Fourth Quarter 2015 - Holt Lunsford Commercial

Fourth Quarter 2015
Fourth Quarter 2015
Table of Contents
1. Submarkets and Professionals
2. Overall DFW Industrial Market
A. Dallas / Fort Worth Overall Industrial Market Overview
B. Facts and Figures
3. Submarket Intelligence
A. Great Southwest / Arlington
B. DFW Airport
C. Northeast Dallas
D. South Dallas
E. Northwest Dallas
F. North Fort Worth
G. South Fort Worth
Fourth Quarter 2015
HLC Dallas / Fort Worth Industrial Professionals
Jim Brice
Matt Carthey
John Gorman
Donnie Rohde
Chance Olin
Canon Shoults
J. Scott Moore
Joshua Barnes
Andrew Gilbert
George Jennings
Victoria Johnson
Clay Balch
Partner
jbrice@hldallas.com
Marketing Director
jsmoore@hldallas.com
Partner
Principal
mcarthey@hlfortworth.com jgorman@hldallas.com
Marketing Director
jbarnes@hldallas.com
Marketing Associate
agilbert@hldallas.com
Marketing Director
drohde@hlfortworth.com
Marketing Director
colin@hlfortworth.com
Marketing Associate
Sr. Marketing Coordinator
gjennings@hlfortworth.com vjohnson@hldallas.com
HLC Leased and/or Managed Industrial Product by Submarket
5055 Keller Springs, Suite 300 • Addison, Texas 75001 • 972.241.8300 • holtlunsford.com
Managing Principal
cshoults@hldallas.com
Marketing Associate
cbalch@hldallas.com
Fourth Quarter 2015
Trends And Transactions
•
Industrial product remains in high demand for institutional
investment.
•
Speculative development will remain strong as capital sources
seek alternative basis positions to “retail” acquisitions resulting
from high demand and historically low cap rates.
•
Due to a continued increase in E-commerce groups, demand
for bulk warehouse used as fulfillment centers remains strong.
•
Rent concessions are minimal, yet tenant improvement costs
are higher than historical norms.
•
Since 2010, depending on the size of the deal, rental rates
have increased 20%-30% with 2%-4% annual escalations
accepted by the market.
Top Lease Transactions
•
Mission Foods leased 768,587 SF at 2401 West Pioneer
•
Samsung Electronics America leased 552,225 SF at 400
Dividend
•
Chain Link Services leased 300,000 SF at 1000 Terminal Road
•
Ozburn-Hessey Logistics leased 291,138 SF at 4040 Pipestone
•
Almo Logistics leased 261,902 SF at 201 South Interstate 45
•
Chevron renewed 210,000 SF at 1301 Avenue T
Top HLC Lease Transactions
4040 Pipestone, Turnpike Distribution Center
competing for inferior product with record low cap rates.
The bulk warehouse sector outperformed the flex and shallow bay
sectors in the Fourth Quarter with positive absorption of 3,477,122
SF. The flex and shallow-bay market also produced positive net
absorption numbers of 219,936 SF and 1,300,540 SF, respectively.
As 2016 begins, vacancy rates should remain in single digits albeit
slightly increasing as new construction may outpace net absorption.
Rental rates will stabilize under favorable conditions although
concessions may be more prominent from new development
projects. Dallas remains as one of the top regional distribution
hubs in the country yet will seek to establish a new equilibrium
between supply and demand.
•
Ozburn-Hessey Logistics leased 291,138 SF at 4040 Pipestone
•
Texas Recycling leased 203,710 SF at 5200 East Grand
Avenue
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
4,997,598
1,742,998
2,001,517
Global Fulfillment Solutions rewnewed 129,611 SF at 2040
McKenzie Drive
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
•
SimplexGrinnell LP leased 69,150 SF 1125 at East Collins
Boulevard
7.4%
7.5%
7.8%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
•
Delta Logistics leased 58,107 SF at 4030 Forest Lane
•
The DFW industrial market remains one of the strongest industrial
markets in the country and a top four choice for national logistics
distribution. As of Fourth Quarter 2015, the overall industrial market
persists with a single digit vacancy rate of 7.4%. Momentum picked
up again during the fourth quarter as the overall market boasted
almost 5 million square feet of absorption. Leasing activity in DFW
reported approximately 9.52 million SF during the Fourth Quarter
which remains favorable with the Third Quarter figure of 8.5 million
SF.
9,522,736
8,557,691
7,513,199
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
20,514,965
15,566,543
15,332,636
Delivered SF
vs. Prev. Qtr
Vs. 12 Mths Ago
4,485,452
3,697,094
8,542,379
Source: CoStar 2015 4Q Industrial Report
Construction activity continued at a strong pace during the Fourth
Quarter. Between build-to-suits and speculative development,
the market currently has approximately 20.5 million SF under
construction. This activity encompasses the sub markets of North
Fort Worth, South Fort Worth, South Dallas, GSW, Northwest
Dallas, Northeast Dallas and DFW Airport. Over 4.48 million SF
was delivered throughout the market in the Fourth Quarter of 2015.
