OFFICE MARKET BEATwhiteboxrealestate.com/wp-content/uploads/2019/08/Q22019-Office … · 2018,...

Q2 2019 OFFICE

MARKET BEAT

The market terms, definitions, and statistics in this report are based on CoStar Group, Inc. office statistics. The information contained is gathered from multiple sources considered to be reliable. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price,

rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2017 Whitebox Real Estate, LLC | Data from CoStar, Inc

1 DFW OFFICE MARKET OVERVIEW

Office Market Overview Office Market Statistics

2 DALLAS CENTRAL CORE

Preston Center Central Expressway

Uptown/Turtle Creek Dallas CBD

3 UPPER CENTRAL EXPRESSWAY

Allen/McKinney Plano

Richardson

4 FAR NORTH DALLAS

Frisco/The Colony Upper Toll/West Plano Quorum/Bent Tree

West LBJ East LBJ

5 LAS COLINAS

DFW Freeport/Coppell Office Center/West LBJ Ext

Urban Center/Wingren

6 FORT WORTH

Fort Worth CBD

MARKET BEAT

TABLE OF CONTENTS

820183

35W 35E

30

20

3

4 5

2

6

7

8

9

10

14

16

17

635/LBJ

75/CentralExpressway

121/Sam Rayburn

Tollway

DallasNorth

Tollway

PresidentGeorge Bush

Turnpike114

36020

820

183

35W 35E

30

45

20

3

4 5

2

1

6

7

8

9

10

15

14

13

16

17

12

1315

635/LBJ


121/Sam Rayburn

Tollway

DallasNorth

Tollway


Turnpike114

360

DFWOfficeMarketOverview

1 - Dallas CBD

Legend

2 - Uptown/Turtle Creek

3 - Stemmons Freeway

4 - Preston Center

5 - Central Expressway

6 - LBJ Freeway

7 - Far North Dallas

8 - Las Colinas

9 - Richardson/Plano

10 - East Dallas

11 - Southwest Dallas

12 - South Ft Worth

13 - North Ft Worth

14 - Lewisville/Denton

15 - Mid-Cities

16 - Northeast Ft Worth

17 - Ft Worth CBD

DFW Airport

N

Ft Worth CBD Dallas CBD

20

820183

35W 35E

30

35E

45

20

3

4 5

2

1

6

7

8

9

10

11

15

14

13

16

17

12

635/LBJ


121/Sam Rayburn

Tollway

DallasNorth

Tollway


Turnpike114

360

Love Field

1



MARKET BEAT

OFFICE OVERVIEW

OFFICE OVERVIEW| Q2 2019

0100020003000400050006000

Q22018

Q32018

Q42018

Q12019

Q22019

Thou

sand

s

Net Absorption

$25.20

$25.40

$25.60

$25.80

$26.00

Q22018

Q32018

Q42018

Q12019

Q22019

LEASING ACTIVITY

$25.20$25.40$25.60$25.80$26.00

0.0%5.0%

10.0%15.0%20.0%

Q22018

Q32018

Q42018

Q12019

Q22019

Vacancy Vs Rental Rate

Vacancy Rental Rate

400 S Record Street Suite 1100

Dallas, TX 75202

(214) 380-4540 [email protected]

201 Main Street Suite 600

Fort Worth, TX 76102

(817) 502-1518

5830 Granite Parkway Suite 100

Plano, TX 75024

(214) 380-4540

Economic Overview The Texas economy continued to grow for yet another quarter, and June marked the 110th consecutive month for positive growth of nonfarm employment in the State of Texas, according to the Texas Workforce Commission. 10 of 11 major industries are experiencing positive annual growth. The private sector continues to be a growth engine for the state, and the growth rate has risen to 2.9% (from 2.5% a year ago). Unemployment for the State of Texas held relatively dropped to 3.4% (down 0.4% from the previous quarter). This is the lowest unemployment rate since 1976 (when the date series began). The United States unemployment rate decreased by 0.1% to 3.7%. Texas has outperformed the US unemployment rate for the last seven months. The Dallas Federal Reserve reported, “mixed” outlooks and “moderate” expansion. The Fed had positive news regarding the greater economy noting, “moderate expansion.” The news continues to be more positive than the end of last year. Employment has continued to expand in spite of labor shortages. The Dallas-Fort Worth (DFW) labor market grew by 3.2% by adding 116,800 jobs over the last 12 months (320 per day). The unemployment rate for DFW has held relatively flat at 3.2%. Dallas-Plano-Irving continues to stay in the top three for fastest growing MSA in the state (on a percentage basis at 3.7% -- 95,900 jobs added over the last 12 months).

