Research & Forecast Report DALLAS-FORT WORTH | OFFICE Q2 2017
Optimism still high in DFW office market
Mike Otillio Director of Research Kari Beets Research Associate
The flight to quality continues to be a trend throughout the market. As the U.S. economy continues slow, steady growth tenants are Market Indicators Annual Quarterly Quarterly taking advantage of the opportunity to restructure and refresh Relative to prior period Change Change Forecast* their space. For some, this means consolidating space in a higher- quality building by creating open office concepts or eliminating Vacancy storage, causing negative market-wide absorption for Class Net Absorption B in the first half of the year. Examples of this include EnLink Midstream, who recently moved from Class B space in Uptown to Under Construction One Arts Plaza, and Pioneer Natural Resources, who was in Class A space in Williams Tower but was optimistic enough to kick-start Rental Rate its new headquarters in the mixed-use Hidden Ridge development in Las Colinas. *Projected Also during this quarter, we saw the fulfillment of Legacy West’s vision. Legacy West Urban Village held its grand opening in June with most of its 300,000 square feet of space leased. For the office market, Toyota moved its first batch of employees into its new campus and will continue moving people in throughout the Summary Statistics DFW DFW DFW year. Gaedeke’s big bet of speculative space in Far North Dallas DFW Office Market Market Class A Class B paid off with the move-in of NTT Data. However, there are still concerns about traffic and lack of public transit options to attract Vacancy Rate 15.4% 17.2% 14.7% retail workers who cannot afford rising costs in the northern suburbs. Change from prior Quarter 0.2% 0.1% 0.2% A Look Ahead Absorption (Thousand Square Feet) 510 435 40 > Rental rates will continue to rise in key submarkets as New Supply landlords shift the rent structure to triple net, raising the (Thousand Square Feet) 1,252 755 497 overall cost to the tenant. While Uptown began this trend, it has rippled into other markets such as Preston Center and Under Construction (Thousand Square Feet) 11,061 10,043 1,018 Far North Dallas and is beginning to catch on in Las Colinas. Expect overall rental rates to rise 5-7% in major submarkets Asking Rents over the next year. Per Square Foot Per Year > Sky-high land prices in Uptown will discourage future office Average $25.13 $28.99 $21.05 developers — The Union may be the last large office project in the submarket for this cycle. We will continue to see Change from prior Quarter 1.3% 0.9% 1.7% reinvestment in the areas adjacent to Uptown such as the Arts District and Dallas CBD. Year-Over-Year Change 4.9% 3.6% 5.7%
Market Highlights > The pace of DFW’s job growth slowed slightly, but the metroplex still added 317 jobs per day. Labor force saturation is starting to be a concern with DFW’s unemployment rate at 3.8%, 0.3% below the national average. However, this is not Job Growth & Unemployment slowing corporate tenants’ hiring spree. People continue to move to DFW for jobs (not seasonly adjusted) and companies continue to move for the labor. > The construction pipeline remains split between build-to-suits and spec office Unemployment 5/2016 5/2017 space. Spec properties that delivered in Q2 2017 were 54% leased at the end of DFW 3.6% 3.8% the quarter, and of the 11 million square feet under construction, 65% were leased. 7,500 Vacancy Rate 25% Texas 2.2% 4.4% The vacancy rate continued its gradual climb. Vacancy increased slightly from 15.2% U.S. 4.5% 4.1% 20% in5,000 Q1 2017 to 15.4% in Q2 2017. Class A vacancy increased 0.1% to 17.2%, and Class B vacancy increased 0.2% to 14.7%. 15% Annual # of Jobs Far North Dallas and the Fort Worth CBD both saw a 0.6% improvementRate in overall Job Growth Change Added
