000

NORTH FTWORTH

PINNACLE/TURNPIKE

6,585,000

GSW

6,060,000

SOUTH FTWORTH

4,625,000

4,150,000

MESQUITE

GARLAND

2,225,000

2,100,000

N STEMMONS/VALWOOD

1,200,000

FAR NORTH/I-35

0

5,000,000

10,000,000

15,000,000

20,000,000

*Requirements looking market wide will be included in multiple markets

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

Q2 2019

21

Cushman &Wakefield Dallas/Fort Worth

DFW INDUSTRIAL | HISTORICAL TRANSACTIONS BY SIZE RANGE

2017

2018

YTD 2019

250K-499K SF

18

6.5 MSF

26

9.1 MSF

12

4.9 MSF

500K-749K SF

12

7.2 MSF

15

9.4 MSF

2

1.5 MSF

750K SF+

10

9.5 MSF

10

10.5 MSF

3

3.1 MSF

TOTAL

40

23.2 MSF

51

29 MSF

17

9.5 MSF

*Includes Renewals, Spec and BTS transactions

2019 YEAR TO DATE BIG DEALS LIST | DFW INDUSTRIAL

TENANT NAME

SIZE (SF)

DEAL TYPE

Smucker's

1,075,260

First Gen Spec Lease

Whirlpool

1,020,050

Renewal

Georgia Pacific

1,004,674

BTS

Sam's Club

729,157

Renewal (Expansion)

CTDI

705,955

First Gen Spec Lease

Hollingsworth

494,990

2nd Gen New Lease

Sally Beauty

494,041

First Gen Spec Lease

McKesson

490,825

Renewal (Expansion)

Systemax

487,804

First Gen Spec Lease

22 Q2 2019

Industrial Insider Mid-Year Report

Big Box Industrial

GATEWAY MARKETS | DEALS DONE (300 SF+) REPORT

DEALS DONE BY MARKET | 300K SF+ | YTD 2019

NEW JERSEY 1.4 MSF

ATLANTA 6.0 MSF

MARKET

TOTAL SF COUNT AVG SIZE

PA I-81/I-78 CORRIDOR 5.9 MSF

ATLANTA

6.0 MSF

14

431,036

CHICAGO

1.2 MSF

2

620,263

CHICAGO 1.2 MSF

DALLAS/FORT WORTH

9.2 MSF

16

574,856

INDIANAPOLIS

3.0 MSF

6

494,862

INLAND EMPIRE

5.2 MSF

7

749,842

PA I-81/I-78 CORRIDOR

5.9 MSF

9 660,546

INLAND EMPIRE 5.2 MSF

NEW JERSEY

1.4 MSF

2

697,500

DALLAS/FORT WORTH 9.2 MSF

INDIANAPOLIS 3.0 MSF

DEALS DONE BY TYPE | 300K SF+ | YTD 2019

29DEALS

DEAL TYPE TOTAL SF COUNT 2ND GEN 2.7 MSF 7 BTS 3.4 MSF 5 RENEWAL 8.4 MSF 15 SPEC 17.5 MSF 29

0 MSF 2 MSF 4 MSF 6 MSF 8 MSF 10 MSF 12 MSF 14 MSF 16 MSF 18 MSF 20 MSF

17.5MSF

17.5 MSF 29

15DEALS

8.4MSF

8.4 MSF 15

5DEALS

2.7MSF 7DEALS

3.4MSF

3.4 MSF 5

2.7 MSF 7

2nd Gen

BTS

Renewal

Spec

Q2 2019

23

Cushman &Wakefield Dallas/Fort Worth

Big Box Industrial

GATEWAY MARKETS | TENANTS IN THE MARKET REPORT

REQUIREMENTS BY MARKET (300K SF+)

Atlanta 15.1 MSF

PA 81/78 Corridor 22.6 MSF

MARKET

TOTAL SF COUNT AVG SIZE

ATLANTA

15.1 MSF

17

888,235

Central Valley 7.6 MSF

CENTRAL VALLEY

7.6 MSF

10 755,000

CHICAGO

8.3 MSF

9

916,667

New Jersey 3.8 MSF

Chicago 8.3 MSF

DALLAS/FORT WORTH 18.6 MSF

29

640,517

INDIANAPOLIS

10.0 MSF

12

829,167

Inland Empire 15.1 MSF

INLAND EMPIRE

15.1 MSF

17

888,235

Dallas/Fort Worth 18.6 MSF

NEW JERSEY

3.8 MSF

5

760,000

Indianapolis 10.0 MSF

PA 81/78 CORRIDOR

22.6 MSF

25

902,000

REQUIREMENTS BY SIZE RANGE (300K SF+)

