VACANCY DOWN TO 11%

The North Central Expressway Sub-Market is defined geographically as the area that is bordered by Hillcrest Avenue to the West, N Haskell Avenue to the South, Greenville Avenue to the East, and Forest Lane to the North. This analysis is focused on Class A and B office buildings that are existing or under construction and contain a minimum of 75,000 rentable square feet. The North Central Expressway Sub-Market has seen decrease in the Direct Class A vacancy from 12.3% at the end of first quarter 2016 to 11% at the end of the first quarter 2017. Average full-service rental rates of Class A space increased per square foot, from $29.13 to $29.52 during the same timeframe. Class A direct net absorption is currently sitting at 20,846 square feet for first quarter 2017. Meanwhile, Direct Class B vacancy has rapidly decreased to 11.3% from 8.1% since the first quarter of 2016. Full-service rental rates are increasing from $25.05 per square foot to $26.71 per square foot. Direct net absorption in Class B space is negative at (27,981) square feet year to date.

TOTAL NET ABSORPTION (past 12 months)

DELIVERED (past 12 months)

2017 -1,815 SF 2017 0 SF

2016 1,225,714 SF 2016 149,510 SF

DIRECT FULL SERVICE RENTAL RATE (Q1)

DIRECT VACANCY (Q1)

2017 $28.82 PSF 2017 11%

2016 $28.09 PSF 2016 12.3%

DIRECT VACANCY BY CLASS (Q1)

Class A 11% Class B 8.1%

Advisory Experience

This document has been prepared by Citadel Partners, LLC. for advertising and general information only. Citadel Partners, LL C. makes no guarantees, representations or warranties of any kind, expressed or implied,

regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Citadel Partners, LLC.

excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This

publication is the copyrighted property of Citadel Partners, LLC. and/or their licensor(s). All rights reserved.

Mac Morse Advisor

mmorse@citadelpartnersus.com 972-980-2917

1st QUARTER INSIGHT North Central Expressway

Advisory Experience

Maxim – 700,000 SF

The Domain, Austin, TX – 70 Acres Weaver – 58,000 SF

Knoll Trail Plaza – 120,000 SF Build-to-Suit

Weaver – 171,000 SF Multi-market Texas Instruments – 1,200,000 SF

Invensys – 45,000 SF Sublease

Texas Instruments – 70.537 Acres with a 441,362 SF Semiconductor

Flextronics – 1,500,000 SF

ESI – 70,000 SF

TECHNOLOGY LEASE

MULTIPLE TRANSACTIONS

DISPOSITION

ADAPTIVE REUSE OFFICE LEASE

Sub-Market Momentum & Forecast

As predicted in our previous report, The North Central Expressway Submarket appears to be slowing down. When we hear “slow-down” we tend to flinch, but that reaction should be the exact opposite for this Submarket. The status of this market is higher than it has ever been. This is the classic story of supply vs. demand. As you can tell by almost 30% increase in rates over the past 2 years, it is obvious that the demand is there, but the supply is lacking. In this Submarket there are less than two buildings that could accommodate an office user over the size of 50,000 SF. With under 10% vacancy rates, companies are going further north to find rent relief. Look for rents to soften over the next 18 months, and for this market to continue to strengthen.

Absorption / Deliveries / Vacancy (All Classes)

Office Sub-Market Highlights

Office Sub-Market Momentum & Forecast NCX News

Total Office Sub-Market Q1 Statistics

2017 Y-T-D SUB-MARKET HIGHLIGHTS

New York investor snaps up Dallas' Meadow Central office building

New York-based investor through a joint venture with EY Ventures LLC of Dallas has purchased a prominent office building along North Central Expressway, which has undergone a transformation over the last few years. Ascent Real Estate Advisors LLC of New York and EY Ventures acquired the 179,184-square-foot office complex at 10260 and 10300 N. Central Expressway in Dallas for an undisclosed sum. The North Central Expressway corridor has been popular among investors seeking to buy real estate that's attracting tenants seeking a value compared to Uptown or Preston Center.

A number of buildings in this corridor have traded in the past year, including the 17-story tower at 8080 North Central Expressway, a 19-story tower named Three Forest Plaza, the two-building, gold-clad office complex named Campbell Centre, and many others. The real estate investors making the buys say they were attracted by the potential rental rate growth in the corridor and the value proposition to tenants. Several of these properties are expected to get upgrades as part of the deal. Dallas Business Journal 3.2.17

citadelpartnersus.com

Market

Existing Inventory Vacancy YTD Net Absorption

YTD Deliveries Under Const SF

Quoted Rates # Blds Total RBA Direct SF Total SF Vac %

Central Expressway 274 15,154,527 1,492,884 1,536,314 10.1% (35,134) 0 0 $26.88

Dallas CBD 141 33,581,393 7,261,660 7,548,836 22.5% (119,988) 0 353,637 $25.67

East Dallas 1,125 13,763,001 1,437,693 1,452,788 10.6% (96,264) 6,500 293,921 $23.44

Far North Dallas 1,064 57,743,297 7,214,614 7,780,797 13.5% 805,683 969,249 6,443,100 $27.55