vacancy rate from Q1 to Q2. New developments continue to 10see% high activity in DFW 3.3% 115.8k Vacancy Thousand of Square Feet Far2,500 North Dallas as new projects saw significant absorption this quarter, including Texas 2.2% 268.1k The Star in Frisco (67,000 SF), Legacy West (66,000 SF), and5% One Legacy West (NTT Data - 126,000 SF). Despite several large move-outs, the Fort Worth CBD still U.S. 1.6% 2,264k improved its overall vacancy rate largely due to the Aloft hotel taking 100,000 square 0 0% feet out2008 of the2009 market2010 in2011 One2012 City 2013Place,2014 the 2015old Radio2016 Shack2017 building. New Supply, Absorption & Vacancy Rate 7,500 New Supply Absorption Vacancy Rate Class A Office Rents & Vacancy 25% 19% $30
20% $29 5,000 18% $28 15% $27 Rate 17% $26 10%
Vacancy $25 2,500
Thousands of Square Feet 16% $24 5% $23 15% $22 0 0% $21 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Rental Rates 14% $20 2009 2011 2013 2015 2017 Rental Rates continue to break records as rates rose to a new overall high of $25.13. This is the first time theNew SupplyDFW market hasAbsorption topped $25 overall.Vacancy RateClass A rental rates almost Class A Vacancy Rate Class A Rental Rate broke a new barrier, reaching $28.99 overall. Las Colinas saw the greatest increase in average asking rates of all the major markets Class A, B & C Office Absorption increasing 5% to $25.61. East Dallas has also seen a 29% leap in rental rates from the prior year due solely to the start of construction and leasing for The Epic, whose asking 4,500 rates of $35.00 triple net seem more in line with Uptown than artsy Deep Ellum. Class Feet 4,000 A rental rates in Uptown continue to hold steady, increasing only 0.8% quarter-over- 3,500 quarter and 4.2% year-over-year, a decline from large jumps seen in 2015. of Square 3,000 Absorption & Demand Thousands 2,500 Net absorption for Q2 2017 was 509,727 square feet, one-third of the prior quarter’s 2,000 absorption level. Year-to-date net absorption stands at 2 million square feet, 800,000 square feet ahead of this time in 2016. With several large properties still expected to 1,500 deliver by year-end, the market continues to be on track for a record year. 1,000 Far North Dallas saw the highest absorption level, bolstered by Toyota starting its move 500 to its North American Headquarters, occupying 400,000 square feet of its 2 million 0 square foot campus. Mid-Cities saw the largest negative absorption, as CoreLogic, who moved into its new Hackberry Creek headquarters last quarter, vacated 220,000 square -500 feet at Solana. While many submarkets showed strong positive absorption in the quarter, 2013 2014 2015 2016 2017
Las Colinas, Mid-Cities, and Northeast Fort Worth all had approximately 100,000 square Class A Class B Class C feet of negative absorption, significantly lowering the market-wide level.
2 Dallas-Fort Worth Research & Forecast Report | Q2 2017 | Office | Colliers International Dallas-Fort Worth Downtown & Suburban Office Market Summary
EXISTING PROPERTIES VACANCY NET ABSORPTION CONSTRUCTION RENT
Total Direct Sublease Total Vacancy Vacancy Net Abs Net Abs New Supply Under Average SubmarketBldgs Inventory Vacancy Vacancy Vacant Rate Rate Current Qtr YTD YTD Construction Rate SF Rate Rate SF Current Prior Qtr SF SF SF SF (FS) DOWNTOWN AND SUBURBAN MARKETS