Speculative development may sharply increase over the next 12
months in the DFW market as capital sources accept leasing risk
to obtain lower basis positions and build to a yield rather than
5055 Keller Springs, Suite 300 • Addison, Texas 75001 • 972.241.8300 • holtlunsford.com
Fourth Quarter 2015
Facts & Figures
Vacancy - Overall DFW
Construction - Overall DFW
10.0%
25,000,000
9.00%
9.0%
8.8%
7.40%
8.0%
20,000,000
7.0%
7.3%
6.0%
15,000,000
5.0%
4.0%
10,000,000
3.0%
2.0%
0.2%
Q4
12
Q1
13
Q2
13
Q3
13
Q4
13
Q1
14
Direct Vacancy
Q2
14
Q3
14
Q4
14
Q1
15
Q2
15
Sublet Vacancy
5,000,000
1.0%
0.1%
Q3
15
Q4
15
0.0%
Q4
12
Q1
13
Q2
13
Total Vacancy
Q3
13
Q4
13
Q1
14
Q2
14
Q3
14
Q4
14
Delivered Inventory
Q2
15
Q3
15
Q4
15
Source: CoStar 2015 4Q Industrial Report
Absorption - Overall DFW
Overview - Overall DFW
9,000,000
10.0%
8,000,000
12,000,000
8.0%
7,000,000
10,000,000
8,000,000
6,000,000
0
Under Construction
Source: CoStar 2015 4Q Industrial Report
14,000,000
Q1
15
6,000,000
6.0%
5,000,000
4,000,000
4.0%
3,000,000
4,000,000
2,000,000
2.0%
2,000,000
Q4
12
Q1
13
Q2
13
Q3
13
Q4
13
Q1
14
Q2
14
Q3
14
Q4
14
Total Net Absorption
Q1
15
Q2
15
Q3
15
Q4
15
1,000,000
0.0%
0
Q4
12
Q1
13
Q2
13
Q3
13
Q4
13
Q1
14
Q2
14
Vacancy Absorption
Leasing Activity
Source: CoStar 2015 4Q Industrial Report
Q3
14
Q4
14
Q1
15
Deliveries
Q2
15
Q3
15
Q4
15
0
Vacancy
Source: CoStar 2015 4Q Industrial Report
Existing Inventory
Vacancy
# Bldgs.
Total RBA
Direct SF
Total SF
Vac. %
YTD Net
Absorption
DFW Airport
570
68,001,705
6,198,892
6,244,272
9.2%
1,090,936
2,351,001
780,183
2,971,994
East Dallas
570
40,060,095
2,420,280
2,420,280
6.0%
244,129
0
25,755
2,020,344
1,025
92,121,295
4,544,671
4,709,797
5.1%
2,776,108
1,720,937
5,488,132
5,702,518
North Fort Worth
517
72,686,220
7,550,368
7,562,568
10.4%
-40,601
2,467,142
3,861,804
3,625,963
Northeast Dallas
1,378
97,672,387
5,984,605
6,421,956
6.6%
2,496,572
652,121
769,079
3,811,463
Northwest Dallas
1,266
98,114,666
6,917,726
7,075,492
7.2%
3,751,816
2,750,051
1,954,283
6,700,883
615
74,526,918
6,604,375
6,636,775
8.9%
5,324,244
6,352,325
7,296,323
2,335,045
Market
Great SW/Arlington
South Dallas
YTD
Under
YTD Leasing
Deliveries Construction SF
Activity
South Fort Worth
1,247
70,347,406
3,671,170
3,688,846
5.2%
60,835
132,300
74,993
1,684,832
South Stemmons
2,072
112,305,571
9,142,300
9,151,975
8.1%
2,111,364
598,445
264,413
5,210,423
Totals
9,260
725,836,263
53,034,387
53,911,961
7.4%
17,815,403
17,024,322
20,514,965
34,063,465
5055 Keller Springs, Suite 300 • Addison, Texas 75001 • 972.241.8300 • holtlunsford.com
Fourth Quarter 2015
Submarket intelligence - Great Southwest/Arlington
Provided by Canon Shoults, Managing Principal
Market Highlights
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
598,795
275,552
122,088
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
5.1%
5.6%
6.4%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
1,309,441
1,476,326
983,540
•
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
5,488,132
2,596,246
1,720,937
•
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
145,579
497,400
847,326
Source: CoStar 2015 4Q Industrial Report
The Great Southwest industrial submarket has been a top
performing submarket in the DFW Metroplex for the past two
years. Leasing activity and velocity remained strong to wrap up
Q4 2015. The occupancy rate hit a new historic benchmark as it
increased to 94.9%. As 2016 begins, landlords should expect
rental rates to hold strong and include annual rent escalations
of 2% to 4% (depending on the size of the lease). Additionally,
rental concessions will remain minimal as Landlords are
continuing to offer less abated rent. On the development front,
the GSW submarket has nearly 5.5 million SF currently under
construction. Crow Holdings Industrial, Hillwood, Industrial
Property Trust, Liberty Property Trust, MassMutual, Cabot
Properties, Mohr Capital, First Industrial and Weeks Robinson
are all actively building spec development projects.
Top Lease Transactions
•
•
•
Mission Foods leased 768,587 SF at 2401 West Pioneer
Parkway
Office Depot leased 245,079 SF at 3550 Roy Orr
Boulevard
Falken Tires leased 233,740 SF at 2401 North Beltline
Road
Logistics Team leased 172,200 SF at 2250 Belt Line Road
Deals In The Market
•
•
•
•
contract with Cabot)
Austin & Dallas Industrial Portfolio – A 12 building package
consisting of 977,767 SF of which 142,350 SF is located in
GSW; TA is the seller.