Ft Worth CBD 117 11,806,524 1,187,695 1,221,051 10.3% 19,837 0 280,489 $25.05

Las Colinas 430 39,587,092 4,981,291 5,315,014 13.4% 1,050,369 679,183 987,395 $24.09

LBJ Freeway 265 22,596,714 4,832,087 5,049,104 22.3% (233,145) 0 0 $22.00

Lewisville/Denton 900 12,977,935 888,821 973,365 7.5% (40,650) 30,648 167,104 $22.16

Mid-Cities 2,551 40,406,416 4,842,159 5,018,350 12.4% (73,920) 193,573 892,627 $21.71

North Fort Worth 564 6,551,118 344,778 406,166 6.2% 23,631 34,320 42,003 $20.62

Northeast Ft Worth 337 5,400,765 1,815,846 1,840,861 34.1% 100,610 0 0 $19.18

Preston Center 146 5,885,416 469,283 496,199 8.4% (10,633) 0 183,589 $36.24

Richardson/Plano 1,343 40,835,578 5,991,012 6,122,063 15.0% (21,135) 72,270 812,701 $24.20

South Ft Worth 1,611 19,742,816 1,485,516 1,572,504 8.0% 47,594 191,382 66,236 $23.09

Southwest Dallas 791 7,231,323 561,660 565,160 7.8% 36,928 0 6,300 $17.28

Stemmons Freeway 282 14,945,132 3,406,183 3,489,313 23.3% (103,808) 0 72,630 $15.78

Uptown/Turtle Creek 295 14,664,921 1,442,603 1,534,125 10.5% 175,528 200,000 1,295,323 $37.46

Totals 12,236 362,873,968 49,655,785 51,922,010 14.3% 1,525,503 2,377,125 11,897,055 $24.52

Top Leases (2016) Size Tenant

Meadow Park Tower 24,154 Eberstein & Witherite, LLP

Deliveries (2015-2016) Size % Occupied Quoted Rate

The Offices at Park Lane Q3 ‘15 149,510 SF 80% $33.56

Preston Hollow Village Q2 ‘15 57,531 SF 24% $34.84

Select Sales (2015-2016) Size Date

Meadow Park Tower 251,755 SF Q1 2016

Walnut Glen 464,289 SF Q1 2016

Rambler Park 310,711 SF Q1 2016

$19.00

$21.00

$23.00

$25.00

$27.00

$29.00

$31.00

2006 2008 2010 2012 2014 2016 Q12017

Lease Rates – Full Service (All Classes)

5.00%

7.00%

9.00%

11.00%

13.00%

15.00%

17.00%

19.00%

21.00%

-700,000

-300,000

100,000

500,000

2006 2008 2010 2012 2014 2016 Q12017

Total Net Absorption (sf) RBA Delivered (sf) Direct Vacant %

Sub-Market Momentum & Forecast

As predicted in our previous report, The North Central Expressway Submarket appears to be slowing down. When we hear “slow-down” we tend to flinch, but that reaction should be the exact opposite for this Submarket. The status of this market is higher than it has ever been. This is the classic story of supply vs. demand. As you can tell by almost 30% increase in rates over the past 2 years, it is obvious that the demand is there, but the supply is lacking. In this Submarket there are less than two buildings that could accommodate an office user over the size of 50,000 SF. With under 10% vacancy rates, companies are going further north to find rent relief. Look for rents to soften over the next 18 months, and for this market to continue to strengthen.

Absorption / Deliveries / Vacancy (All Classes)

Office Sub-Market Highlights

Office Sub-Market Momentum & Forecast NCX News

Total Office Sub-Market Q1 Statistics

2017 Y-T-D SUB-MARKET HIGHLIGHTS

New York investor snaps up Dallas' Meadow Central office building

New York-based investor through a joint venture with EY Ventures LLC of Dallas has purchased a prominent office building along North Central Expressway, which has undergone a transformation over the last few years. Ascent Real Estate Advisors LLC of New York and EY Ventures acquired the 179,184-square-foot office complex at 10260 and 10300 N. Central Expressway in Dallas for an undisclosed sum. The North Central Expressway corridor has been popular among investors seeking to buy real estate that's attracting tenants seeking a value compared to Uptown or Preston Center.

A number of buildings in this corridor have traded in the past year, including the 17-story tower at 8080 North Central Expressway, a 19-story tower named Three Forest Plaza, the two-building, gold-clad office complex named Campbell Centre, and many others. The real estate investors making the buys say they were attracted by the potential rental rate growth in the corridor and the value proposition to tenants. Several of these properties are expected to get upgrades as part of the deal. Dallas Business Journal 3.2.17

citadelpartnersus.com

Market

Existing Inventory Vacancy YTD Net Absorption

YTD Deliveries Under Const SF

Quoted Rates # Blds Total RBA Direct SF Total SF Vac %

Central Expressway 274 15,154,527 1,492,884 1,536,314 10.1% (35,134) 0 0 $26.88

Dallas CBD 141 33,581,393 7,261,660 7,548,836 22.5% (119,988) 0 353,637 $25.67

East Dallas 1,125 13,763,001 1,437,693 1,452,788 10.6% (96,264) 6,500 293,921 $23.44