Class A Dallas CBD 27 23,159,803 24.9%0.8% 5,932,981 25.6% 26.0% 145,496$138,63492,237 261,400 27.27
Fort Worth CBD 17 5,984,611 12.5% 1.1% 812,48913.6% 14.6%661,114 4,9180280,489 $29.79
Dallas Suburban 5001114,271,547 4.6% 1.1% 17,921,87515.7% 15.5% 395,988$1,749,9642,465,370 9,403,022 29.69
Fort Worth Suburban 28 4,833,164 15.9% 0.9% 814,79516.9% 13.4%((167,524)$40,772)160,182 98,497 24.62
Total DFW Market 5721148,249,125 6.2% 1.0% 25,482,140 17.2%17.1% 435,074$1,912,744 2,717,78910,043,408 28.99
Class B Dallas CBD 37 6,086,317 19.2% 0.6% 1,202,301 19.8%16.8% (178,125)$(72,140) 0022.89
Fort Worth CBD 42 3,968,116 8.3% 0.3% 341,6828.6%8.6% (2,405)$22,819 0019.96
Dallas Suburban 2,3161124,083,033 3.9% 0.5% 17,881,03314.4% 14.2%(173,794$156,599) 662,487914,030 20.96
Fort Worth Suburban 325 13,984,462 15.9% 0.6% 2,315,45016.6% 16.9%151,752 4,55244,940103,962 $21.05
Total DFW Market 2,721 148,239,122 14.2%0.5%21,787,49014.7% 14.5%(40,434$186,707) 707,4271,017,992 21.05
Class C Dallas CBD 45 3,150,832 10.0%0.0%315,026 10.0%9.0%((31,316) 29,308)00 $17.97
Fort Worth CBD 21 665,554 0.2% 0.0% 1,3200.2%0.6% 2,422 (1,320) 00$18.82
Dallas Suburban 816119,528,593 0.1% 0.1% 1,975,82710.1% 10.3%144,321$61,12000 18.00
Fort Worth Suburban 211 4,602,184 6.7% 0.0% 307,284 6.7% 7.1% 18,792 73,669 00$18.45
Total DFW Market 1,093 27,947,163 9.3% 0.0% 2,599,457 9.3% 9.4% 34,219$204,16100 18.06
All Classes Dallas CBD 109 32,396,952 22.4% 0.6% 7,450,308 23.0% 22.6%3(63,945)$7,18692,237 261,400 26.58
Fort Worth CBD 80 10,618,281 10.2%0.7%1,155,491 10.9%11.5% 61,131 86,417 0280,489 $26.43
Dallas Suburban 3,632 257,883,173 13.9% 0.7% 37,778,735 14.6%14.5% 614,103$1,754,485 3,127,85710,317,052 25.09
Fort Worth Suburban 564123,419,810 4.1% 0.6% 3,437,52914.7% 14.3%4(96,980) 7,449 205,122 202,459 $21.70
Total DFW Market 4,3861324,435,410 4.7% 0.7% 49,869,08715.4% 15.2%1509,727$,930,198 3,425,216 11,061,400 25.13
QUARTERLY AND ANNUAL HISTORICAL COMPARISONS
24017 Q2 ,386 324,435,410 14.7%0.7%49,869,08715.4% 15.2% 509,727 1,930,198 3,425,21611,061,400 $ 25.13
2017 Q1 4,369 323,169,848 14.5%0.7%49,162,48415.2% 15.1%11,420,471 ,420,471 2,172,85411,442,359 $ 24.81
24016 Q4 ,351 320,996,994 14.4%0.6% 48,410,10115.1% 15.0%3421,007 ,642,0715,178,027 12,641,798 $ 24.41
24016 Q3 ,335 320,121,597 14.3%0.6%47,955,71115.0% 15.2%32,069,891 ,221,064 4,302,63012,449,883 $ 24.19
24016 Q2 ,310 318,546,529 14.7%0.6%48,450,534 15.2% 15.2%1777,460 ,151,1732,727,562 12,685,317 $ 23.90
2015 Q2 4,2421312,315,553 4.1% 0.7% 46,051,749 14.7%15.1% 1,850,468 3,969,4353,882,221 7,515,716 $ 22.31
24014 Q2 ,170 306,613,797 15.0%0.7%48,264,40315.7% 15.7%2880,647 ,672,628 1,954,5866,706,220 $ 21.14
2013 Q2 4,123 303,192,315 15.8% 0.7% 50,192,624 16.6% 16.4% (43,232) 381,114 911,651 3,454,056 $ 20.20
2012 Q2 4,0921301,495,637 6.3% 0.5% 50,699,959 16.8%16.8% 159,086 579,941528,055 2,287,839 $ 19.69
3 Dallas-Fort Worth Research & Forecast Report | Q2 2017 | Office | Colliers International Dallas-Fort Worth Office Submarket Summary
EXISTING PROPERTIES VACANCY NET ABSORPTION CONSTRUCTION RENT
Total Direct Sublease Total Vacancy Vacancy Net Abs Net Abs New Supply Under Average Colliers Markets Bldgs Inventory Vacancy Vacancy Vacant Rate Rate Current Qtr YTD YTD Construction Rate SF Rate Rate SF Current Prior Qtr SF SF SF SF (FS)
Class A Central Expressway 22 7,054,442 12.9% 0.1% 917,072 13.0% 12.7% (20,905) 32,436 0 0 $ 28.51
Dallas CBD 27 23,159,803 24.9% 0.8% 5,932,981 25.6% 26.0% 145,496 138,634 92,237 261,400 $ 27.27
East Dallas 3 598,856 6.1% 0.2% 38,094 6.4% 6.4% 0 0 0 294,820 $ 42.90
