DALLAS / FORT WORTH MULTIFAMILY OUTLOOK 3RD QUARTER REPORT – 2013 INSIDE THIS ISSUE STRENGTH IN NUMBERS Having recovered and exceeded prerecession job levels, the Dallas/ ADDING INFRASTRUCTURE ................... 2 Fort Worth Metroplex continues to see significant job growth. The DEVELOPMENT HIGHLIGHTS ................. 4 OVERALL D/FW MARKET ....................... 6 Metroplex added 111,000 jobs year-over-year as of August, a growth CONSTRUCTION PIPELINE .................... 7 of 3.7%. As a result of Dallas/Fort Worth’s business friendly climate for jobs and investments, the Metroplex has seen a migration of highly skilled workers, a trend that forecasters predict will continue throughout the foreseeable future. According to Penske moving company, Dallas/Fort Worth is the second most popular moving destination in the country. This has made for a fundamentally sound and robust multifamily sector. In the third quarter, Dallas/Fort Worth hit a 12-year high of 94.4% occupancy. Annual rent growth was strong as well, registering at 3.4%. MPF Research projects that demand will total over 11,470 units next year. In anticipation, 92 projects totaling approximately 14,600 units are currently under construction, with a scheduled delivery in the next four quarters. 3Q2013 MULTIFAMILY OUTLOOK Real Estate Investment Services ADDING INFRASTRUCTURE THE CHISHOLM TRAIL PARKWAY The Chisholm Trail Parkway (CTP) is a 27.6 mile toll road that will connect downtown Fort Worth to southwest Fort Worth, continuing south to Cleburne. This will provide an alternative route to I-35W and drastically improve traffic conditions in the area. The project is a collaboration between the North Texas Tollway Authority (NTTA), Texas Department of Transportation (TxDOT), the North Central Texas Council of Governments (NCTCOG), Tarrant and Johnson counties, the cities of Fort Worth, Burleson, and Cleburne, Fort Worth and Western Railroad (FWWR), and Union Pacific Railroad (UPRR). The CTP is more than 40 years in the making with an estimated cost of $1.4 billion. Completion is projected to be mid-summer 2014. In November, the newly constructed Rosedale/Lovell bridge opened and traffic was rerouted in order to demolish the existing bridge. The I-20 bridge is currently under construction and expected to be finished in the spring. Source: www.ntta.org 2 Real Estate Investment Services THE NORTH TARRANT EXPRESS The North Tarrant Express (NTE) consists of multiple major highways that connect Dallas and Fort Worth through the Mid-Cities. Recent efforts to overhaul the infrastructure have given the Metroplex a true “face- lift”. This 13.5-mile project will cost an estimated $2.5 billion once it is completed in 2015. NTE Mobility Partners, in close collaboration with the Texas Department of Transportation, is heading up the project which is employing 2,000+. Rebuilding the general purpose lanes, improving/expanding the frontage lanes, and adding four toll lanes will provide relief from traffic congestion while driving through this area. Source: www.northtarrantexpress.com Source: www.northtarrantexpress.com LBJ EXPRESS PROJECT In 2008, traffic counts for LBJ Freeway were estimated at 270,000 vehicles per day. By 2020, demand is expected to increase to 500,000 vehicles per day. To accommodate the traffic increase, construction began in 2011 on the $3.1 billion LBJ Express project, a project that will incorporate dramatic improvements to Interstate 635 and Interstate 35E. Meridiam Infrastructure and LBJ Infrastructure Group LLC, led by Cintra US, are spearheading this 13-mile project which will feature rebuilt main lanes, a continuous frontage road system, and TEXpress Lanes. TEXpress or ‘managed lanes’ will have adjusting tolls based mainly upon traffic congestion. These lanes will give drivers the option of trading a higher toll for a reliable, predictable trip through this frequently congested corridor. Estimated completion is late 2015. Source: www.lbjexpress.com 3 DALLAS / FORT WORTH MULTIFAMILY OUTLOOK | 3RD QUARTER REPORT DEVELOPMENT HIGHLIGHTS INTOWN DALLAS The Intown Dallas submarket, inclusive of Uptown, has experienced exceptional growth. In the last four quarters, 2,315 units were delivered. Another 2,836 units are currently under construction, making this submarket one of the hottest in the Metroplex. The Intown Dallas submarket appeal can be seen in the numbers, occupany is currently 95.4% while averaging $1.59 per square foot in rent. FORT WORTH’S SUNDANCE SQUARE PLAZA Construction on Sundance Square Plaza, an addition to Sundance Square, is underway. The project, with scheduled openings in 2013 and 2014, includes three Class ‘A’ buildings with enough space to accommodate for offices, stores, and restaurants. Two of the three buildings, The Westbrook and The Commerce building, opened in October, adding 176,000 SF. The Cassidy building, 99,000 SF, will open in 2014. This area will be a significant addition to Sundance Square