SIZE RANGE TOTAL SF COUNT

52.5MSF 44DEALS

60 MSF

300K - 499K SF

6.9 MSF

19

50 MSF

500K - 749K SF

21.5 MSF

36

750K - 999K SF 20.0 MSF

25

40 MSF

1 MSF +

52.5 MSF

44

21.5MSF 36DEALS

20.0MSF 25DEALS

30 MSF

20 MSF

21.5 MSF 36

20.0 MSF 25

19DEALS

6.9MSF

10 MSF

6.9 MSF 19

0 MSF

300K - 499K SF 300K-499KSF 500K- 749KSF 750K- 999KSF 1MSF+ 500K - 749K SF

750K - 999K SF

24 Q2 2019

Industrial Insider Mid-Year Report

Q2 2019

25

Cushman &Wakefield Dallas/Fort Worth

Submarket Snapshots

26 Q2 2019

Industrial Insider Mid-Year Report

Q2 2019

27

Cushman &Wakefield Dallas/Fort Worth

Allen/ McKinney

28 Q2 2019

Industrial Insider Mid-Year Report

Q2 2019

29

Cushman &Wakefield Dallas/Fort Worth

Allen/McKinney

OBSERVATIONS & TRENDS

• Located on the northeastern most edge of the DFW market surrounded by heavy residential population • Most new supply to this submarket comes from built-to- suit, shallow bay, and high-finish deals (flex space) • Proximity to residential rooftops has motivated planning and ground breaking of several new speculative developments –– Hunt Southwest’s speculative 202K SF front-park, rear- load at I-75 and Wilmeth Road sold to MDC Investments, Inc. with no pre-leasing –– Dalfen’s McKinney Fulfillment Center, a speculative 115K SF front-park, rear-load at the SEC of Redbud Blvd and Corporate Drive in McKinney is 25% leased –– Sentinel Capital’s Phase I of McKinney National Business Park with two 75K SF rear-load speculative buildings just west of McKinney National Airport on FM 546 is expected to deliver by year-end SELECT NEW DEVELOPMENTS:

75

380

ALLEN/MCKINNEY

ALLEN

75

MURPHY

RICHARDSON

75

30

635

MARKET SUMMARY

ND

30

2011

2012 2013 2014 2015 2016 2017 2018 YTD 2019

LAS

80

9.3

9.3

9.3

9.4

9.4

9.9

10.0

10.5

10.6

Inventory (MSF)

Overall Net Absorption (MSF)

98,155

32,900 194,810 499,072 338,526 470,371 106,799 147,478 (126,325)

FORNEY

45

12

175

16.3% 15.8% 13.8% 8.0% 3.1% 2.3% 3.4% 6.5% 7.7% 20

Overall Vacancy

BALCH SPRINGS

20

305,000

0

66,000 117,261

0

423,927 198,000 455,722 102,954

Completions (MSF) HUTCHINS

175

Under Construction (MSF) 45

66,000 66,000 117,261

0

291,620 108,000 140,000 30,954 147,500

ANCASTER

WILMER

30 Q2 2019

Industrial Insider Mid-Year Report

VACANCY

Historical Average = 9.1%

HISTORICAL AVERAGE = 9.1%

18.0%

16.0%

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

2011

2012

2013

2014

2015

2016

2017

2018

YTD 2019

OVERALL VACANCY RATE

HISTORICAL AVERAGE

NET ABSORPTIONS / COMPLETIONS

NET ABSORPTION / COMPLETIONS

0.6

0.5

0.4

0.3

0.2 Millions

0.1

0.0

2011

2012

2013

2014

2015

2016

2017

2018 YTD 2019

(0.1)

(0.2)