F1ar North Dallas 58 33,260,226 11.0% 1.3% 4,093,86312.3% 13.4% 708,498 1,111,972 1,290,2655,828,589 $ 32.21
Fort Worth CBD 17 5,984,611 12.5% 1.1% 812,489 13.6% 14.6% 61,114 64,918 0 280,489 $ 29.79
L8as Colinas 1119,606,585 3.1% 2.0% 2,956,31615.1% 14.1%7(198,065) 22,383544,183 812,219 $ 29.85
LBJ Freeway 37 10,684,441 22.8% 1.9% 2,637,084 24.7% 24.4% (25,605) (13,077) 0 0 $ 25.63
Lewisville / Denton 6 474,755 2.7% 0.0% 12,602 2.7% 3.8% 5,243 0 0 0 $ 25.49
M4id-Cities 2 8,233,523 20.7% 0.2% 1,718,156 20.9% 15.0%((314,396) 337,033)367,922 548,840 $ 26.61
North Fort Worth 3 725,711 2.6% 0.0% 19,206 2.6% 2.6% 9 5,820 0 0 $ 19.71
Northeast Fort Worth 2 414,859 74.7% 0.0% 309,931 74.7% 61.3% (55,637) 28,086 0 0 $ 21.28
Preston Center 22 4,188,627 8.4% 0.7% 384,296 9.2% 8.1% (44,641) (67,716) 0 171,583 $ 39.19
North US 75 Corridor166 4,116,831 22.2% 0.3% 3,188,135 22.6% 23.3% 96,363 (69,258) 0 473,441 $ 27.65
South Fort Worth 23 3,692,594 11.9% 1.2% 485,658 13.2% 10.1% (111,896) (74,678) 160,182 98,497 $ 30.28
Southwest Dallas 3 352,607 3.9% 0.0% 13,664 3.9% 4.4% 1,836 1,836 0 0 $ 25.34
Stemmons Freeway 14 4,797,669 18.0% 0.2% 874,345 18.2% 19.3% 101,878 113,198 63,000 0 $ 18.52
Uptown / Turtle Creek 46 10,902,985 9.0% 0.9% 1,088,248 10.0% 10.8% 85,782 255,223 200,000 1,273,530 $ 40.78
T5otal DFW Market 72 148,249,125 16.2% 1.0%25,482,14017.2% 17.1% 435,074 1,912,744 2,717,78910,043,408 $ 28.99
Class B Central Expressway 85 5,962,518 8.1% 0.4% 505,659 8.5% 9.3% 47,599 (36,097) 0 0 $ 24.96
Dallas CBD 37 6,086,317 19.2% 0.6% 1,202,301 19.8% 16.8% (178,125) (72,140) 0 0 $ 22.89
East Dallas 178 6,555,785 8.0% 0.1% 526,507 8.0% 8.0% (2,928) (91,822) 0 0 $ 19.51
Far North Dallas 404 21,280,353 14.5% 0.6% 3,200,121 15.0% 15.0% 5,689 (21,878) 103,694 186,621 $ 22.75
Fort Worth CBD 42 3,968,116 8.3% 0.3% 341,682 8.6% 8.6% (2,405) 22,819 0 0 $ 19.96
Las Colinas 232 18,446,260 14.3% 0.3% 2,691,107 14.6% 13.2% 47,257 25,457 339,359 31,413 $ 20.88
LBJ Freeway 128 10,954,367 19.7% 0.4% 2,195,871 20.0% 20.3% 27,138 (27,479) 0 0 $ 18.73
Lewisville / Denton 195 8,014,603 8.7% 1.7% 831,501 10.4% 9.6% (53,924) (94,275) 29,400 128,660 $ 22.18
Mid-Cities 468 18,612,043 13.1% 0.3% 2,501,351 13.4% 14.2% 151,372 87,532 10,000 145,649 $ 20.28
North Fort Worth 68 3,230,246 4.8% 1.8% 214,848 6.7% 6.9% 8,947 (19,571) 23,940 42,000 $ 24.08
Northeast Fort Worth351 ,067,391 48.0% 0.5% 1,488,531 48.5% 47.3% (37,322) (15,031) 0 0 $ 18.74
Preston Center 21 972,857 9.2% 0.3% 92,221 9.5% 10.1% 5,673 2,669 0 0 $ 31.89
North US 75 Corridor 374 20,169,675 12.8% 0.1% 2,609,581 12.9% 12.9% 50,018 72,192 180,034 324,439 $ 21.20
South Fort Worth 206 7,686,825 7.8% 0.1% 612,071 8.0% 9.0% 80,127 49,154 21,000 61,962 $ 23.32
Southwest Dallas 88 2,995,744 11.8% 0.0% 352,226 11.8% 12.5% 22,722 64,088 0 55,000 $ 17.77
Stemmons Freeway 99 7,687,295 25.8% 0.8% 2,043,329 26.6% 26.1% (35,556) (41,568) 0 0 $ 16.24
Uptown / Turtle Creek 45 2,548,727 9.9% 4.9% 378,583 14.9% 11.1% (95,848) (90,757) 0 42,248 $ 32.77
T2otal DFW Market ,721 148,239,122 14.2%0.5%21,787,490 14.7%14.5% 40,434 (186,707) 707,427 1,017,992 $ 21.05
4 Dallas-Fort Worth Research & Forecast Report | Q2 2017 | Office | Colliers International Dallas-Fort Worth Office Submarket Summary
EXISTING PROPERTIES VACANCY NET ABSORPTION CONSTRUCTION RENT
Total Direct Sublease Total Vacancy Vacancy Net Abs Net Abs New Supply Under Average Colliers Markets Bldgs Inventory Vacancy Vacancy Vacant Rate Rate Current Qtr YTD YTD Construction Rate SF Rate Rate SF Current Prior Qtr SF SF SF SF (FS)
Class C Central Expressway 47 916,660 4.3% 0.1% 40,502 4.4% 5.4% 9,053 24,440 0 0 $ 24.45