and is sure to be one of the premier gathering places in downtown Fort Worth. SH 121 / DALLAS NORTH TOLLWAY CORRIDOR The SH 121/Dallas North Tollway corridor is currently one of the hottest stretches of highway in the Metroplex. Nebraska Furniture Mart broke ground in September 2012 as part of a 433-acre retail/industrial complex along SH 121, between the Plano and West Spring Creek Parkways. The retail portion will anchor the complex when it opens in 2015 with a 90-acre footprint and a 1.86 million SF building. The furniture store will be the largest in the nation and will call for approximately 4,000 construction jobs. Upon completion it is forecasted that 2,000 new permanent jobs will be created, attracting an estimated eight million visitors to the area each year, which forecasters say will grow annual sales 7%. Top Golf, a premier golf entertainment complex, opened last month. The facility, which features 4,000 SF of private event space, will attract 350,000 visitors in the first year alone, create hundreds of jobs, and attract other popular franchises to the area. Also along SH 121 is Lewisville Town Crossing shopping center which features business powerhouses such as Target, Best Buy, 24-hour Fitness, and PetSmart, with Walmart, Staples, and Home Depot. Source: MPF Report 4 Real Estate Investment Services THE PLATINUM CORRIDOR The ‘Platinum Corridor’ is an area coined such due to its prime location in Dallas and Plano. Bounded on the east by Preston Road, the north at SH 190 / President George Bush Turnpike, west by Midway Road, and south by Interstate 635 / LBJ Freeway, this area is home to several major employment centers including Legacy Business Park, the Dallas North Tollway corridor, the SH 190 corridor, Granite Park, and the International Business Park. Legacy Business Park, which includes The Shops at Legacy, continues to garner attention from developers. The business park is home to some of the world’s largest companies – EDS, The Frito-Lay Company, Countrywide Home Loans, Ericsson, McAfee, Inc., Pepsico, Intuit, and AT&T. To support these companies, there are over 2,700 apartment units in the immediate area with another 978 units under construction. With the growth and success of the area, the city of Plano has garnered recent accolades such as, “#1 Best City to Build Personal Wealth”, “100 Best Places to Raise a Family”, and “Best Places in the Dallas/Fort Worth Metroplex to Live”. THE PLATINUM CORRIDOR Office Rentable Completion Address Developer Floors Quoting Building SF Date Warren parkway & North Frisco Station Hines 200,000 4 Planned Dallas Pkwy, Frisco 3001 Dallas Parkway, Hall Office Park Hall Financial Group 200,000 8 $30 - $32 + E Completed Frisco Granite Park IV 5850 Granite Pkwy, Plano Granite Properties 304,500 12 $24 - $25 NNN May-14 Dominion Lagacy Office 8383 Dominion Pkwy, Nyers & Crow 92,250 2 $18.75/SF Net August-14 Center Plano Company 5151 Headquarters Drive, Legacy Business Park Primera Companies 51,333 3 $28/SF + E Completed Plano 7800 North Dallas Pkwy, Randy Heady & Legacy Town Center 157,800 6 $29.5 + E Completed Plano Company 5415 Legacy Drive, Haggard/Cawley Legacy Center 150,000 4 $27/SF + E Planned Plano Partners Trammell Crow Legacy Tower 7250 Dallas Pkwy, Plano 342,006 13 $28/SF NNN August-14 Company Lincoln Property Lincoln Legacy II 6000 Tennyson, Plano 132,000 8 $24 - $26/SF NNN August-14 Company North Dallas Pkwy & Haggard/Cawley Windhaven Place I 200,000 8 $32/SF + E Planned Windhaven, Plano Partners North Dallas Pkwy & Hines Development/ Parkway Pointe II 210,000 4 $26.50/SF + E Planned North of W Plano Pkwy Jesse Pruitt 6111 West Plano 6111 West Plano Pkwy, Billingsley Company 80,000 3 $23.75/ SF + E June-14 Parkway Plano PGB Turnpike & North 235,000 - 375,000 Bush & Tollway Billingsley Company 6 Planned Dallas Tollway (4 Buildings) PGB Turnpike & Midway 150,000 - 250,000 Bush & Midway Billingsley Company 3 Planned Rd (5 Buildings) Westgrove Drive & North Knoll Trail Plaza Cawley Partners 120,000 4 $26/SF + E November-14 Dallas Tollway Source: MPF Research (3Q2013); http://www.grandscape.com 5 DALLAS / FORT WORTH MULTIFAMILY OUTLOOK | 3RD QUARTER REPORT OVERALL D/FW MARKET The D/FW Metroplex is the fourth largest metro area in the nation with a population of more than 6.5 million. The Dallas/Fort Worth/Arlington MSA is one of the fastest growing urban metro areas in the country and boasts an unemployment rate of 6.0%, well below the national average. The Metroplex has enjoyed carefully planned development, as evidenced by the varied economic base of information technology, telecommunications, oil and natural gas, financial services, retail, real estate, and manufacturing opportunities, making the Metroplex a desirable location for jobs and investments. Robust apartment construction continues throughout the Metroplex. During 3Q2013, Dallas delivered 3,879 units and Fort Worth 1,113 units, expanding the inventory base of D/FW by 2.0%.