Q3 2020 MARKET IN MINUTES /FORT WORTH Savills Research

Leasing activity continues to plummet, KEY STATISTICS y-o-y Q3 2019 Q3 2020 sublease space on the rise Change Leasing activity across Dallas-Fort Worth, at 1.8 million square feet (msf) Inventory 205.6 MSF 208.1 MSF in Q3 2020, has decreased by 3.1% over the quarter and plunged 58.6% year Availability Rate 24.9% 27.4% over year. With national trends throughout the pandemic proclaiming dismal leasing activity in major markets, the Metroplex presents itself as a prime Asking Rental Rate $24.75 $25.10 example of the true weight of COVID-19’s impact on the sector. Previously Class A Asking Rental Rate $27.11 $27.51 buzzing with activity in Q1 2020, demand is now running on reserves sourced primarily from renewals, extensions and expansions. Slowing leasing activity Quarterly Leasing Activity 4.4 MSF 1.8 MSF and increasing sublease availability sets tenant favorability in the market at its peak as landlords face a more a competitive market and tepid demand leading to lower taking rates and increasingly generous concessionary offerings for ASKING RENT TRENDS Overall Asking Rent Class A Asking Rent direct-space deals. $40.00

Availability climbs to new heights six months into the pandemic Market-wide availability reached 27.4% in the third quarter, the highest level $30.00 $27.51 observed in at least 16 years. This marks a 300 basis-point increase over the $25.10 quarter, the largest variance in availability that the Metroplex has seen since Q4 $20.00

2015 when availability jumped up 340 basis points. To offer further context, the $ / SF fallout from the financial crisis of 2008 saw availability rates peak at 25.8% in Q2 2010, still 160 basis points shy of where they stand today. The Stemmons and $10.00 Preston Center submarkets saw relatively little change, whereas the Mid-Cities submarket saw availability increase by 830 basis points, the Fort Worth Central $0.00 Business District saw a 680-basis-point increase, and the West LBJ submarket Q3 2015 Q3 2016 Q3 2017 Q3 2018 Q3 2019 Q3 2020 saw a 580-basis-point increase. AVAILABILITY TRENDS Overall Availability Class A Availability Dallas-Fort Worth’s resilient nature will drive recovery 30.0% 27.4% Dallas-Fort Worth will likely see a more expedient recovery than other large metropolitan areas. The city’s deep talent pool, relative affordability, ability to 27.3% attract organizations and headquarters locations from outside of the market, 20.0% and ongoing economic diversification will drive recovery on the other side of the pandemic. Occupiers that have been able to weather current circumstances have taken advantage of the currently soft market fundamentals with four of the ten largest leases for the quarter relocating to Class A product and an 10.0% additional three expanding their existing premises.

0.0% Q3 2015 Q3 2016 Q3 2017 Q3 2018 Q3 2019 Q3 2020

Outlook LEASING ACTIVITY Quarterly Leasing Activity 5-Year Quarterly Average • Current market dynamics are highly tenant favorable and are 5.0 expected to persist in the near- to medium-term 4.5 4.0 • Minimal movement in asking rental rates is expected, net effective 3.5 rents are expected to decrease as landlords face competition from 3.0 both rising direct and sublease available space 2.5 • The competitive advantage of Dallas-Fort Worth is not expected to 2.0 1.5 diminish, corporate relocations which have slowed under current

Square feet (millions) feet Square 1.0 market conditions are expected to pick back up as the national 0.5 economy recovers 0.0 Q3 2015 Q3 2016 Q3 2017 Q3 2018 Q3 2019 Q3 2020 Dallas/Fort Worth Market in Minutes - Q3 2020

MAJOR TRANSACTIONS 42.9% 35.4% 28.9% Of major transactions were expansions of large transactions occurred in Financial services sector tenants by square footage the Dallas CBD submarket by square represented 28.9% of major transactions footage by square footage

Tenant Square feet Address Transaction type Submarket Industry

Hilltop Securities 130,756 717 N Harwood Street Relocation Dallas CBD Financial Services

3939 W John Carpenter Free- The Michaels Companies, Inc. 123,740 Expansion West LBJ Retail way

Aimbridge Hospitality 75,000 5301 Headquarters Drive Expansion Corridor Real Estate

Faegre Drinker 37,179 1717 Main Street Renewal Dallas CBD Legal Services

Redfin Corporation 36,823 2611 Internet Boulevard Expansion North Dallas Corridor Real Estate

5420 Lyndon B Johnson Coca-Cola Southwest 31,862 Relocation LBJ Retail Freeway

Richardson Telecom For more information, DebtBlue 30,291 1125 E Campbell Road Relocation Professional Services Corridor please contact us: Excavation Safety Richardson Telecom 29,343 1410 E Renner Road New Location Construction System Corridor Savills 27,733 2515 McKinney Avenue Extension Uptown Financial Services NexBank Chase Tower Waddell Serafino Geary 26,597 1717 Main Street Relocation Dallas CBD Legal Services 2200 Ross Avenue Rechner Jenevein, PC Suite 4800 , TX 75201

Source Savills Research +1 972 739 2200

Kelly Winn AVAILABILITY RATE COMPARISON RENTAL RATE COMPARISON ($/SF) Executive Vice President Dallas/Fort Worth Submarkets Dallas/Fort Worth Submarkets Co-Branch Manager [email protected]

North Fort Worth 8.6% Uptown $35.14

Preston Center 15.7% Preston Center $33.30 John McWilliams

Northeast Fort Worth 17.0% Research Manager North Dallas Corridor $28.26

Southwest Dallas 18.0% [email protected] Central Expressway $28.06

South Fort Worth 19.3% Fort Worth CBD $27.23

Far North Stemmons 22.9% Las Colinas $25.90

Uptown 23.2% Dallas-Forth Worth Overall $25.10 About Savills Inc. Fort Worth CBD 23.3% Savills helps organizations find the South Fort Worth $24.40 right solutions that ensure Central Expressway 24.7% Dallas CBD $23.97 employee success. Sharply skilled North Dallas Corridor 26.3% North Fort Worth $23.94 and fiercely dedicated, the firm’s

Las Colinas 26.4% integrated teams of consultants and LBJ $22.59 brokers are experts in better real Richardson Telecom Corridor 26.6% Richardson Telecom Corridor $22.58 estate. With services in tenant Dallas-Forth Worth Overall 27.4% Mid-Cities $22.46 representation, workforce and

West LBJ 27.4% incentives strategy, workplace West LBJ $21.73 strategy and occupant experience, LBJ 27.6% Northeast Fort Worth $20.04 project management, and capital Stemmons 29.7% Far North Stemmons $19.40 markets, Savills has elevated the Mid-Cities 34.5% potential of workplaces around the Stemmons $18.79 corner, and around the world, for East Dallas 35.5% Southwest Dallas $16.36 160 years and counting. Dallas CBD 37.3% East Dallas $13.82 0.0% 10.0% 20.0% 30.0% 40.0% For more information, please visit $0.00 $10.00 $20.00 $30.00 $40.00 Savills.us and follow us on LinkedIn, Twitter, Instagram and Facebook.

Unless otherwise noted, all rents quoted throughout this report are average asking gross (full service) rents per square foot (psf). Statistics are calculated using both direct and sublease information. Current and historical availability and rent data are subject to change due to changes in inventory.

The information in this report is obtained from sources deemed reliable, but no representation is made as to the accuracy thereof. Unless otherwise noted, source for data is Savills research.

Copyright © 2020 Savills savills.us