Dallas CBD 45 3,150,832 10.0% 0.0% 315,026 10.0% 9.0% (31,316) (29,308) 0 0 $ 17.97
East Dallas 120 2,674,316 8.6% 0.2% 234,406 8.8% 7.2% (42,940) (16,804) 0 0 $ 15.34
Far North Dallas 46 907,191 17.0% 0.0% 154,451 17.0% 13.6% (31,109) (28,093) 0 0 $ 16.17
Fort Worth CBD 21 665,554 0.2% 0.0% 1,320 0.2% 0.6% 2,422 (1,320) 0 0 $ 18.82
Las Colinas 22 1,208,199 6.3% 0.0% 75,596 6.3% 8.2% 24,061 36,110 0 0 $ 17.69
LBJ Freeway 31 635,792 25.3% 0.0% 161,130 25.3% 24.8% (3,403) (3,420) 0 0 $ 17.97
Lewisville / Denton 73 1,647,370 3.1% 0.0% 50,738 3.1% 3.1% 584 10,427 0 0 $ 17.33
Mid-Cities 206 4,842,811 11.6% 0.0% 563,334 11.6% 12.4% 36,719 71,617 0 0 $ 16.22
North Fort Worth 28 518,540 2.1% 0.0% 10,851 2.1% 1.8% (1,474) 27,384 0 0 $ 18.71
Northeast Fort Worth 38 991,101 9.3% 0.0% 91,944 9.3% 9.0% (2,850) (6,279) 0 0 $ 17.89
Preston Center 16 381,262 5.5% 0.0% 20,916 5.5% 14.9% 35,734 53,180 0 0 $ 29.35
North US 75 Corridor 104 2,475,759 6.9% 0.0% 170,371 6.9% 5.8% (27,896) (27,731) 0 0 $ 20.98
South Fort Worth 145 3,092,543 6.6% 0.0% 204,489 6.6% 7.4% 23,116 52,564 0 0 $ 18.65
Southwest Dallas 67 1,399,305 3.8% 0.0% 52,745 3.8% 3.7% (500) 4,792 0 0 $ 18.41
Stemmons Freeway 62 1,946,434 21.0% 0.0% 409,249 21.0% 23.3% 44,018 39,752 0 0 $ 13.97
Uptown / Turtle Creek 22 493,494 7.6% 1.0% 42,389 8.6% 8.6% 0 (3,150) 0 0 $ 30.12
Total DFW Market 1,093 27,947,163 9.3% 0.0% 2,599,457 9.3% 9.4% 34,219 204,161 0 0 $ 18.06
All Classes Central Expressway 154 13,933,620 10.3% 0.2% 1,463,233 10.5% 10.8% 35,747 20,779 0 0 $ 27.22
Dallas CBD 109 32,396,952 22.4% 0.6% 7,450,308 23.0% 22.6% (63,945) 37,186 92,237 261,400 $ 26.58
East Dallas 301 9,828,957 8.0% 0.1% 799,007 8.1% 7.7% (45,868) (108,626) 0 294,820 $ 24.42
F6ar North Dallas 08 55,447,770 12.4% 1.0%7,448,435 13.4%14.0% 683,078 1,062,0011,393,959 6,015,210 $ 27.90
Fort Worth CBD 80 10,618,281 10.2% 0.7% 1,155,491 10.9% 11.5% 61,131 86,417 0 280,489 $ 26.43
L3as Colinas 35 39,261,044 13.4% 1.1% 5,723,01914.6% 13.5%7(126,747) 83,950 883,542843,632 $ 25.61
LBJ Freeway 196 22,274,600 21.3% 1.1% 4,994,085 22.4% 22.4% (1,870) (43,976) 0 0 $ 22.13
Lewisville / Denton 274 10,136,728 7.5% 1.3% 894,841 8.8% 8.3% (48,097) (83,848) 29,400 128,660 $ 22.45
M7id-Cities 16 31,688,377 14.9%0.2% 4,782,841 15.1%14.1% (126,305) (177,884)377,922 694,489 $ 21.94
North Fort Worth 99 4,474,497 4.1% 1.3% 244,905 5.5% 5.6% 7,482 13,633 23,940 42,000 $ 22.00
Northeast Fort Worth491 ,473,351 41.9% 0.3% 1,890,406 42.3% 40.1% (95,809) 6,776 0 0 $ 19.20
Preston Center 59 5,542,746 8.4% 0.6% 497,433 9.0% 8.9% (3,234) (11,867) 0 171,583 $ 37.42
North US 75 Corridor 544 36,762,265 16.0% 0.2% 5,968,087 16.2% 16.4% 118,485 (24,797) 180,034 797,880 $ 24.38
South Fort Worth 374 14,471,962 8.6% 0.4% 1,302,218 9.0% 8.9% (8,653) 27,040 181,182 160,459 $ 24.30
Southwest Dallas 158 4,747,656 8.8% 0.0% 418,635 8.8% 9.3% 24,058 70,716 0 55,000 $ 18.10
Stemmons Freeway1175 4,431,398 22.6% 0.5% 3,326,923 23.1% 23.5% 110,340 111,382 63,000 0 $ 16.87
Uptown / Turtle Creek 113 13,945,206 9.2% 1.7% 1,509,220 10.8% 10.8% (10,066) 161,316 200,000 1,315,778 $ 38.78
Total DFW Market 4,3861324,435,410 4.7% 0.7% 49,869,087 15.4%15.2% 509,727 1,930,198 3,425,216 11,061,400 $ 25.13
NOTE: Statistical set consists of office properties 10,000 SF and up, including owner-occupied properties; and excluding medical office and properties where the government is 100% owner and occupier. While CoStar attempts to provide the most accurate data at the end of every quarter, revisions are made throughout the year accounting for discrepancies in past reporting.