Tenant Outlook Net absorption for the second quarter totaled 1,038,350 SF, down slightly from the previous quarter. The average quoted rental rate increased 0.27% from the previous quarter to $25.89 per square foot (SF). The Class A office market rose $0.17/SF to a DFW average quoted rate of $29.42/SF. The CBD average Class A quoted rate is $26.59/SF vs. an average of $30.30/SF for Class A suburban office product. The vacancy rate in DFW increased slightly to 14.9%, but it has remained relatively flat over the last six quarters (14.8% for the previous quarter 14.6% for the end of 2018, 14.9% for the third quarter 2018, 15.0% for second quarter 2018, 14.7% for first quarter 2018, and 14.6% at the end of 2017). The Class A vacancy rate decreased from 18.3% at the end of the previous quarter to 18.1% at the end of the



second quarter of 2019. Class A CBD vacancy rates were recorded at 23.0%, significantly higher than the 17.0% for suburban Class A office product. Vacant sublease space decreased by over 300,000 SF to 3,224,471 SF from 3,595,404 SF at the end of the second quarter. Sublease vacancy in the CBD represents 17.89% of the available sublease space on the market while the market only constitutes 11.99% of the overall DFW office market. Class A vacant sublease space decreased to 2,207,389 SF from the 2,318,948 SF at the end of the first quarter of 2019. 1,518,157 SF of new construction was delivered in the second quarter of 2019. There is an additional 8,966,025 SF currently under construction. The largest active construction projects are build-to-suits for American Airlines Corporate Campus, a 1,700,000 SF campus in Mid-Cities, and for Pioneer Natural Resources, a 1,125,000 SF facility in Las Colinas. Investor Outlook Office building sales continues to see an increase in price and compression of cap rates on trophy assets. Irrespective of the trophy assets, as a whole, Cap rates have slightly increased and averaged 7.2% for the previous 12 months at an average price of $198/SF compared to 7.5% for the previous quarter, 7.23% at the end of 2018, 6.54% for the end of the third quarter, and 6.94% from one year ago. The most prominent sale transaction for the last 12 months was the sale of 1900 Pearl, a 261,400 square foot new office development in the Dallas CBD submarket for $183,000,000 or $700.00 per square foot. Looking Forward At the halfway mark, 2019 has been better than expected. DFW growth has accelerated since the end of the first quarter. DFW still struggles to find labor, and that is the biggest strain on the economy at the present time. There is a true war for talent, and we continue to monitor this closely. Trade tariffs and slowed Oil & Gas activity continue to be a concern; however, there is enormous interest from coastal markets on the relocation front and the investment from (New York, Boston, Los Angeles, San Francisco), the economy continues to grow, and we feel the fundamentals for Dallas-Fort Worth continue to be positive and the outlook for 2019 is positive.