New Developments
•
•
•
•
HLC Outlook
•
•
•
•
•
•
•
•
2401 West Pioneer Parkway (Logistics Crossing II) –
768,587 SF spec with Weeks Robinson
2401 North Belt Line (Wildlife III) – 233,740 SF spec with
Crow Holdings Industrial
2010 January Lane (Park 161 Distribution Center) –
347,015 SF spec with Industrial Property Trust
CentrePort Drive & FAA Boulevard (CentrePort Bldg. 5) –
463,115 SF spec with Hillwood
CentrePort Drive & FAA Sovereign (CentrePort Bldg. 3) –
134,340 SF spec with Hillwood
4629 Diplomacy Road (CentrePort Bldg. 8) – 120,279 SF
spec with Hillwood
931 West Bardin Road (Bldg. A) – 420,000 SF spec with
MassMutual
1111 West Bardin Road (Bldg. B) – 420,000 SF spec with
MassMutual
Valley View Lane & Frye Road (Liberty Park GSW North) –
345,620 SF spec with Liberty Property Trust
I-20/161 Crossing – 430,188 SF spec with Mohr Capital
East Bardin Road – 234,100 SF spec with First Industrial
Trinity Crossing – 322,842 SF spec with Cabot Properties
Large Existing Vacancies
•
•
•
•
•
3800 East Avenue E – 492,500 SF
2010 January Lane – 347,015 SF
5111 Frye Road – 248,144 SF
3151 East Pioneer Parkway – 229,400 SF
3001 East Pioneer Parkway – 200,825 SF
Vital Stats
10.0%
3,000,000
9.0%
2,500,000
8.0%
2,000,000
7.0%
6.0%
GTI Portfolio – A 14 building package consisting of 415,331
SF all located in Arlington; GTI is the seller.
Crow Holdings Industrial - Core DFW Portfolio – A 4
building package consisting of 989,878 SF of which
536,578 SF is located in GSW; Crow Holdings Industrial is
the seller. (Under contract with RREEF)
Texas In-Fill Industrial – A package of 21 buildings
consisting of 2.8 M SF of which 214,600 SF is located in
GSW at 2920 State Highway 360; Greenfield is the seller.
Riverpark 1000 and DFW Airport I – A 2 building package
consisting of 547,179 SF of which 145,579 SF is located in
GSW; Huntington Industrial Partners is the seller. (Under
1,500,000
5.0%
1,000,000
4.0%
3.0%
500,000
2.0%
0
1.0%
0.0%
Q4
12
Q1
13
Q2
13
Q3
Q4
13
13
Absorption
Q1
14
Q2
Q3
14
14
Deliveries
Source: CoStar 2015 4Q Industrial Report
5055 Keller Springs, Suite 300 • Addison, Texas 75001 • 972.241.8300 • holtlunsford.com
Q4
14
Q1
Q2
15
15
Vacancy
Q3
15
Q4
15
(500,000)
Fourth Quarter 2015
Submarket intelligence - DFW Airport
Provided by Jim Brice, Partner
Market Highlights
•
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
1,684,144
(431,058)
623,050
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
9.2%
11.0%
7.6%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
936,652
854,386
979,416
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
780,183
910,180
2,270,811
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
510,019
552,582
1,372,380
Source: CoStar 2015 4Q Industrial Report
HLC Outlook
Throughout the fourth quarter of 2015, the DFW Airport market
had a decrease in vacancy from 11% to 9.2%. The submarket
absorbed over 1.6 M square feet to end the year strong. The large
absorption number for this quarter can be partially attributed to
Bed Bath and Beyond leasing approximately 800,000 of the
1,022,146 SF at 2900 S Valley Parkway. Construction on Highway
121 has continued to hamper leasing activity in the northernmost
quadrant of the DFW Airport submarket.
The airport has
remained a hotbed of construction with 780,183 SF currently
being developed. With the increase in land prices coupled with
the rise in construction costs, speculative developments have
been quoting $3.75 - $4.50 NNN for bulk warehouses.
Top Lease Transactions
•
•
•
•
•
Bed Bath and Beyond leased approximately 800,000 SF at
2900 South Valley Parkway
Owens & Minor leased 223,990 SF at 550 Lakeside Parkway
MSHQ leased 152,990 SF at 2525 Esters Boulevard
Kuehne + Nagel leased 117,060 SF at 4265 Trade Center
Drive
BFS Services leased 70,000 SF at 500 Airport Drive
•
•
•
•
2701 Esters Boulevard (Logistics Center IV) – 143,950 SF
spec with Perot Development/Hillwood
750 Royal Lane (Logistics Center V) – 116,072 SF spec with
Perot Development/Hillwood
1204 West Bethel Road (DCT Freeport West) – 107,782 SF
spec with DCT Industrial
6701 North Belt Line Road (PARC 114) – 56,256 SF spec
with Jackson-Shaw Company
6711 North Belt Line Road (PARC 114) – 135,656 SF spec
with Jackson-Shaw Company
Large Existing Vacancies
•
•
•
2701 West Bethel Road – 1,052,380 SF
944 West Sandy Lake Road – 604,800 SF
840 West Sandy Lake Road – 279,330 SF
Vital Stats
12.0%
2,000,000
1,800,000
1,600,000
10.0%
1,400,000
1,200,000
8.0%
1,000,000
800,000
6.0%
600,000
400,000
4.0%
200,000
0
2.0%
(200,000)
(400,000)
0.0%
Q4
12
Q1
13
Q2
13
Q3
13
Q4
13
Q1
14
Absorption
Q2
14
Q3
14
Deliveries
Q4
14
Q1
15
Q2
15
Vacancy
Source: CoStar 2015 4Q Industrial Report
Deals in the Market
•
Riverpark 1000 and DFW Airport I – 401,600 SF of the
overall 547,579 SF package is located at 1900 Lakeside
Parkway; owned by Amstar. Under contract with Cabot.