Sources: CoStar Property, Colliers Research
5 Dallas-Fort Worth Research & Forecast Report | Q2 2017 | Office | Colliers International Leasing Activity Leasing activity in Q2 2017 was down 25% from the first half of 2016. Leasing activity for Q2 was approximately 3.9 million square feet, while year-to-date activity is just over 8.3 million square feet.
Q2 2017 Top Office Lease Transactions
BUILDING NAME/ADDRESS SUBMARKET SF TENANT LEASE DATE
2001 Ross Ave Dallas CBD 139,710 Baker Botts LLP Apr-17
2001 Ross Ave Dallas CBD 115,492 Goldman Sachs Apr-17
8616 Freeport Pky Las Colinas 54,646 Yardi Systems Jun-17
3000-3030 Waterview Pky US 75 Corridor 38,783 University of Texas at Dallas Apr-17
6080 Tennyson Pky Far North Dallas 35,738 BroadSoft, Inc. May-17
6500 International Pky Far North Dallas 33,653 Fisher Asset Jun-17
2375 N Glenville Dr US 75 Corridor 33,465 Service King Collision Repair Centers May-17
8585 N Stemmons Fwy Stemmons Freeway 30,703 Safeguard Business Systems May-17
7950 Legacy Dr Far North Dallas 25,343 NTT DATA, Inc. May-17
5080 Spectrum Dr Far North Dallas 23,427 Principal Financial Services, Inc. May-17
222 W Las Colinas Blvd Las Colinas 22,542 Lightbeam Health Solutions May-17
220 E Las Colinas Blvd Las Colinas 22,338 General Motors Financial Company Apr-17
4120 International Pky Far North Dallas 18,398 Gallagher Apr-17
5905 Legacy Dr Far North Dallas 17,315 Spectrum VIOP May-17
651 Canyon Dr Las Colinas 16,876 MAG Velocity May-17
Sales Activity Investment activity for the first half of 2017 was up 74% from the first half of 2016. Liberty Mutual’s purchase of its Plano campus was one of the largest transactions of the quarter, estimated at around $325 million. 5851 Legacy Circle in Far North Dallas traded near Uptown-level prices at $387 per square foot.
Q2 2017 Significant Sales Transactions – (50,000 SF or greater)
BUILDING NAME SUBMARKET RBA (SF) CLASS BUYER SELLER DATE SOLD
Upper Tollway/ 5851 Legacy Circle 318,582 A TIER REIT, Inc. VEREIT, Inc. 06/26/17 West Plano
Northpark Central Central Expressway 491,820 A CBRE Global Investors Cornerstone RE Advisers 06/21/17
Point West I DFW Freeport/Coppell 182,700 B Capital Commercial Investments Gramercy Property Trust 05/31/17
Libitzky Property Midtown Office Center East LBJ Freeway 128,789 B Olymbec USA 05/26/17 Companies
Intercontinental Real Estate Foundry Commercial, 2280 N Greenville Avenue Richardson 190,000 B 05/25/17 Corporation CenterSquare
Arbors at Brookhollow Arlington/Mansfield 114,421 B Yacht Harbor Capital Advisors Onward Investors LLC 05/19/17
KBS Real Estate Investment Pacific Center I & II Quorum/Bent Tree 224,222 A Apex Pacific Partners 05/18/17 Trust
Transwestern Investment The Douglas Preston Center 163,864 B Granite Properties 05/02/17 Company
Office Ctr/West LBJ American Fidelity Property Granite Plaza 195,173 A Granite Properties 04/27/17 Extension Company
Forest Green Business Park East LBJ Freeway 172,620 B Pat Davis Properties Prescott Realty Group 04/03/17
Sources: RCA, Costar, Colliers Research