OVERALL NET ABSORPTION COMPLETIONS

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

Q2 2019

31

Cushman &Wakefield Dallas/Fort Worth

Alliance/North FortWorth

32 Q2 2019

Industrial Insider Mid-Year Report

Q2 2019

33

Cushman &Wakefield Dallas/Fort Worth

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 and institutional investors have entered the area. There are currently at least ten other developers that have acquired or are actively pursuing developable land sites in Alliance. This marks the evolution of the submarket from one that has traditionally been tightly controlled with high barriers of entry, to one with a more diverse investment CORINTH DENTON 35E 35 35W

landscape. It will also bring efficiency to the leasing market as tenants will enjoy options to lease product controlled by a variety of owners. North Fort Worth is an infill submarket with few remaining large land parcels available for development. The submarket’s tenant base has a high percentage of rail users and light manufacturing. Alliance and North Fort Worth combined have delivered 1.4 MSF year- to-date and currently account for nearly 35% of the greater DFW market’s new development pipeline with 10.4 MSF of inventory under construction. The activity from a supply standpoint is being met by high demand with roughly 2.9 MSF of leasing activity during the first two quarters of 2019. FRISCO 380

LEASING ACTIVITY IN ALLIANCE/ NORTH FT. WORTH IS APPROXIMATELY 2.9 MSF AFTER THE FIRST TWO QUARTERS. THIS LEVEL OF DEMAND IS FUELING THE RECORD 10.4 MSF OF SUPPLY UNDER CONSTRUCTION 380

7

LITTLE ELM

287

ALL

HIGHLAND VILLAGE

75

OBSERVATIONS & TRENDS

PLANO

35E

• The Alliance and North Fort Worth submarkets lead the greater DFW industrial market in construction activity with 10.4 MSF of new product under construction at the end of Q2, 8.6 MSF (83%) of which is speculative • Elizabeth Creek Gateway, a two-building 1.2 MSF speculative project developed by DHL and sold in a Forward Commitment to State Farm, is 100% leased less than 6 months after delivery • At mid-year, the Alliance submarket has speculative projects by 7 different developers either under construction or close to breaking ground – the most the submarket has ever experienced • During the first two quarters, the submarkets combined posted over 2.9 MSF of leasing activity, 100% of which was for first-generation product IRVING FARMERS BRANCH HIGHLAND PARK DALLAS ADDISON CARROLLTON 635 635 35E 35E 30 12 114 114 121 360 183 121 12 75 75

FLOWER MOUND

114

ROANOKE

114

SOUTHLAKE

RICHARDSON

35W

GRAPEVINE

287

ALLIANCE

KELLER

NORTH RICHLAND HILLS

360

COLLEYVILLE

635

121

NORTH FORT WORTH

BEDFORD

SAGINAW

EULESS

199

183

HALTOM CITY

820

820

35W

121

30

WHITE SETTLEMENT

34 Q2 2019

GRAND PRAIRIE

ARLINGTON

12

FORT WORTH

35E

30

Industrial Insider Mid-Year Report

Q2 2019

35

Cushman &Wakefield Dallas/Fort Worth

YEAR-TO-DATE - Alliance/North Fort Worth Combined

OVERALL NET ABSORPTION 2.3MSF 1.4MSF 10.4MSF COMPLETIONS

UNDER CONSTRUCTION

MARKET SUMMARY - Alliance

2011

2012 2013 2014 2015 2016 2017 2018 YTD 2019

26.8

26.8

28.0

30.7

33.7

35.6

37.3

41.8

43.5

Inventory (MSF)

Overall Net Absorption (MSF)

746,052

1.4

1.4

1.4

1.3

2.5

4.0

1.6

1.5

13.8% 8.9% 7.5% 11.2% 15.1% 12.4% 6.0% 11.6% 9.7%

Overall Vacancy

25,000

0

1.1

2.7

3.0

1.8

1.7

4.0

1.3

Completions (MSF)

48,726

48,726

3.8

2.8

1.2

1.7

2.7

2.5

8.1

Under Construction (MSF)

VACANCY

NET ABSORPTIONS/COMPLETIONS

HISTORICAL AVERAGE = 11.3%

Historical Average = 11.3%

NET ABSORPTION / COMPLETIONS

16.0%

4.5

14.0%

4.0

12.0%

3.5

3.0

10.0%

2.5

8.0%

2.0 Millions

6.0%

1.5

4.0%

1.0

2.0%

0.5

0.0

0.0%

2011

2012

2013

2014

2015

2016

2017

2018 YTD2019

2011

2012

2013

2014

2015

2016

2017

2018

YTD2019

OVERALL NET ABSORPTION COMPLETIONS

OVERALL VACANCY RATE

HISTORICAL AVERAGE

36 Q2 2019

Industrial Insider Mid-Year Report

MARKET SUMMARY - North Fort Worth

2011

2012 2013 2014 2015 2016 2017 2018 YTD 2019

35.9

36.0

36.0

36.6

37.1

40.6

42.6

44.3

44.4

Inventory (MSF)