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

MARKET BEAT

OFFICE OVERVIEW




Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

MARKET BEAT

Total Office Submarket Statistics

YTD Net YTD Under QuotedMarket # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF RatesAllen/McKinney 535 9,570,626 878,195 1,002,022 10.5% 238,537 325,486 435,752 $27.05 Alliance 180 4,457,486 574,006 579,181 13.0% (37,985) 208,800 83,000 $24.54 Arlington/Mansfield 971 13,705,894 1,229,756 1,257,124 9.2% 60,648 44,696 76,054 $20.47 Central Expressway 282 15,153,919 1,625,130 1,665,562 11.0% 135,818 38,848 0 $29.63 Dallas CBD 144 33,795,131 6,944,802 7,478,367 22.1% (36,242) 81,711 60,230 $25.17 Delta County 3 6,141 0 0 0.0% 0 0 0 $0.00 Denton 438 4,637,589 429,030 436,108 9.4% (22,364) 51,609 43,427 $24.03 DFW Freeport/Coppell 234 15,367,625 1,729,827 1,910,339 12.4% 413,751 504,700 907,980 $23.42 East LBJ Freeway 171 17,555,420 3,720,871 3,917,790 22.3% 133,839 0 0 $23.33 East Northeast Ft Wo. 348 5,480,294 765,776 765,776 14.0% 486,785 0 0 $22.09 Ellis County 273 1,767,338 27,848 27,848 1.6% 42,131 5,000 5,330 $23.40 Frisco/The Colony 349 8,274,156 1,127,896 1,148,621 13.9% 4,177 0 423,726 $33.21 Ft Worth CBD 121 12,685,913 1,415,714 1,459,074 11.5% (10,121) 0 0 $27.76 Garland 293 3,163,321 394,944 394,944 12.5% 43,020 0 14,000 $20.62 Grand Prairie 153 4,633,447 318,201 318,201 6.9% (18,488) 7,045 15,000 $21.23 HEB/Mid-Cities 524 7,570,987 1,045,408 1,077,914 14.2% (20,366) 0 1,881,288 $18.52 Henderson County 87 294,789 13,814 13,814 4.7% (13,814) 0 0 $7.84 Hood County 136 803,089 33,285 33,285 4.1% (7,249) 0 0 $21.33 Hunt County 137 826,671 75,961 75,961 9.2% (32,559) 0 0 $17.52 Johnson County 272 1,539,489 129,901 131,901 8.6% 28,503 22,591 0 $19.05 Lewisville 496 8,604,308 926,137 944,218 11.0% (160,281) 15,925 288,931 $23.65 Mesquite/Forney/Terr. 247 2,017,305 136,695 136,695 6.8% 8,041 6,000 47,000 $22.76 Northwest Ft Worth 205 1,384,424 55,290 55,290 4.0% 14,066 12,328 0 $20.90 Office Ctr/West LBJ . 166 16,978,149 3,020,453 3,153,527 18.6% (225,260) 74,400 1,420,377 $25.37 Outlying Collin Coun. 84 534,901 70,661 70,661 13.2% (3,059) 2,942 19,081 $30.82 Outlying Denton Coun. 56 354,228 33,102 33,102 9.3% 1,440 0 16,000 $28.99 Outlying Kaufman Cou. 25 81,402 0 0 0.0% 0 0 0 $0.00 Parker County 229 1,308,919 74,304 74,304 5.7% 20,643 9,375 40,720 $22.36 Plano 382 9,973,080 1,754,027 1,782,775 17.9% 332,077 0 61,200 $25.92 Preston Center 152 6,073,551 468,284 505,874 8.3% (86,212) 0 126,054 $38.16 Quorum/Bent Tree 390 24,173,937 4,739,233 5,009,649 20.7% (139,983) 15,623 0 $25.69 Richardson 402 23,114,090 3,571,495 3,673,846 15.9% 2,979 21,000 10,000 $23.32 Rockwall 186 1,709,478 133,294 141,823 8.3% (24,020) 0 28,037 $30.86 South Irving 229 2,944,738 331,955 340,139 11.6% (56,490) 0 0 $16.35 Southeast Dallas 130 1,454,384 51,887 54,317 3.7% 5,555 0 65,890 $18.13 Southeast Ft Worth 211 2,595,126 154,859 154,859 6.0% (16,870) 0 0 $17.68 Southwest Dallas 592 6,147,864 400,206 407,472 6.6% 39,914 0 315,000 $21.30 Stemmons Freeway 283 15,761,474 3,222,050 3,222,050 20.4% 90,929 0 17,946 $17.16 Upper Tollway/West P. 443 34,002,555 4,389,080 5,125,740 15.1% 521,746 458,728 910,850 $31.58 Uptown/Turtle Creek 311 15,978,700 1,932,950 2,209,411 13.8% 117,002 34,762 321,098 $39.63 Urban Center/Wingren 65 9,808,551 1,528,636 1,713,196 17.5% (91,418) 0 54,957 $29.70 West LBJ Freeway 88 5,306,515 1,086,579 1,142,563 21.5% (184,594) 0 0 $18.73 West Southwest Ft Wo. 1,126 16,828,889 1,222,676 1,313,362 7.8% (22,777) 27,850 120,674 $24.64 Westlake/Grapevine 826 13,062,336 1,870,210 1,917,547 14.7% 665,791 595,250 856,423 $27.81 White Rock 270 5,869,381 749,252 751,899 12.8% 10,679 294,820 300,000 $28.18 Wise County 54 297,599 9,334 9,334 3.1% (6,200) 0 0 $20.28 Totals 13,299 387,655,209 54,413,014 57,637,485 14.9% 2,201,719 2,859,489 8,966,025 $25.89

Existing Inventory Vacancy

DallasLoveField

Preston Center

Legend

Central Expressway Submarket

Uptown/Turtle Creek

Dallas CBD

NorthwestHighway


WoodallRodgersFreeway

DallasNorth

Tollway

3035E

DallasCentralCore

N



Market Snapshot Rental Rates Vacancy

Construction Absorption

Market Statistics Inventory Total

Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under

Construction Rates - All

Classes Rates - Class A

Preston Center 6,073,551 SF 505,874 SF 8.33% -86,212 SF 0 SF 126,054 SF $38.16/SF $39.85/SF

Dallas/Fort Worth Total 387,655,209 SF 57,637,485 SF 14.87% 2,201,719 SF 2,859,489 SF 8,966,025 SF $25.89/SF $29.42/SF

MARKET BEAT

OFFICE SUBMARKET REPORT

Market Insights: The Preston Center Submarket ended the 2nd quarter of 2019 with a vacancy rate of 8.33%. The vacancy rate increased from the previous quarter, with a YTD net absorption of -86,212 SF to finish Q2 2019. Rental rates ended the 2nd quarter at $38.16/SF across all classes, decreasing from $38.18/SF in the previous quarter. As with the previous quarter, there were no new construction deliveries, and there is currently 126,054 SF under construction in the submarket. Fundamentals in Preston Center are strong. Occupancies are well above the metro average and are likely to remain that way due to the land constraints unique to this submarket. Furthermore, the rare new-builds in the submarket are typically met with relatively strong demand. Rents rank second highest in the metroplex and rent growth has outpaced the metro average over the past few years.