6 Dallas-Fort Worth Research & Forecast Report | Q2 2017 | Office | Colliers International Quoted gross rental rates for existing top performing office buildings
YEAR % BUILDING NAME ADDRESS SUBMARKET RBA (SF) AVAIL. SF RENT ($/SF) OWNER BUILT LEASED +E BUILDINGS KPMG Plaza at Hall Arts 2323 Ross Ave Dallas CBD 459,383 2015 75% 113,415 $48.00 +E 2323 Ross Holdings, LLC 1919 McKinney Ave 1919 McKinney Ave Uptown/Turtle Creek 118,940 1924 69% 40,788 $38.00 +E Ecom Real Estate Mgmt, Inc. 8300 Douglas at Preston Center 8300 Douglas Ave Preston Center 100,893 1982 37% 63,492 $35.50 +E Lionstone Investments Chase Tower 2200 Ross Ave Dallas CBD 1,255,473 1987 76% 344,474 $35.00 +E Fortis Property Group, LLC Travis Walk 4514 Travis St Preston Center 91,357 1986 90% 17,703 $35.00 +E Intercity Investment Properties, Inc. Westdale Real Estate Investment 3100 Monticello 3100 Monticello Ave Preston Center 174,879 1983 95% 33,194 $35.00 +E and Management NNN BUILDINGS 2100 McKinney Ave 2100 McKinney Ave Uptown/Turtle Creek 360,859 1998 96% 16,161 $40.00 NNN NY State Common Retirement Fund 17Seventeen McKinney 1717 McKinney Ave Uptown/Turtle Creek 369,017 2010 97% 41,860 $39.00 NNN Gaedeke Group LLC The Star 1 Cowboys Way Far North Dallas 397,819 2016 79% 81,585 $39.00 NNN City of Frisco 2000 McKinney Ave 2000 McKinney Ave Uptown/Turtle Creek 447,595 2008 97% 20,803 $38.50 NNN Union Investment Real Estate GmbH McKinney & Olive 2021 McKinney Ave Uptown/Turtle Creek 530,000 2016 93% 35,880 $38.50 NNN Crescent Real Estate Equities LLC Harwood No. 7 Frost Tower 2950 N Harwood St Uptown/Turtle Creek 167,735 2015 94% 9,702 $38.00 NNN Harwood International
Q2 2017 HIGHLIGHTS
TOTAL OFFICE SUBMARKET SF INVENTORY 324.4M SF UNDER CONSTRUCTION FAR NORTH DALLAS 6.0M SF 148.2M SF 148.2M SF UPTOWN/TURTLE CREEK 1.3M SF
LAS COLINAS 843K SF
27.9M SF NORTH US-75 CORRIDOR 798K SF Q2 2017 Significant Sales Transactions – (50,000 SF or greater) 12.8%
TOTAL: 11.5M SF 11.5M TOTAL: ANNUALLY BUILDING NAME SUBMARKET RBA (SF) CLASS BUYER SELLER DATE SOLD TOTAL INVENTORY BY CLASS CLASS A: 46% CLASS B: 46% CLASS C: 8% MID-CITIES 694K SF Upper Tollway/ 5851 Legacy Circle 318,582 A TIER REIT, Inc. VEREIT, Inc. 06/26/17 West Plano
Northpark Central Central Expressway 491,820 A CBRE Global Investors Cornerstone RE Advisers 06/21/17
Point West I DFW Freeport/Coppell 182,700 B Capital Commercial Investments Gramercy Property Trust 05/31/17 15.4% 509,727 SF VACANCY NET ABSORPTION Libitzky Property CURRENT Midtown Office Center East LBJ Freeway 128,789 B Olymbec USA 05/26/17 Companies
Intercontinental Real Estate Foundry Commercial, 2280 N Greenville Avenue Richardson 190,000 B 05/25/17 SF 1 MILLION+ Corporation CenterSquare
Arbors at Brookhollow Arlington/Mansfield 114,421 B Yacht Harbor Capital Advisors Onward Investors LLC 05/19/17 500K-1M SF 500K-1M KBS Real Estate Investment Pacific Center I & II Quorum/Bent Tree 224,222 A Apex Pacific Partners 05/18/17 Trust MULTI-TENANT