New Developments
•
•
•
Highway 121 / Freeport Parkway (Prologis Park 121) – 1.3
M SF complex consisting of 6 buildings with Prologis
Esters Boulevard (DFW Trade Center VIII) – 208,249 SF
spec with Rosewood/Clarion
2650 Esters Boulevard (Logistics Center III) – 120,000 SF
spec with Perot Development/Hillwood
New Development - Esters Boulevard (Lostistics Center III) 120,000 SF
5055 Keller Springs, Suite 300 • Addison, Texas 75001 • 972.241.8300 • holtlunsford.com
Q3
15
Q4
15
(600,000)
Fourth Quarter 2015
Submarket intelligence - Northeast Dallas
Provided by Joshua Barnes, Market Director
Market Highlights
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
303,915
(239,694)
834,076
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
6.6%
6.6%
8.6%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
1,215,591
1,130,907
1,390,610
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
769,079
914,084
493,645
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
320,005
281,116
429,540
Source: CoStar 2015 4Q Industrial Report
HLC Outlook
The Northeast Dallas submarket rebounded in Q4 2015 after
it posted its first quarter with negative absorption since 2Q
2013; 303,915 SF were absorbed in the final quarter of 2015.
All sectors (flex, shallow bay and warehouse) reported positive
absorption YTD to end 2015 which indicates that the tenant
confidence continues to increase throughout all business
types. The shallow bay sector has the lowest vacancy rate at
2.9% with the flex sector and warehouse sectors reporting an
8.7% and 6.7% vacancy rate, respectively. Consequently, rates
have continued to improve and the constrain on incentives has
held. We anticipate for the market to continue to tighten as the
speculative developments are being pre-leased at a strong pace.
Top Lease Transactions
HLC
Deal
•
•
•
•
•
HLC
Deal
At Home leased 352,076 SF at 4030 Forest
Petco renewed their 130,734 SF lease at 850 South Jupiter
Tosca Services renewed their 76,771 SF lease at 4009
Distribution Drive
American Logistics Services leased 72,653 SF at 3300
Wood Drive
Simplex Grinnell renewed their 69,150 SF lease at 1125
East Collins
New Development: Regency Crest Drive – 135,323 SF & 134,027 SF to be delivered
9/2016
New Developments
•
HLC
Deal
•
•
Regency Crest Drive – 135,323 SF & 134,027 SF spec
buildings with Huntington; to be delivered 9/2016
South Central Expressway in Allen – 121,835 SF BTS for
KONE Elevator; to be delivered 5/2016
Channel Commercial HQ – 175,000 SF BTS in Rockwall; to
be delivered 1/2017
Large Existing Vacancies
•
3000 West Kingsley Road – 341,840 SF; Former Apex
Tools space for sublease
2149 South Jupiter – 227,023 SF; coming to market as
Interceramic announced plans to move to Carrollton
4030 Forest – 201,000 SF; Former International assembly
3838 West Miller Road – 200,000 SF; Former Grand Hall
building
3845 Grader – 200,000 SF; Former Sears building
•
•
•
•
Vital Stats
1,400,000
14.0%
1,200,000
12.0%
1,000,000
Deals on the Market
•
•
•
•
•
10.0%
Jupiter Service Center – 126,485 SF of flex in Plano owned
by Kodiak Building Partners
Texas Infill Industrial – 601,609 SF of the overall 2.7M SF is
in Northeast Dallas; owned by Greenfield
Texas Light Industrial – 1.1M SF portfolio, 175,700 SF is in
Northeast Dallas; owned by Berkely Property Trust
Campbell Creek – 318,844 SF office/flex project in
Richardson currently owned by Granite
Austin & Dallas Industrial Portfolio – 118,000 SF of the
overall 977,767 SF us in Northeast Dallas; owned by TA
800,000
600,000
8.0%
400,000
6.0%
200,000
0
4.0%
(200,000)
2.0%
0.0%
(400,000)
Q4
12
Q1
13
Q2
13
Q3
13
Absorption
Q4
13
Q1
14
Q2
14
Q3
14
Deliveries
Source: CoStar 2015 4Q Industrial Report
5055 Keller Springs, Suite 300 • Addison, Texas 75001 • 972.241.8300 • holtlunsford.com
Q4
14
Q1
15
Q2
15
Vacancy
Q3
15
Q4
15
(600,000)
Fourth Quarter 2015
Submarket intelligence - South Dallas
Provided by John Gorman, Principal
Market Highlights
downturn. As a result, tenants albeit cautious are addressing inevitable
needs from the past slow-but-positive turnaround.