Overall Net Absorption (MSF)

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

4.5

2.3

725,536 767,813

5.3% 4.9% 3.8% 4.4% 8.1% 4.7% 4.0% 5.1% 3.6%

Overall Vacancy

58,603 188,000

0

541,216 559,367

3.4

2.1

1.7

125,029

Completions (MSF)

Under Construction (MSF) 188,000

0

0

0

3.3

1.4

1.1

1.1

2.3

VACANCY

NET ABSORPTIONS/COMPLETIONS

HISTORICAL AVERAGE = 5.2%

Historical Average = 5.2%

NET ABSORPTION / COMPLETIONS

9.0%

5.0

8.0%

4.0

7.0%

3.0

6.0%

5.0%

2.0

4.0%

Millions

1.0

3.0%

0.0

2.0%

2011

2012

2013

2014

2015

2016

2017

2018 YTD2019

1.0%

(1.0)

0.0%

2011

2012

2013

2014

2015

2016

2017

2018

YTD2019

(2.0)

OVERALL NET ABSORPTION COMPLETIONS

OVERALL VACANCY RATE

HISTORICAL AVERAGE

Q2 2019

37

Cushman &Wakefield Dallas/Fort Worth

Alliance/North Fort Worth

SELECT LEASING ACTIVITY

100K SF+ | YTD

Tenant

Building

Location

SF Leased

Sam's Club*

Speedway Distribution Center - Building A 2400 Short Track Ct, Fort Worth

729,157

CTDI

Elizabeth Creek Gateway - Building A

1753 Chaplin Dr, Fort Worth

705,956

Sally Beauty

Elizabeth Creek Gateway - Building B

15453 Wolff Crossing, Fort Worth

494,041

NEC N Beach St & Eagle Pky, Fort Worth

Stanley Black & Decker #2 Alliance Center North 10

425,000

Westrock Paper

Railhead Industrial Park - Building 2

5180 N Railhead Rd, Fort Worth

362,670

Saddle Creek Logistics* Alliance Gateway 50

743 Henrietta Creek Rd, Roanoke

287,240

Traulsen

Meacham Crossing

4601 Gold Spike Dr, Fort Worth

183,832

Ryder Integrated Logistics 35/820 at Mercantile Center

4800 N Sylvania Rd, Fort Worth

164,721

United Technologies (Goodrich)

Mercantile Distribution Center 38

4630 N Beach St, Haltom City

117,160

*Renewal

NEW DEVELOPMENTS Completed - First Generation Vacancies (100K SF+)

Building

Developer/Owner

RBA SF Available

TCC 35 Eagle - Building A

Trammell Crow / Prudential

1,089,642

1,089,642

Speedway Distribution Ctr - Building C

IDI Logistics

316,128

316,128

Park 820 - Building 2

Scannell

270,000

270,000

TCC 35 Eagle - Building H

Trammell Crow / Prudential

312,733

234,461

TCC 35 Eagle - Building J

Trammell Crow / Prudential

234,277

234,277

Fossil Creek Crossing - Building 1

KKR

219,396

219,396

Synergy Crossing - Building 200

Ironwood / TCRG Properties

496,782

202,000

38 Q2 2019

Industrial Insider Mid-Year Report

Under Construction - Availabilities (100K SF+)

Building

Developer/Owner

RBA

SF Available

Interstate Crossing

Hunt Southwest

1,023,488

1,023,488

Alliance Westport 11

Hillwood

1,002,536

1,002,536

Speedway Logistics Crossing - Building 2

Scannell

795,780

795,780

Alliance Center North 3

Hillwood

783,465

783,465

Westport Logistics - Building 2

PLR

677,429

677,429

Mark IV Commerce Park - Building 1

Crow Holdings Industrial

581,000

581,000

Alliance Northport 1

Hillwood

500,555

500,555

Northwest Commerce Park - Building 1

Stream / Morgan Stanley

473,894

473,894

Speedway Logistics Crossing - Building 3

Scannell

408,240

408,240

Speedway Logistics Crossing - Building 1

Scannell

390,000

390,000

Northwest Commerce Park - Building 3

Stream / Morgan Stanley

351,194

351,194

Northwest Commerce Park - Building 2

Stream / Morgan Stanley

266,152

266,152

Mark IV Commerce Park - Building 3

Crow Holdings Industrial

239,500

239,500

Alliance Northport 5

Hillwood

225,930

225,930

Alliance Northport 4

Hillwood

225,472

225,472

Westport Logistics - Building 1

PLR

205,136

205,136

Mark IV Commerce Park - Building 2

Crow Holdings Industrial

205,000

205,000

Fossil Creek Commerce Center

First Industrial

198,589

198,589

Planned Speculative (100K SF+)