Preston Center | Q2 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(150,000) (100,000) (50,000)

- 50,000

100,000 150,000 200,000 250,000

Q22018

Q32018

Q42018

Q12019

Q22019

Net Absorption

$35.00 $36.00 $37.00 $38.00 $39.00 $40.00 $41.00

Q22018

Q32018

Q42018

Q12019

Q22019

Gross Asking Rents/SF

$34.00$36.00$38.00$40.00$42.00

0.0%

5.0%

10.0%

15.0%

Q22018

Q32018

Q42018

Q12019

Q22019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Central Expressway 15,153,919 SF 1,665,562 SF 10.99% 135,818 SF 38,848 SF 0 SF $29.63/SF $31.77/SF


MARKET BEAT


Market Insights: The Central Expressway Submarket ended the 2nd quarter of 2019 with a vacancy rate of 10.99%. The vacancy rate increased from the previous quarter, with a YTD net absorption of 135,818 SF to finish Q2 2019. Rental rates ended the 2nd quarter at $29.63/SF across all classes, increasing from $28.50/SF in the previous quarter. YTD new construction deliveries remained at 38,848 SF, and there is currently 0 SF under construction in the submarket. Though vacancies in Central Expressway have risen in recent quarters, they are still near all-time lows. With vacancies this low, landlords have pushed rents at one of the fastest rates in the metro over the past few quarters. The submarket is usually heavily traded and volume has picked up in the last twelve months with about $326M in sales. However, a significant portion of recent volume was due to the sale of the 1.35 million-SF Cityplace Tower, the largest asset in the submarket.

Central Expressway | Q2 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(300,000)

(200,000)

(100,000)

-

100,000

200,000

Q22018

Q32018

Q42018

Q12019

Q22019

Net Absorption

$27.50$28.00$28.50$29.00$29.50$30.00

Q22018

Q32018

Q42018

Q12019

Q22019


$27.50$28.00$28.50$29.00$29.50$30.00

0.0%

10.0%

20.0%

30.0%

Q22018

Q32018

Q42018

Q12019

Q22019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Uptown/Turtle Creek 15,978,700 SF 2,209,411 SF 13.83% 117,002 SF 34,762 SF 321,098 SF $39.63/SF $42.37/SF


MARKET BEAT


Market Insights: The Uptown/Turtle Creek Submarket ended the 2nd quarter of 2019 with a vacancy rate of 13.83%. The vacancy rate decreased from the previous quarter, with a YTD net absorption of 117,002 SF to finish Q2 2019. Rental rates ended the 2nd quarter at $39.63/SF across all classes, increasing from $39.18/SF in the previous quarter. YTD new construction deliveries remained at 34,762 SF, and there is currently 321,098 SF under construction in the submarket. Uptown/Turtle Creek is the premier office submarket, boasting the highest rents in the metro. It offers all of the transportation, infrastructure and amenity advantages of a CBD but has a more-upscale class of office product than the Dallas CBD Submarket. Nearly 75% of the submarket’s office product is Class A, and of that, a number of buildings are considered trophy assets. The tenant base is primarily made up of law firms, financial firms, and other professional services companies.

Uptown/Turtle Creek | Q2 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(100,000)

-

100,000

200,000

300,000

Q22018

Q32018

Q42018

Q12019

Q22019

Net Absorption

$38.00

$38.50

$39.00

$39.50

$40.00

Q22018

Q32018

Q42018

Q12019

Q22019


$38.00$38.50$39.00$39.50$40.00

11.0%12.0%13.0%14.0%15.0%

Q22018

Q32018

Q42018

Q12019

Q22019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Dallas CBD 33,795,131 SF 7,478,367 SF 22.13% -36,242 SF 81,711 SF 60,230 SF $25.17/SF $26.01/SF


MARKET BEAT


Market Insights: The Dallas CBD Submarket ended the 2nd quarter of 2019 with a vacancy rate of 22.13%. The vacancy rate increased from the previous quarter, with a YTD net absorption of -36,242 SF to finish Q2 2019. Rental rates ended the 2nd quarter at $25.17/SF across all classes, increasing from $24.80/SF in the previous quarter. YTD new construction deliveries remained at 81,711 SF, and there is currently 60,230 SF under construction in the submarket. The Dallas CBD is the metro’s primary office node, but the submarket has struggled for some time. Its vacancy rate has been among the highest in the metroplex for decades because its inventory contains a significant percentage of older towers that are not competitive with new assets in other prominent office submarkets. However, transit amenities and central location have helped keep a core group of tenants rooted here, and fundamentals have improved in recent years.