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
741,875
543,474
447,753
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
7.5%
6.4%
7.8%
HLC
Deal
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
2,010,008
966,498
1,897,764
•
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
•
7,584,118
4,784,194
6,655,005
•
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
2,510,063
1,373,224
1,951,598
Source: CoStar 2015 4Q Industrial Report
HLC Outlook
At the end of the Fourth Quarter 2015, the overall South Dallas Industrial
submarket reported a vacancy rate of 7.5% which increased from the
previous quarter due to 2.5 million square feet of deliveries outpacing
absorption in 4th Quarter. The ebb and flow of leasing activity continued
in South Dallas as the 4th Quarter experienced an increase of leasing
activity and sales. Earlier in 2015 the surge of leasing activity reported in
2nd Quarter 2015 decreased substantially in the submarket during the 3rd
Quarter 2015. Activity reemerged during the 4th Quarter with approximately
1.5 million square feet of positive absorption and 1.5 million square feet of
sales. Niagara Water leased 630,000 square feet from Crow Holdings in
their new development in Mountain Creek on Grady Niblo. Ozburn Hessey
Logistics expanded their new operations at 4040 Pipestone Road taking
the residual 291,138 square feet with Principal Realty Investors in Turnpike
Distribution Center. Almo Distributing leased 261,902 square feet and Porta-Cool expanded 87,916 square feet in USAA’s Dalport building at 201 S
Interstate 45. Thermo Fisher Scientific leased 178,646 square feet from
Hillwood at their new development Commerce 20. Despite delivering 2
million square feet of speculative development to the market South Dallas
still had ten (10) speculative projects remaining under construction as of
4th Quarter of 2015, totaling 6,985,971 square feet. In addition, USAA/
Seefried is proceeding with Building 2 in Southfield Park 35 on Interstate
20 as they signed Southwest Moulding to a lease for 367,262 square feet
of the 662,214 square foot Building 2. Total under construction increases
to 11,002,187 with the build to suits under construction for Ulta Cosmetics
(670,000 sf), Kimberly Clark (870,000 sf), Shippers Warehouse (500,000
sf), and Medline (800,000 sf). Large build-to-suits have been and should
continue to account for the majority of the submarkets activity but the
speculative development is more optimistic with the recent leases.
(Note: Our study continues to treat the 315 acre property at 9314 W. Jefferson as an anomaly which
remains apart from our statistics)
South Dallas Submarket Outlook
The Fourth Quarter 2015 surge is not surprising in a predominately bulk
warehouse submarket such as South Dallas. During the past 12 months
(CY 2015) this submarket has absorbed 6.8 million square feet and it
will continue to be interesting to observe the continued performance of
new construction. Rental rates are commonly being secured with annual
increases of 2% to 3%. South Dallas will continue to produce new
opportunities with land positions along I-20 with proximity to I-35 and I-45
but, existing infrastructure and amenities will remain keys to success.
Equity sources are fortified and have interest in speculative development
given the aggressive cap rates in acquisitions. In addition, leveraged
positions have softened to 65% loan to cost for private equity seeking
institutional partners. Businesses continue to properly size their operations
with strategic planning, and efficiencies initiated by the previous economic
Top Lease & Sale Transactions
•
•
•
•
•
•
Niagara Water lease 630,000 sf in Mountain Creek from Crow
Holdings on Grady Niblo Road
Ozburn Hessey Logistics expanded by 291,138 SF with Principal at
4040 Pipestone Road
Almo Distributing lease 261,902 sf from USAA at DalPort (201 S
Interstate 45)
Port-a-Cool expanded by 87,916 sf from USAA at DalPort (201 S
Interstate 45)
Thermo Fisher Scientific leased 178,646 SF from Hillwood at Langdon
Road (Commerce 20)
Pinnacle Group leased 81,150 SF from Estate of James Campbell at
4900 Langdon Road
Glasfloss purchased 420 East Danieldale Road (423,771 sf) for
$47.50/sf
2310 Saint Germain (107,400 sf) sold for $40/sf
Hillwood purchased 501 West Danieldale Road (1,126,320 sf) from
USAA/Seefried for $42.50/sf
Under Construction
•
•
•
•
•
•
Southport Parkway, Bld 1 – 1,075,260 sf spec SouthPort Logistics
Park (Interstate 45)
SouthPointe 20/35 – 1,003,733 sf spec with Clarion (660,312 sf &
343,421 sf)
Mountain Creek – 1,540,000 sf for (2-BTS/ Ulta & Kimberly Clark)
501 West Danieldale Road – 662,224 sf BTS for Southwest Moulding
with USAA/Seefried
Grady Niblo Road (Mountain Creek) – 663,000 sf spec with Crow
Holdings
Centre Park Blvd. (Eagle Park 20/35) – 454,408 sf spec with Ridgeline
Property Group
Largest Existing Vacancies
•
•
•
•
•
•
501 West Danieldale Road – 1,126,320 sf spec with Hillwood
Grady Niblo Road (Mountain Creek) – 663,000 sf spec with Crow
Holdings
4615 Langdon Road (Commerce 20) – 488,565 sf spec with Hillwood
2425 West Danieldale Road – 399,971 sf for with TA Realty Associates
220 Danieldale Road – 382,288 sf with Bradford Companies
39324 Interstate 20 – 308,379 sf spec with Trammell Crow/Prudential
Vital Stats
10.0%
5,000,000
9.0%
4,000,000
8.0%
7.0%
3,000,000
6.0%
5.0%
2,000,000
4.0%
1,000,000
3.0%
2.0%
0
1.0%
0.0%
Q4
12
Q1
13
Q2
13
Q3
13
Q4
13
Q1
14
Absorption
Q2
14
Q3
14
Deliveries
Source: CoStar 2015 4Q Industrial Report
5055 Keller Springs, Suite 300 • Addison, Texas 75001 • 972.241.8300 • holtlunsford.com
Q4
14
Q1
15
Q2
15
Vacancy
Q3
15
Q4
15
(1,000,000)
Fourth Quarter 2015
Submarket intelligence - Northwest Dallas
Provided by J.Scott Moore, Market Director
Market Highlights
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
738,841
13,361,476
435,327
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
7.2%
7.4%
8.5%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
1,695,732
1,476,602
1,290,948
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
1,954,283
2,560,337
2,420,051
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
606,054
668,284
1,471,263
Source: CoStar 2015 4Q Industrial Report
HLC Outlook
The Northwest Dallas submarket was able to maintain positive
momentum through the end of 2015. Over the past quarter,
Northwest Dallas continued to prove to be one of the strongest
submarkets in Dallas. The submarket saw a decrease in the
vacancy rate from 7.4% to 7.2%. Construction activity continued
to remain heavy with 1,954,283 SF of industrial space currently
under construction. As the market continues to tighten, expect
rates to rise and rent concessions to diminish. All indicators point
to the market continuing to remain strong into 2016.