Building

Developer/Owner

RBA

SF Available

Intermodal Logistics Center - Building 2

Northpoint Development

1,007,000

1,007,000

NorthLink A

Hines

754,313

754,313

NorthLink B

Hines

263,200

263,200

FORECAST The construction pipeline for both Alliance and North Fort Worth will remain active throughout the rest of the year with 8.6 MSF of speculative product under construction in the submarkets combined. However, with continued elevated tenant demand, it is anticipated the area’s leasing fundamentals will remain strong. We forecast that an increase in vacancy for Alliance is likely in the short term - a result of the current construction pipeline. Longer term, the area should return to equilibrium as the majority of good developable sites are now under developer control, and a disciplined approach to future development is expected.

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

Q2 2019

39

Cushman &Wakefield Dallas/Fort Worth

Brookhollow/ Trinity

40 Q2 2019

Industrial Insider Mid-Year Report

Q2 2019

41

FRISCO

Cushman &Wakefield Dallas/Fort Worth

ALLEN

LAND AGE

75

PLANO

Brookhollow/Trinity 121

35E

MURPHY

ADDISON

OBSERVATIONS & TRENDS

RICHARDSON

CARROLLTON

35E

121

75

• Most of the 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 • The majority of the submarket’s tenant base occupies smaller spaces – current availabilities consist of only 2 spaces over 100,000 SF • 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 FORNEY 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

45

12

175

20

BALCH SPRINGS

12

20

20

HUTCHINS

67

35E

175

DUNCANVILLE

MARKET SUMMARY

45

DESOTO

LANCASTER

2011

2012 2013 2014 2015 2016 2017 2018 YTD 2019 WILMER

67

35E

47.9

47.9

47.9

48.3

48.3

48.3

48.3

48.8

49.2

Inventory (MSF)

Overall Net Absorption (MSF)

398,419 137,953 245,991

1.2

572,730 532,986 64,042 20,578 (308,273)

7.3% 7.0% 6.6% 4.7% 3.5% 2.4% 2.2% 2.1% 2.6%

Overall Vacancy

21,400

0

34,400 353,161

0

0

0

0

0

Completions (MSF)

Under Construction (MSF)

0

139,561 185,161

0

0

0

0

0

0

42 Q2 2019

Industrial Insider Mid-Year Report

VACANCY

Historical Average = 4.9% HISTORICAL AVERAGE = 4.9%

8.0%

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

2011

2012

2013

2014

2015

2016

2017

2018

YTD 2019

OVERALL VACANCY RATE

HISTORICAL AVERAGE

NET ABSORPTIONS/COMPLETIONS

NET ABSORPTION / COMPLETIONS

1.4

1.2

1.0

0.8

0.6

Millions

0.4

0.2

0.0

2011

2012

2013

2014

2015

2016

2017

2018 YTD 2019

(0.2)

(0.4)

OVERALL NET ABSORPTION COMPLETIONS

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

Q2 2019

43

Cushman &Wakefield Dallas/Fort Worth

DFW Airport

44 Q2 2019

Industrial Insider Mid-Year Report

Q2 2019

45

Cushman &Wakefield Dallas/Fort Worth

DFW Airport

The DFW Airport industrial submarket has a central location with excellent access to several major transportation arteries, an abundant supply of labor and multiple area amenities. The area consistently enjoys high tenant demand and investor interest 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 380

submarket has played a leading role in absorption for the overall DFW market. The submarket’s lack of developable infill sites along with strong leasing Airport to open the southern end for ground leased development in 2017. Developers have aggressively taken advantage of this opportunity, breaking ground on over 8 MSF since, 82% of which has been speculative product. 75 velocity on the northern side of the airport motivated DFW

DFW AIRPORT LEADS THE GREATER DFW INDUSTRIAL MARKET IN MID-YEAR ABSORPTION AND DELIVERIES, WITH 3.3 MSF AND 3.4 MSF RESPECTIVELY. DENTON