Transwestern Investment The Douglas Preston Center 163,864 B Granite Properties 05/02/17 OFFICE Company SF 250K-500K BUILDINGS BY SIZE Office Ctr/West LBJ American Fidelity Property 100K-250K SF 100K-250K Granite Plaza 195,173 A Granite Properties 04/27/17 SF 25K-50K SF 50K-100K Extension Company NUMBER OF BUILDINGS 531 435 449 138 28 17 Forest Green Business Park East LBJ Freeway 172,620 B Pat Davis Properties Prescott Realty Group 04/03/17 TOTAL SQUARE FEET 18.8M SF 31.3M SF 69.4M SF 46.5M SF 17.8M SF 22.9M SF VACANCY 14.3% 21.2% 19.7% 21.0% 22.8% 23.9%
7 Dallas-Fort Worth Research & Forecast Report | Q2 2017 | Office | Colliers International 380 35 OFFICE SUBMARKET MAP 380 380 288 78 LLT
DNT 380 DENTON FRISCO 81 THE COLONY LLT 121
ALLEN / McKINNEY 35E 4 75
35W 377 121 DNT 13 8 PLANO UPPER TOLLWAY 114 PLANO LEWISVILLE 78 ALLIANCE / FOSSIL CREEK 190 190 121 2499 QUORUM RICHARDSON DFW / FREEPORT BENT TREE DNT COPPELL WEST LAKE / GRAPEVINE 190 26 205 114 121 1709 635 6 161 30 B 635 10 35W A B 66 114 7 377 35E 75 121 360 OFFICE CTR ROCKWALL WEST LBJ EXT PRESTON CENTER GARLAND URBAN CENTRAL 12 DNT EXPWY NORTHWEST FORT WORTH CENTER WINGREN 635 12 820 STEMMONS 183 183 FREEWAY 12 WHITE ROCK 199 HURST / EULESS / 1 BEDFORD 161 SOUTH IRVING UPTOWN / 35W 11 183 12 TURTLE 190 16 CREEK 30 820 183 17 FW NORTHEAST DALLAS CBD CBD FORT WORTH 30 352 30 9 3 175 12 12 MESQUITE 80 80 35E 2 30 5 161 45 FORNEY 30 TERRELL 820 303 12 183 287 20 377 ARLINGTON 360 408 20 820 GRAND PRAIRIE 287B 20 67 635 20 20 SOUTHEAST DALLAS 20 20
14 67 175 35W SOUTHEAST FORT WORTH SOUTHWEST DALLAS 377 15 SOUTHWEST FORT WORTH 287 360 287B 67
1 Central Expressway 10 North Fort Worth RESEARCHERS: 154 Bldgs 13.9m SF 10.5% Vac UC = None $ 27.22 PSF 99 Bldgs 4.5m SF 5.5% Vac UC = 42K SF $ 22.00 PSF 45 2 Dallas CBD 11 Northeast Fort Worth MIKE OTILLIO 287 35E 109 Bldgs 32.4m SF 23% Vac UC35W = 261.4K SF $ 26.58 PSF 91 Bldgs 4.5m SF 42.3% Vac UC = None $ 19.20 PSF Director of Research 77 3 East Dallas 12 Preston Center DIRECT +1 214 217 1232 67 301 Bldgs 9.8m SF 8.1% Vac UC = 294.8K SF $ 24.42 PSF 59 Bldgs 5.5m SF 9% Vac UC = 171.6K SF $ 37.42 PSF [email protected] 4 Far North Dallas 13 North US 75 Corridor 608 Bldgs 55.4m SF 13.4% Vac UC = 6,015K SF $ 27.90 PSF 544 Bldgs 36.8m SF 16.2% Vac UC = 798K SF $ 24.38 PSF
67 KARI BEETS 5 Fort Worth CBD 14 South Fort Worth Research Associate 80 Bldgs 10.6m SF 10.9% Vac UC = 280.5K SF $ 26.43 PSF 374 Bldgs 14.5m SF 9% Vac UC = 160.5K SF $ 24.30 PSF DIRECT +1 214 217 1227 6 Las Colinas 15 Southwest Dallas [email protected] 335 Bldgs 39.3m SF 14.6% Vac UC = 843.6K SF $ 25.61 PSF 158 Bldgs 4.7m SF 8.8% Vac UC = 55K SF $ 18.10 PSF 7 LBJ Freeway 16 Stemmons Freeway 196 Bldgs 22.3m SF 22.4% Vac UC = None $ 22.13 PSF 175 Bldgs 14.4m SF 23.1% Vac UC = None $ 16.87 PSF 8 Denton / Lewisville 17 Uptown / Turtle Creek 274 Bldgs 10.1m SF 8.8% Vac UC = 128.7K SF $ 22.45 PSF 113 Bldgs 13.9m SF 10.8% Vac UC = 1,316K SF $ 38.78 PSF 9 Mid-Cities Total Market 716 Bldgs 31.7m SF 15.1% Vac UC = 694.5K SF $ 21.94 PSF 4,386 Bldgs 324.4m SF 15.4% Vac UC = 11,061K SF $ 25.13 PSF UC = Under Construction
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