Top Lease Transactions
•
HLC
Deal
•
•
Global Fulfillment Solutions renewed their 129,611 SF lease
at 2040 McKenzie Drive
United 1 Laboratories leased 107,270 SF at 1270 Champion
Drive
Diesel Displays leased 81,634 SF at 2941 Commodore
New Development: 1550 North Western Boulevard (170,270 SF)
Large Existing Vacancies
•
•
•
•
1809 West Frankford Road – 380,002 SF
13800 Diplomat Drive – 225,019 SF
2900 South Valley Parkway – 222,686 SF
4101 International Parkway – 205,160 SF
Vital Stats
1,800,000
12.0%
1,600,000
10.0%
1,400,000
1,200,000
8.0%
1,000,000
800,000
6.0%
600,000
4.0%
400,000
200,000
2.0%
0
0.0%
Q4
12
Q1
13
Q2
13
Q3
13
Q4
13
Q1
14
Absorption
•
Q3
14
Deliveries
Q4
14
Q1
15
Q2
15
Vacancy
Source: CoStar 2015 4Q Industrial Report
Deals in the Market
•
Q2
14
Texas Infill Industrial – 769,587 SF of the overall 2.7 M SF is
in Northwest Dallas; owned by Greenfield.
Austin & Dallas Industrial Portfolio – 176,981 SF of the
overall 977,767 SF is in Northwest Dallas; owned by TA.
New Developments
•
•
•
•
22000 & 2010 Lakeside Parkway (DFW North II) – Two
buildings totaling 349,580 SF (185,000 SF & 164,580 SF)
with Huntington.
2701 & 2801 South Valley Parkway (Majestic Airport
Center DFW) – Two buildings totaling 578,560 SF (249,500
SF & 329,060 SF) with Majestic.
1310 Electronics Drive (Valwood Corporate Center) – Four
industrial buildings totaling 885,241 SF with Prologis.
1550 North Western Boulevard (Westgate Business Park) –
170,270 SF building with The Martino Group Development.
New Development: 2010 Lakeside Parkway (DFW North II) 164,580 SF
5055 Keller Springs, Suite 300 • Addison, Texas 75001 • 972.241.8300 • holtlunsford.com
Q3
15
Q4
15
(200,000)
Fourth Quarter 2015
Submarket intelligence - South Stemmons
Provided by Andrew Gilbert, Market Associate
Market Highlights
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
358,661
-24,807
165,326
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
3.8%
4.2%
4.8%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
1,088,955
1,073,914
1,259,253
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
5,461
29,287
23,826
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
23,826
-
10,000
Source: CoStar 2015 4Q Industrial Report
HLC Outlook
The South Stemmons industrial submarket is centrally located
in the heart of the overall Dallas Market. Stemmons, also known
as Interstate 35, runs north and south from the southern portion
of Texas to the northern portion of the country. The Dallas
South Stemmons submarket runs along I-35 right in between
the Valwood and South Dallas submarkets. South Stemmons
continues to perform at a high level with a vacancy rate of
3.8% through the fourth quarter of 2015. It has predominately
maintained a decreasing vacancy rate the past three years
and we don’t expect that to change as the demand continues
to remain strong for class B and C product coupled with the
lack of construction within the submarket. Although you won’t
find any Class A, 32’ clear height facilities, tenants find South
Stemmons an attractive location due to its easy access to major
thoroughfares: I-35, Hwy 114 and LBJ Freeway. With major
highway construction completed along LBJ Freeway and I-35,
expect the submarket to see an increase in activity as well as
more tenants relocating to I-35 in 2015. The fourth quarter of
2015 also provided more positive absorption figures totaling
358,661 square feet. Rent concessions are expected to decrease
as the market becomes tighter which will provide landlords the
opportunity to chase higher rents.
Since 2013, rents have increased over 20% for space under
15,000 SF. There has been a drastic change as more institutional
owners are entering into the Brookhollow market. Landlords
currently in the submarket are spending more on make-ready
spaces and Tenant Improvements and are receiving the value
of higher rental rates in return. We expect this trend to continue
throughout 2016.
Large Existing Vacancy: 4747 Leston – 42,399 SF
Top Lease Transactions
•
Artemis Fine Art Services leased 59,000 SF at 10405 Shady
Trail
Brodnax Printing Company leased 58,534 SF at 737 Regal
Row
USP Labs leased 29,927 SF at 10741-10761 King William
Drive
ATCAP Partners purchased the Prime Industrial Portfolio
totaling 300,000 square feet in which 60,000 SF are in the
South Stemmons submarket
•
•
•
Deals in the Market
•
Texas Light Industrial Service Center Portfolio – 1.6M square
foot portfolio across Texas with over 1M square feet in DFW.
Texas In-Fill Industrial – 2.6M SF portfolio of which 91,800
SF is located in the South Stemmons submarket.