35

35E

LITTLE ELM

380

CORINTH

35W

FRISCO

ALLEN OBSERVATIONS & TRENDS

HIGHLAND VILLAGE

75

PLANO

MURPHY • DFW Airport’s mid-year net absorption of 3.3 MSF accounts for 30% of greater DFW market’s mid-year net absorption • Of the 4.5 MSF currently under construction in the submarket, 4.3 MSF (95%) is speculative product HIGHLAND PARK • Consistently high tenant demand in the submarket continues to fuel increased construction activity, the submarket absorbing over 13 MSF in the last three and a half years • Southern DFW Airport ground leased product accounts for 73% (3.3 MSF) of the submarket’s current construction activity DALLAS 30 • The submarket’s spike in development activity is a direct result of DFW Airport officials awarding eleven different developers ground leased sites, encompassing +/- 1,000 acres with over 14.5 MSF of potential development – 8.4 MSF of which has already delivered or broken ground 30 635 12 75 80 75 RICHARDSON

35E

121

FLOWER MOUND

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

360

30

30

GRAND PRAIRIE

ARLINGTON

12

35E

FORNEY

45

12

175

46 Q2 2019

20

BALCH SPRINGS

12

20

20

20

Industrial Insider Mid-Year Report

YEAR-TO-DATE - DFWAirport

OVERALL NET ABSORPTION UNDER CONSTRUCTION 3.3MSF 8.8% 3.4MSF 4.5MSF OVERALL VACANCY COMPLETIONS

MARKET SUMMARY

2011

2012 2013 2014 2015 2016 2017 2018 YTD 2019

62.9

63.0

65.7

70.4

74.0

76.1

79.3

83.1

86.5

Inventory (MSF)

Overall Net Absorption (MSF)

3.6

2.4

4.5

2.4

3.2

4.6

3.2

2.8

3.3

13.5% 9.9% 6.8% 9.5% 9.7% 6.1% 5.8% 8.4% 8.8%

Overall Vacancy

28,417

85,500

2.7

4.6

3.7

2.1

3.2

3.8

3.4

Completions (MSF)

Under Construction (MSF)

85,500

1.1

4.5

3.6

2.3

3.7

1.6

3.8

4.5

COMPLETIONS / NET ABSORPTIONS

VACANCY

Historical Average = 8.2%

.0%

HISTORICAL AVERAGE = 9.6%

.0%

Historical Average = 9.6%

.0%

16.0%

NETABSORPTION / COMPLETIONS

5.0

14.0%

4.5

.0%

12.0%

4.0

3.5

10.0%

.0%

3.0

8.0%

2.5

Millions

.0%

6.0%

2.0

1.5

4.0%

1.0

.0%

2.0%

0.5

0.0

0.0%

.0%

2011

2012

2013

2014

2015

2016

2017

2018 YTD2019

2011

2012

2013

2014

2015

2016

2017

2018

YTD2019

Q2 2010 Q2 2011

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

OVERALL NETABSORPTION COMPLETIONS

OVERALL VACANCY RATE

HISTORICAL AVERAGE

OVERALL VACANCY RATE

HISTORICAL AVERAGE

Q2 2019

47

Cushman &Wakefield Dallas/Fort Worth

DFW Airport

100K SF+ | YTD SELECT LEASING ACTIVITY Tenant Building

Location

SF Leased

McKesson*

DFW Trade Center - Building F

4250 Patriot Dr, Grapevine

490,825

Samsung

Gateway Logistics Center - Building 1

2800 Market St, Irving

309,567

Gulf Relay*

Liberty at Amberpoint

330 S Royal Ln, Coppell

134,924

Delta Apparel

Majestic Airport Center DFW - Building 5

2900 S Valley Pky, Lewisville

113,098

YKK - AP*

Belt Line Trade Center - Building A

346 E Belt Line Rd, Coppell

105,000

*Renewal

NEW DEVELOPMENTS Completed - First Generation Vacancies (100K SF+)

Building

Developer/Owner

RBA SF Available

DFW Commerce Center - Building 1

Copeland Commercial

1,000,584 1,000,584

Gateway Logistics Center - Building 3

Bandera Ventures / Long Warf

374,900

374,900

Gateway Logistics Center - Building 5

Bandera Ventures / Long Warf

267,254

267,254

Valley View DFW Airport

KKR

294,795

221,895

Gateway Logistics Center - Building 2

Bandera Ventures / Long Warf

211,316

211,316

Gateway Logistics Center - Building 4

Bandera Ventures / Long Warf

250,312

187,812

Lakeside Ranch 1001

Duke

634,564

185,344

Prologis Freeport West - Building 2

Prologis

111,012

111,012

48 Q2 2019

Industrial Insider Mid-Year Report

Under Construction - Availabilities (100K SF+)