Dallas CBD | Q2 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(200,000)

-

200,000

400,000

600,000

800,000

Q22018

Q32018

Q42018

Q12019

Q22019

Net Absorption

$24.60

$24.80

$25.00

$25.20

$25.40

Q22018

Q32018

Q42018

Q12019

Q22019


$24.60$24.80$25.00$25.20$25.40

0.0%

10.0%

20.0%

30.0%

Q22018

Q32018

Q42018

Q12019

Q22019


Vacancy Rental Rate

Allen/McKinney

Legend

Plano

Richardson

UpperCentralExpressway

N

78

205

380

121/Sam Rayburn

Tollway



Turnpike






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Allen/ McKinney 9,570,626 SF 1,002,022 SF 10.47% 238,537 SF 325,486 SF 435,752 SF $27.05/SF $32.45/SF


MARKET BEAT


Market Insights: The Allen/McKinney Submarket ended the 2nd quarter of 2019 with a vacancy rate of 10.47%. The vacancy rate increased from the previous quarter, with a YTD net absorption of 238,537 SF to finish Q2 2019. Rental rates ended the 2nd quarter at $27.05/SF across all classes, decreasing from $27.44/SF in the previous quarter. New construction deliveries increased from 36,048 SF to 325,486 SF, and there is currently 435,752 SF under construction in the submarket. Allen/McKinney is a fast-growing suburban submarket in the northeastern corner of Dallas-Fort Worth. While large office product in McKinney is limited, it is home to two nodes, and there is a strong presence of insurance companies. Both Allen and McKinney are often ranked among the best places to live in the country for their high-quality schools, low crime rates, and relatively affordable homes.

Allen/McKinney | Q2 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

$26.60 $26.80 $27.00 $27.20 $27.40 $27.60 $27.80

Q22018

Q32018

Q42018

Q12019

Q22019


$26.50

$27.00

$27.50

$28.00

8.0%9.0%

10.0%11.0%12.0%

Q22018

Q32018

Q42018

Q12019

Q22019


Vacancy Rental Rate

-

100,000

200,000

300,000

400,000

500,000

Q22018

Q32018

Q42018

Q12019

Q22019

Net Absorption






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Plano 9,973,080 SF 1,782,775 SF 17.88% 332,077 SF 0 SF 61,200 SF $25.92/SF $29.16/SF


MARKET BEAT


Market Insights: The Plano Submarket ended the 2nd quarter of 2019 with a vacancy rate of 17.88%. The vacancy rate decreased from the previous quarter, with a YTD net absorption of 332,077 SF to finish Q2 2019. Rental rates ended the 2nd quarter at $25.92/SF across all classes, decreasing from $26.23/SF in the previous quarter. As with the previous quarter, there were no new construction deliveries, and there is currently 61,200 SF under construction in the submarket. The Plano Submarket encompasses East Plano, and most of its office inventory is along the North Central Expressway or President George Bush Turnpike. The submarket's inventory primarily comprises Class A, which is reminiscent of office stock in submarkets like Lewisville and HEB/Mid-Cities. Rent growth has slowed in recent quarters to less than 1% year-over-year growth.

Plano | Q2 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(200,000)

(150,000)

(100,000)

(50,000)

-

50,000

Q22018

Q32018

Q42018

Q12019

Q22019

Net Absorption

$25.60 $25.70 $25.80 $25.90 $26.00 $26.10 $26.20 $26.30

Q22018

Q32018

Q42018

Q12019

Q22019


$25.60$25.80$26.00$26.20$26.40

0.0%

10.0%

20.0%

30.0%

Q22018

Q32018

Q42018

Q12019

Q22019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Richardson 23,114,090 SF 3,673,846 SF 15.89% 2,979 SF 21,000 SF 10,000 SF $23.32/SF $25.79/SF


MARKET BEAT


Market Insights: The Richardson Submarket ended the 2nd quarter of 2019 with a vacancy rate of 15.89%. The vacancy rate increased from the previous quarter, with a YTD net absorption of 2,979 SF to finish Q2 2019. Rental rates ended the 2nd quarter at $23.32/SF across all classes, decreasing from $23.81/SF in the previous quarter. New construction deliveries increased from 11,000 SF to 21,000 SF, and there is currently 10,000 SF under construction in the submarket. Richardson is the home of the Telecom Corridor, which contains a number of the world’s largest telecom companies. Despite the moniker, Richardson has a diverse tenant base, with healthcare and insurance firms taking up a large portion of the submarket's office space. CityLine has garnered most of the headlines in recent years, with build-to-suits for State Farm (2 million SF) and Raytheon (500,000 SF) opening a few years ago to go along with thousands of new apartments and retail.

Richardson | Q2 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(100,000)

-

100,000

200,000

300,000

400,000

Q22018

Q32018

Q42018

Q12019

Q22019

Net Absorption

$20.00 $22.00 $24.00 $26.00 $28.00 $30.00

Q22018

Q32018

Q42018

Q12019

Q22019


$22.00$22.50$23.00$23.50$24.00

0.0%5.0%

10.0%15.0%20.0%

Q22018

Q32018

Q42018

Q12019

Q22019


Vacancy Rental Rate

Quorum/Bent Tree

Legend

West LBJ Freeway

Frisco/The Colony

Upper Tollway/West Plano

East LBJ Freeway

FarNorthDallas

N

35E635/LBJ

DallasNorth

Tollway


Turnpike

121/Sam Rayburn

Tollway







Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Frisco/ The Colony 8,274,156 SF 1,148,621 SF 13.88% 4,177 SF 0 SF 423,726 SF $33.21/SF $34.10/SF