•
Large Exisiting Vacancies
•
•
•
•
2100 East Union Bower – 84,048 SF
8400 John Carpenter Freeway – 63,392 SF
6101 Cedar Springs – 60,760 SF
4747 Leston – 42,399 SF
Vital Stats
8.0%
600,000
7.0%
500,000
6.0%
400,000
5.0%
300,000
4.0%
200,000
3.0%
100,000
2.0%
0
1.0%
(100,000)
0.0%
Q4
12
Q1
13
Q2
13
Q3
13
Q4
13
Q1
14
Absorption
Q2
14
Deliveries
Source: CoStar 2015 4Q Industrial Report
5055 Keller Springs, Suite 300 • Addison, Texas 75001 • 972.241.8300 • holtlunsford.com
Q3
14
Q4
14
Q1
15
Vacancy
Q2
15
Q3
15
Q4
15
(200,000)
Fourth Quarter 2015
Submarket intelligence - north fort worth
Provided by Donnie Rohde, Market Director
Market Highlights
Absorption
Deals in the Market
vs. Prev. Qtr
vs. 12 Mths Ago
(259,876)
(964,711)
234,449
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
10.4%
9.3%
7.2%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
1,263,868
1,237,280
144,126
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
3,861,804
3,722,072
2,126,017
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
559,367
229,288
2,380,272
Source: CoStar 2015 4Q Industrial Report
HLC Outlook
•
•
•
•
New/Proposed Developments
•
•
•
North Fort Worth saw another strong quarter in leasing activity, posting
1,263,868 SF and overall year-end total of 3,625,963 SF; this is significant
considering 2012-2014 had average leasing activity of only 1.9 million square
feet. While posting record leasing activity, we didn’t see the needle move on
overall net absorption, so we end the year with (40,601) SF net absorption and
overall Industrial vacancy of 10.4%.
•
North Fort Worth Shallow-bay distribution projects continued to hold their rank
in the DFW Metroplex with highest year-end net absorption totaling 770,978
square feet. Overall deliveries in 2015 were 636,608 SF and another 1,440,000
SF is currently under construction.
•
Warehouse projects were the beneficiary of the majority of leasing activity,
ending with year-end total of 3,390,534 square feet of leases signed. Following
this strong leasing activity, there has been no shortage of new inventory
delivered. There was 1.8 million square feet delivered in 2015 and another 2.4
million currently under construction. Overall vacancy rate increased to 12.5%
in the 4th quarter and year-to-date net absorption ends up at (620,112) square
feet.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Flex projects finished with year-end net absorption of (191,467) square feet
with no deliveries or construction of new projects underway. Flex projects
reported a fourth quarter 2015 vacancy rate of 4.8%, a small decrease from
4.9% in third quarter and leasing activity of only 42,504 SF.
The existing leasing activity throughout 2015 brings optimism that we will
continue to see strong leasing activity into 2016. North Fort Worth continues
to see strong population growth as new residential construction continues its
boom. Most of the new industrial projects continue to see pre-leasing, most
of which coming from buildings that are antiquated and cannot meet modern
distribution needs. We predict strong demand to continue for at least the first
two quarters of 2016 in both warehouse and shallow bay projects.
3500 East Long Street, Fort Worth: Justin Brands Distribution Facility.
150,000 SF / 21 acres– Asking Price $4,800,000 ($31.70psf)
2550 McMillan Pkwy, Fort Worth: Former Coors Distribution Facility.
137,543 SF situated on 10 acres – Asking Price $5,500,000 ($36.35/psf)
Scannell Properties: 232,000 SF warehouse located at 300 Railhead
Drive, Fort Worth. 100% Leased to American Tire Distribution &
Euromax Building Supplies.
•
Jackson-Shaw Parc North located at NE Loop 820 and I-35W –
Buildings currently under construction in the Mercantile Industrial Park
are Bldg. 1 – 82,710 SF, Bldg. 2 – 92,250 SF and Bldg. 3 - 149,093 SF.
Bldg. 4 – 122,367 SF has been delivered and 100% pre-leased
Northport 35 Business Center, located at 4250 Dale Earnhardt Way
in Northlake - Construction underway on 3 buildings totaling 903,000
SF. Bldg. A – 658,732 SF; Bldg. B – 202,522 SF; Bldg. C – 83,731 SF.
Building A is 47% pre-leased by Wesco Aircraft.
Ridge Development located at 400 Industrial Blvd., Fort Worth –
Construction still underway on 299,000 SF in the Railhead Industrial
Park.
Alliance Westport 18, 800,000 square feet, adjacent to the BNSF
Railway Alliance Intermodal Facility at the intersection of FM 156 and
Intermodal Parkway. 2016 Delivery.
Alliance Westport 19 - 360,000 square feet, located at the entrance to
the BNSF Railway Alliance Intermodal Facility at the intersection of FM
156 and Intermodal Parkway. 2016 Delivery.