Building

Developer/Owner

RBA SF Available

TCC Passport Park - Building 1

Trammell Crow Company / CBREI

1,106,315

1,106,315

TCC Passport Park - Building 2

Trammell Crow Company / CBREI

709,703

709,703

Dalfen Passport Park - Building 200

Dalfen Industrial

494,385

494,385

Dalfen Passport Park - Building 300

Dalfen Industrial

494,385

494,385

Majestic Airport Center - Building 7

Majestic Realty

306,280 306,280

Lakeside Ranch 350

Duke Realty

274,994

274,994

Dalfen Passport Park - Building 100

Dalfen Industrial

242,799

242,799

DFW North IV

Huntington

198,854

198,854

Prologis Park 121 - Building 2

Prologis

142,080

142,080

TCC Passport Park - Building 3

Trammell Crow Company / CBREI

104,000

104,000

TCC Passport Park - Building 4

Trammell Crow Company / CBREI

99,000

99,000

Prologis Park 121 - Building 1

Prologis

98,381

98,381

Planned Speculative (100K SF+)

Building

Developer/Owner

RBA

SF Available

DFW Park 161 - Building 9

Perot Development Co

645,840

645,840

Airfield Interchange - Building 1

Logistics Property Co

477,360

477,360

Mustang Business Park - Building 2

Prologis

429,720

429,720

Mustang Business Park - Building 1

Prologis

401,280

401,280

Airfield Interchange - Building 2

Logistics Property Co

320,000

320,000

DFW Park 161 - Building 11

Perot Development Co

247,000

247,000

DFW Airfield Logistics Center - Building 2

Seefried / Clarion

210,640

210,640

DFW Park 161 - Building 10

Perot Development Co

156,000

156,000

DFW Airfield Logistics Center - Building 1

Seefried / Clarion

145,878

145,878

Mustang Business Park - Building 3

Holt Lunsford Commercial

145,058

145,058

FORECAST An uptick in vacancy is likely as no slow-down on the development front is in sight for the remainder of 2019; with 4.5 MSF under construction in the submarket and over 2 MSF slated to break ground this year. Looking ahead, tenants will continue to be attracted to the area and we anticipate elevated absorption numbers to catch up with the influx of new supply.

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

Q2 2019

49

Cushman &Wakefield Dallas/Fort Worth

East FortWorth

50 Q2 2019

Industrial Insider Mid-Year Report

Q2 2019

51

ALLEN

HIGHLAND VILLAGE

Cushman &Wakefield Dallas/Fort Worth

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 developed in previous cycles • Since 2010, East Fort Worth has delivered less than 600,000 SF of new industrial product • Limited new development opportunities due to lack of available land and shallow demand • PAK Quality Foods’ 63,375 SF cold storage facility located at 12360 S Pipeline Rd is expected to deliver during the third quarter of this year • STAG Industrial’s 101,896 SF warehouse at 1801 Riverbend West Drive was purchased by Harris Packaging. The space was previously occupied by Ecolab HUTCHINS BALCH SPRINGS DUNCANVILLE HIGHLAND PARK DALLAS 20 20 45 45 30 35E 35E 35E 30 12 12 12 12 114 183 12 75 67 80 175 175

121

BEDFORD

GINAW

EULESS

183

HALTOM CITY

IRVING

820

820

EAST FORT WORTH

35W

121

360

30

GRAND PRAIRIE

ARLINGTON

FORT WORTH

287

20

820

20

20

FOREST HILL

287

360

35W

DESOTO

LANCASTER

WILMER

MANSFIELD

67

35E

MARKET SUMMARY

2011

2012 2013 2014 2015 2016 2017 2018 YTD 2019

22.9

22.9

22.9

23.0

23.1

23.4

23.5

23.5

23.5

Inventory (MSF)

Overall Net Absorption (MSF)

(54,492) 35,902

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

67,826

10,060

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

Overall Vacancy

21,208 25,000

0

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

0

22,050

Completions (MSF)

Under Construction (MSF)

0

0

50,000

0

0

0

0

64,800 100,167

52 Q2 2019