MARKET BEAT


Market Insights: The Frisco/The Colony Submarket ended the 2nd quarter of 2019 with a vacancy rate of 13.88%. The vacancy rate increased from the previous quarter, with a YTD net absorption of 4,177 SF to finish Q2 2019. Rental rates ended the 2nd quarter at $33.21/SF across all classes, increasing from $33.20/SF in the previous quarter. As with the previous quarter, there were no new construction deliveries, and there is currently 423,726 SF under construction in the submarket. Frisco/The Colony is the metroplex’s up-and-coming submarket. Since the early 2000s, the submarket’s office inventory was less than 700,000 SF, but today it exceeds 8 million SF. The majority of the submarket’s office product is located just off of the Dallas North Tollway, more than 2 million SF of which is in the 162-acre Hall Park. Hall Park is still expanding, and other projects along the North Platinum Corridor ($5 Billion Mile) could deliver up to 20 million SF of office space at full build-out.

Frisco/The Colony | Q2 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

- 100,000 200,000 300,000 400,000 500,000 600,000 700,000

Q22018

Q32018

Q42018

Q12019

Q22019

Net Absorption

$32.60 $32.80 $33.00 $33.20 $33.40 $33.60

Q22018

Q32018

Q42018

Q12019

Q22019


$32.60$32.80$33.00$33.20$33.40$33.60

0.0%5.0%

10.0%15.0%20.0%

Q22018

Q32018

Q42018

Q12019

Q22019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Upper Tollway/ West Plano 34,002,555 SF 5,125,740 SF 15.07% 521,746 SF 458,728 SF 910,850 SF $31.58/SF $34.24/SF


MARKET BEAT


Market Insights: The Upper Tollway/West Plano Submarket ended the 2nd quarter of 2019 with a vacancy rate of 15.07%. The vacancy rate increased from the previous quarter, with a YTD net absorption of 521,746 SF to finish Q2 2019. Rental rates ended the 2nd quarter at $31.58/SF across all classes, increasing from $31.40/SF in the previous quarter. New construction deliveries increased from 457,500 SF to 458,728 SF, and there is currently 910,850 SF under construction in the submarket. The Upper Tollway/West Plano has emerged as one of the most dynamic office submarkets in Dallas-Fort Worth. The submarket has some of the newest office stock in the metro and now serves as a corporate hub for Toyota’s North American headquarters, and is a major regional location for Liberty Mutual, AmerisourceBergen, JPMorgan Chase, and USAA's recent expansion. These companies are able to take advantage of a deep and well-educated labor pool.

Upper Tollway/West Plano | Q2 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

-

500,000

1,000,000

1,500,000

2,000,000

Q22018

Q32018

Q42018

Q12019

Q22019

Net Absorption

$30.00

$30.50

$31.00

$31.50

$32.00

Q22018

Q32018

Q42018

Q12019

Q22019


$30.00$30.50$31.00$31.50$32.00

0.0%

10.0%

20.0%

30.0%

Q22018

Q32018

Q42018

Q12019

Q22019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Quorum/ Bent Tree 24,173,937 SF 5,009,649 SF 20.72% -139,983 SF 15,623 SF 0 SF $25.69/SF $29.77/SF


MARKET BEAT


Market Insights: The Quorum/Bent Tree Submarket ended the 2nd quarter of 2019 with a vacancy rate of 20.72%. The vacancy rate increased from the previous quarter, with a YTD net absorption of -139,983 SF to finish Q2 2019. Rental rates ended the 2nd quarter at $25.69/SF across all classes, increasing from $25.54/SF in the previous quarter. YTD new construction deliveries remained at 15,623 SF, and there is currently 0 SF under construction in the submarket. Quorum/Bent Tree is one of the metroplex’s primary office nodes. Its location allows tenants to tap into the highly educated workforce that resides to the south in Uptown and Park Cities as well as to the north in Plano and Frisco. The submarket emerged in the 1980s when its inventory grew by 10 million SF, accounting for nearly 40% of today’s total RBA. Occupancies have taken a hit in recent years, due to JPMorgan Chase and Fannie Mae moving to the North.