Alliance Center North 15- will be 588,000 square feet, and is located at
the interchange of Interstate 35W and Eagle Parkway. 2016 Delivery
Large Existing Vacancies (Alliance)
15201 Heritage Pkwy-Bldg. A, Trammell Crow; 1,041,879SF
300 Freedom Drive - Ag 60, JP Morgan, 756,000
16101 Three Wide Drive, IDI / Gazeley, 729,900
300 Gateway Pkwy, UBS Global, 603,050
5650 Alliance Gateway Fwy. AG 2,
JP Morgan, 445,870 SF
1051 Republic - AG 57, JP Morgan, 201,500 SF
920 Westport Pkwy. – Alliance 3, JP Morgan, 183,908 SF
15001 Heritage Pkwy-Bldg. B, Trammell Crow, 158,842 SF
Alliance GW 25, JP Morgan, 129,500 SF
900 Terminal, BH Properties, 660,087 SF
4601 Gold Spike, Prologis, 502,320 SF
1000 Terminal, BH Properties, 309,432 SF
4630 Beach Street, Mercantile, 187,000 SF
Parc North Bld 3, Jackson Shaw, 149,093 SF
4675 Railhead Road, Colony Capital, 128,400 SF
3400 Northern Cross, Lester M. Entin Assoc, 102,500 SF
Vital Stats
12.0%
Top Lease Transactions
•
•
•
•
2,500,000
2,000,000
10.0%
Excel Logistics leased 391,744 SF at 15001 Heritage Parkway – Bldg. D,
Fort Worth – Trammell Crow at 35 Eagle Park in Alliance
Chain Link Services leased 290,568 SF at 1000 Terminal Road, Fort
Worth – Former Radio Shack facility
Ozburn-Hessey Logistics leased 100,500 SF at 731 Eight Twenty Blvd. –
Meacham Field/Fossil Creek submarket
Zytech Building Systems leased 93,198 SF at 2817 Braswell Drive, Fort
Worth – Meacham Field/Fossil Creek submarket
1,500,000
8.0%
1,000,000
6.0%
500,000
4.0%
0
2.0%
0.0%
(500,000)
Q4
12
Q1
13
Q2
13
Q3
13
Absorption
Q4
13
Q1
14
Q2
14
Deliveries
Source: CoStar 2015 4Q Industrial Report
5055 Keller Springs, Suite 300 • Addison, Texas 75001 • 972.241.8300 • holtlunsford.com
Q3
14
Q4
14
Q1
15
Vacancy
Q2
15
Q3
15
Q4
15
(1,000,000)
Fourth Quarter 2015
Submarket intelligence - south fort worth
Provided by Chance Olin, Marketing Director
Market Highlights
Absorption
vs. Prev. Qtr
vs. 12 Mths Ago
217,053
672,144
-654,086
Vacancy
vs. Prev. Qtr
vs. 12 Mths Ago
5.2%
5.5%
5.4%
Leasing Act.
vs. Prev. Qtr
vs. 12 Mths Ago
244,290
433,224
413,042
U/C SF
vs. Prev. Qtr
vs. 12 Mths Ago
74,993
53,675
95,200
Delivered SF
vs. Prev. Qtr
vs. 12 Mths Ago
37,100
95,200
0
Source: CoStar 2015 4Q Industrial Report
South Fort Worth Performance
The South Fort Worth industrial submarket posted a fourth
quarter vacancy of 5.2% thus creating an absorption figure of
217,053 square feet. The bright spot for the South Fort Worth
industrial market continues to be the shallow-bay distribution
projects; these have reported a 2015 year-to-date net absorption
of positive 289,503 SF through the end of the fourth quarter.
The vacancy rate within the Shallow Bay sector is up to 2.7%
from 2.4% at the end of the 3rd quarter.
Market Outlook
The South Fort Worth submarket saw positive absorption at the
end of the fourth quarter. The vacancy rate ticked down from
5.5% to 5.2%, which a healthy rate. The Shallow Bay sector
continues to carry the load, with a positive YTD net absorption
of 311,377 SF. The common theme in South Fort Worth is that
the demand is outrunning the supply. Specifically in the Shallow
Bay sector, which is again sub 3% vacancy rate (2.7%).
There is an opportunity in South Fort Worth for shallow bay and
bulk development. These discussions continue to progress and
we think you’ll start to see some of these come to fruition by mid2016 with 2017 deliveries.
With relatively few existing vacancies over 30,000 square feet,
and as developers continue to concentrate on the North Fort
Worth submarket for new, spec developments, South Fort Worth
is poised to positively absorb the square footage vacated in the
fourth quarter, going into the first quarter of 2016.
Deal on the Market: 1101 Everman Pkwy – 725,709 SF
Deals In The Market
•
•
•
1101 Everman Pkwy – 725,709 For Sale or Lease
102 Sentry Drive – 135,182 SF @ $4,750,000 ($31.14/psf)
3131 West Bolt – 136,570 SF For Sale or Lease
Large Existing Vacancies
•
•
•
•
•
•
1101 Everman Parkway - 725,709 SF
4900 Airport Freeway – 514,063 SF
4601 Carey Street – 176,656 SF
7537 North Jack Newell Boulevard – 142,035 SF (119,359
SF Available)
102 Sentry Drive – 135,182 SF
3131 West Bolt – 136,570 SF
Vital Stats
8.0%
1,000,000
800,000
7.0%
600,000
6.0%
400,000
5.0%
200,000
4.0%
0
(200,000)
3.0%
(400,000)
2.0%
(600,000)
1.0%
0.0%
(800,000)
Q4
12
Q1
13
Q2
13
Q3
13
Absorption
Top Lease Transactions
•
•
•
Q4
13
Q1
14
Q2
14
Q3
14
Deliveries
Source: CoStar 2015 4Q Industrial Report
Kobi Group leased 45,000 SF at 301 Risinger in Fort Worth
Trixie Pet Products leased 132,619 SF at 301 Risinger in
Fort Worth
MillerCoors leased 148,000 SF at 301 Risinger in Fort Worth
5055 Keller Springs, Suite 300 • Addison, Texas 75001 • 972.241.8300 • holtlunsford.com
Q4
14
Q1
15
Vacancy
Q2
15
Q3
15
Q4
15
(1,000,000)
www.Holtlunsford.com
dallas • 5055 Keller springs, suite 300 • addison, texas 75001 • 972.241.8300
fort worth • 300 throckmorton, suite 550 • fort worth, texas 76102 • 817.710.1110