Industrial Mid-Year Report Q2 2020

Cushman &Wakefield Dallas/Fort Worth

South Dallas

The South Dallas submarket has been the most active from a development perspective this cycle, more than doubling its inventory since 2012. It is home to mostly modern bulk distribution product with approximately 60% of its building stock constructed since 2010. The submarket is served by three Interstate freeways (I-20, I-35E and I-45) and is desirable for its proximity to interstate highways, the Union Pacific Intermodal and the FedEx Ground hub.

While vacancy in South Dallas has consistently been one of the highest in the greater DFW industrial market, it is finally starting to level as first-gen speculative product in the submarket gets leased. Despite new supply of nearly 30 MSF over the last five years, construction deliveries in South Dallas slowed in 2019 (less than 200K SF of speculative product delivering in 2019), allowing net absorption to begin closing the vacancy gap. South Dallas is proving to be one of the highest demand submarkets as it led greater DFW in net absorption and leasing activity for 2019 and continues to do so with 2.3 MSF in year-to-date net absorption, second only to GSW and 2.8 MSF in year-to-date new leasing activity.

SOUTH DALLAS IS PROVING TO BE ONE OF THE

FRISCO TO GSW) AND 2.8 MSF IN YTD NEW LEASING ACTIVITY. 380 HIGHEST DEMAND SUBMARKETS WITH 2.3 MSF IN YTD NET ABSORPTION (SECOND ONLY

75

380 The majority of speculative development has taken place in the I-35E/I-20 corridor and has

LITTLE ELM

experienced steady leasing velocity, while most development in the I-45 corridor has come from build-to-suits.

ALLEN

75

PLANO

121

MURPHY

OBSERVATIONS & TRENDS

ADDISON

RICHARDSON

CARROLLTON

35E

75

5

30

FARMERS BRANCH

• During the first two quarters, 100% of the submarket’s 2.8 MSF in new leasing activity occurred in first-gen speculative (2.6 MSF) and existing second-gen (200K SF) product as opposed to build-to-suit transactions • The reduction in speculative construction activity in 2019 has contributed to the submarket’s significantly tightened year-to-date vacancy of 12.4% (down by 310 bps from year-end 2019 and 800 bps from year-end 2018) • The submarket’s current construction pipeline consists of three speculative buildings totaling 616k sf and several other developers are gearing up to kick off an additional +/- 2 MSF of speculative product in the second half of 2020

635

635

114

12

12

HIGHLAND PARK

35E

30

183

IRVING

75

DALLAS

80

30

ND

RIE

12

35E

FORNEY

45

12

175

20

BALCH SPRINGS

12

20

20

HUTCHINS

67

35E

175

DUNCANVILLE

SOUTH DALLAS

45

DESOTO

LANCASTER

WILMER

67

35E

90 Q2 2020