Quorum/Bent Tree | Q2 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(600,000) (500,000) (400,000) (300,000) (200,000) (100,000)

- 100,000

Q22018

Q32018

Q42018

Q12019

Q22019

Net Absorption

$24.80 $25.00 $25.20 $25.40 $25.60 $25.80

Q22018

Q32018

Q42018

Q12019

Q22019


$24.50

$25.00

$25.50

$26.00

0.0%

10.0%

20.0%

30.0%

Q22018

Q32018

Q42018

Q12019

Q22019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



West LBJ Freeway 5,306,515 SF 1,142,563 SF 21.53% -184,594 SF 0 SF 0 SF $18.73/SF $20.70/SF


MARKET BEAT


Market Insights: The West LBJ Freeway Submarket ended the 2nd quarter of 2019 with a vacancy rate of 21.53%. The vacancy rate increased from the previous quarter, with a YTD net absorption of -184,594 SF to finish Q2 2019. Rental rates ended the 2nd quarter at $18.73/SF across all classes, decreasing from $19.77/SF in the previous quarter. As with the previous quarter, there were no new construction deliveries, and there is currently 0 SF under construction in the submarket. Fundamentals in West LBJ have improved significantly this cycle. However, vacancies are back on the rise, as the submarket has seen negative absorption over the past few quarters. Rent growth has also weakened recently. If demand improves, rent growth could stand to pick up once again, since the submarket is unlikely to see new supply anytime soon.

West LBJ Freeway | Q2 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(200,000) (150,000) (100,000) (50,000)

- 50,000

100,000 150,000

Q22018

Q32018

Q42018

Q12019

Q22019

Net Absorption

$18.00

$18.50

$19.00

$19.50

$20.00

Q22018

Q32018

Q42018

Q12019

Q22019


$18.00$18.50$19.00$19.50$20.00

0.0%

10.0%

20.0%

30.0%

Q22018

Q32018

Q42018

Q12019

Q22019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



East LBJ Freeway 17,555,420 SF 3,917,790 SF 22.32% 133,839 SF 0 SF 0 SF $23.33/SF $27.07/SF


MARKET BEAT


Market Insights: The East LBJ Freeway Submarket ended the 2nd quarter of 2019 with a vacancy rate of 22.32%. The vacancy rate increased from the previous quarter, with a YTD net absorption of 133,839 SF to finish Q2 2019. Rental rates ended the 2nd quarter at $23.33/SF across all classes, decreasing from $23.52/SF in the previous quarter. As with the previous quarter, there were no new construction deliveries, and there is currently 0 SF under construction in the submarket. Although it is one of the smallest submarkets by land area, it is one of the densest in the metroplex, ranking in the top five for total office inventory. The average building size in the submarket is over 100,000 SF, with most tenants in finance, insurance, real estate or business services. More than half the stock is 80's era inventory, so the top properties are more competitive with assets in Central Expressway or Quorum/ Bent Tree rather than the newer properties in Uptown or Upper Tollway/West Plano.

East LBJ Freeway | Q2 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(400,000) (300,000) (200,000) (100,000)

- 100,000 200,000 300,000

Q22018

Q32018

Q42018

Q12019

Q22019

Net Absorption

$22.40 $22.60 $22.80 $23.00 $23.20 $23.40 $23.60

Q22018

Q32018

Q42018

Q12019

Q22019


$22.50

$23.00

$23.50

$24.00

0.0%

10.0%

20.0%

30.0%

Q22018

Q32018

Q42018

Q12019

Q22019


Vacancy Rental Rate

DFW Freeport/Coppell

Legend

Office Ctr/West LBJ Ext

Urban Center/Wingren

LasColinasOfficeMarket

N

114PresidentGeorge Bush

Turnpike

635/LBJ

121/Sam Rayburn

Tollway

DFWAIRPORT






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



DFW Freeport/ Coppell 15,367,625 SF 1,910,339 SF 12.43% 413,751 SF 504,700 SF 907,980 SF $23.42/SF $25.01/SF


MARKET BEAT


Market Insights: The DFW Freeport/Coppell Submarket ended the 2nd quarter of 2019 with a vacancy rate of 12.43%. The vacancy rate decreased from the previous quarter, with a YTD net absorption of 413,751 SF to finish Q2 2019. Rental rates ended the 2nd quarter at $23.42/SF across all classes, increasing from $22.75/SF in the previous quarter. New construction deliveries increased from 246,400 SF to 504,700 SF, and there is currently 907,980 SF under construction in the submarket. Led by the emergence of the Cypress Waters master-planned mixed-use development, since 2016 DFW Freeport/Coppell has added about 20 buildings, or 2.7 million SF of new inventory. Since so many of the new Cypress Waters office buildings were build-to-suits, vacancies have remained below the metro average in recent years despite significant supply additions. This trend should persist in the near term, as most of what is underway is already accounted for.

DFW Freeport/Coppell | Q2 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(200,000) (100,000)

- 100,000 200,000 300,000 400,000 500,000

Q22018

Q32018

Q42018

Q12019

Q22019

Net Absorption

$22.00

$22.50

$23.00

$23.50

Q22018

Q32018

Q42018

Q12019

Q22019


$22.00

$22.50

$23.00

$23.50

0.0%5.0%

10.0%15.0%20.0%

Q22018

Q32018

Q42018

Q12019

Q22019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Office Center/ West LBJ Ext 16,978,149 SF 3,153,527 SF 18.57% -225,260 SF 74,400 SF 1,420,377 SF $25.37/SF $26.90/SF


MARKET BEAT


Market Insights: The Office Center/West LBJ Ext Submarket ended the 2nd quarter of 2019 with a vacancy rate of 18.57%. The vacancy rate increased from the previous quarter, with a YTD net absorption of -225,260 SF to finish Q2 2019. Rental rates ended the 2nd quarter at $25.37/SF across all classes, increasing from $24.28/SF in the previous quarter. New construction deliveries increased from 0 SF to 74,400 SF, and there is currently 1,420,377 SF under construction in the submarket. Because of its proximity to the airport and its highway access, this submarket has remained a popular destination for major corporations. The submarket is home to regional hubs & headquarters for companies like ExxonMobil, Verizon, McKesson, and Fluor. The office product here caters to larger tenants, and the average building is bigger than 100,000 SF. The tenant mix primarily includes retailers, telecom companies, and financial services firms.

Office Center/West LBJ Ext | Q2 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(500,000) (400,000) (300,000) (200,000) (100,000)

- 100,000

Q22018

Q32018

Q42018

Q12019

Q22019

Net Absorption

$22.00

$23.00

$24.00

$25.00

$26.00

Q22018

Q32018

Q42018

Q12019

Q22019


$22.00$23.00$24.00$25.00$26.00

0.0%5.0%

10.0%15.0%20.0%

Q22018

Q32018

Q42018

Q12019

Q22019


Vacancy Rental Rate






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Urban Center/ Wingren 9,808,551 SF 1,713,196 SF 17.47% -91,418 SF 0 SF 54,957 SF $29.70/SF $31.35/SF


MARKET BEAT


Market Insights: The Urban Center/Wingren Submarket ended the 2nd quarter of 2019 with a vacancy rate of 17.47%. The vacancy rate decreased from the previous quarter, with a YTD net absorption of -91,418 SF to finish Q2 2019. Rental rates ended the 2nd quarter at $29.70/SF across all classes, increasing from $29.40/SF in the previous quarter. As with the previous quarter, there were no new construction deliveries, and there is currently 54,957 SF under construction in the submarket. Roughly 85% of total office inventory was added during the building boom of the 1980s, but the majority of that space is high-quality, Class A stock. The submarket benefits from its proximity to D/FW International Airport, and its location is within reasonable commuting distance of nearly all the affluent northern DFW suburbs. The focus here of late has been on improving transit amenities as well as creating more of a live/work/play environment.

Urban Center/Wingren | Q2 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(150,000) (100,000) (50,000)

- 50,000

100,000 150,000 200,000

Q22018

Q32018

Q42018

Q12019

Q22019

Net Absorption

$29.00 $29.20 $29.40 $29.60 $29.80 $30.00 $30.20

Q22018

Q32018

Q42018

Q12019

Q22019


$28.50$29.00$29.50$30.00$30.50

13.0%14.0%15.0%16.0%17.0%18.0%

Q22018

Q32018

Q42018

Q12019

Q22019


Vacancy Rental Rate

FortWorthCBD

N

35W

121

30

30

Belknap St/Weatherford

St

West ForkTrinity River

HendersonSt






Vacancy SF Vacancy

Rate YTD Net

Absorption YTD

Deliveries Under



Ft Worth CBD 12,685,913 SF 1,459,074 SF 11.50% -10,121 SF 0 SF 0 SF $27.76/SF $30.36/SF


MARKET BEAT


Market Insights: The Ft Worth CBD Submarket ended the 2nd quarter of 2019 with a vacancy rate of 11.50%. The vacancy rate decreased from the previous quarter, with a YTD net absorption of -10,121 SF to finish Q2 2019. Rental rates ended the 2nd quarter at $27.76/SF across all classes, decreasing from $27.96/SF in the previous quarter. As with the previous quarter, there were no new construction deliveries, and there is currently 0 SF under construction in the submarket. The Fort Worth CBD is home to a heavy concentration of energy companies, leaving it exposed to the effects of energy price swings. The good news is that, at about 11%, vacancies are well below the metro average and have been trending in the right direction. Also, the new Frost Tower, which opened in early 2018, was already about 70% leased less than one year after opening. While rent growth has slowed compared to earlier this cycle, rents are about 15% above their prerecession peak.

Ft Worth CBD | Q2 2019


Dallas, TX 75202




(817) 502-1518


Plano, TX 75024

(214) 380-4540

(100,000)

(50,000)

-

50,000

100,000

150,000

Q22018

Q32018

Q42018

Q12019

Q22019

Net Absorption

$27.00

$27.50

$28.00

$28.50

$29.00

Q22018

Q32018

Q42018

Q12019

Q22019


$27.00$27.50$28.00$28.50$29.00

0.0%

5.0%

10.0%

15.0%

Q22018

Q32018

Q42018

Q12019

Q22019


Vacancy Rental Rate

5830 Granite ParkwaySuite 100

Plano, TX 75024

(214) 380-4540www.whiteboxrealestate.com

400 S Record StreetSuite 1100

Dallas, TX 75202


201 Main StreetSuite 600



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