Far North Dallas 1,064 57,743,297 7,214,614 7,780,797 13.5% 805,683 969,249 6,443,100 $27.55

Ft Worth CBD 117 11,806,524 1,187,695 1,221,051 10.3% 19,837 0 280,489 $25.05

Las Colinas 430 39,587,092 4,981,291 5,315,014 13.4% 1,050,369 679,183 987,395 $24.09

LBJ Freeway 265 22,596,714 4,832,087 5,049,104 22.3% (233,145) 0 0 $22.00

Lewisville/Denton 900 12,977,935 888,821 973,365 7.5% (40,650) 30,648 167,104 $22.16

Mid-Cities 2,551 40,406,416 4,842,159 5,018,350 12.4% (73,920) 193,573 892,627 $21.71

North Fort Worth 564 6,551,118 344,778 406,166 6.2% 23,631 34,320 42,003 $20.62

Northeast Ft Worth 337 5,400,765 1,815,846 1,840,861 34.1% 100,610 0 0 $19.18

Preston Center 146 5,885,416 469,283 496,199 8.4% (10,633) 0 183,589 $36.24

Richardson/Plano 1,343 40,835,578 5,991,012 6,122,063 15.0% (21,135) 72,270 812,701 $24.20

South Ft Worth 1,611 19,742,816 1,485,516 1,572,504 8.0% 47,594 191,382 66,236 $23.09

Southwest Dallas 791 7,231,323 561,660 565,160 7.8% 36,928 0 6,300 $17.28

Stemmons Freeway 282 14,945,132 3,406,183 3,489,313 23.3% (103,808) 0 72,630 $15.78

Uptown/Turtle Creek 295 14,664,921 1,442,603 1,534,125 10.5% 175,528 200,000 1,295,323 $37.46

Totals 12,236 362,873,968 49,655,785 51,922,010 14.3% 1,525,503 2,377,125 11,897,055 $24.52

Top Leases (2016) Size Tenant

Meadow Park Tower 24,154 Eberstein & Witherite, LLP

Deliveries (2015-2016) Size % Occupied Quoted Rate

The Offices at Park Lane Q3 ‘15 149,510 SF 80% $33.56

Preston Hollow Village Q2 ‘15 57,531 SF 24% $34.84

Select Sales (2015-2016) Size Date

Meadow Park Tower 251,755 SF Q1 2016

Walnut Glen 464,289 SF Q1 2016

Rambler Park 310,711 SF Q1 2016

$19.00

$21.00

$23.00

$25.00

$27.00

$29.00

$31.00

2006 2008 2010 2012 2014 2016 Q12017

Lease Rates – Full Service (All Classes)

5.00%

7.00%

9.00%

11.00%

13.00%

15.00%

17.00%

19.00%

21.00%

-700,000

-300,000

100,000

500,000

2006 2008 2010 2012 2014 2016 Q12017

Total Net Absorption (sf) RBA Delivered (sf) Direct Vacant %

VACANCY DOWN TO 11%

The North Central Expressway Sub-Market is defined geographically as the area that is bordered by Hillcrest Avenue to the West, N Haskell Avenue to the South, Greenville Avenue to the East, and Forest Lane to the North. This analysis is focused on Class A and B office buildings that are existing or under construction and contain a minimum of 75,000 rentable square feet. The North Central Expressway Sub-Market has seen decrease in the Direct Class A vacancy from 12.3% at the end of first quarter 2016 to 11% at the end of the first quarter 2017. Average full-service rental rates of Class A space increased per square foot, from $29.13 to $29.52 during the same timeframe. Class A direct net absorption is currently sitting at 20,846 square feet for first quarter 2017. Meanwhile, Direct Class B vacancy has rapidly decreased to 11.3% from 8.1% since the first quarter of 2016. Full-service rental rates are increasing from $25.05 per square foot to $26.71 per square foot. Direct net absorption in Class B space is negative at (27,981) square feet year to date.

TOTAL NET ABSORPTION (past 12 months)

DELIVERED (past 12 months)

2017 -1,815 SF 2017 0 SF

2016 1,225,714 SF 2016 149,510 SF

DIRECT FULL SERVICE RENTAL RATE (Q1)

DIRECT VACANCY (Q1)

2017 $28.82 PSF 2017 11%

2016 $28.09 PSF 2016 12.3%

DIRECT VACANCY BY CLASS (Q1)

Class A 11% Class B 8.1%

Advisory Experience

This document has been prepared by Citadel Partners, LLC. for advertising and general information only. Citadel Partners, LL C. makes no guarantees, representations or warranties of any kind, expressed or implied,

regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Citadel Partners, LLC.

excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This

publication is the copyrighted property of Citadel Partners, LLC. and/or their licensor(s). All rights reserved.

Mac Morse Advisor

mmorse@citadelpartnersus.com 972-980-2917

1st QUARTER INSIGHT North Central Expressway

Advisory Experience

Maxim – 700,000 SF

The Domain, Austin, TX – 70 Acres Weaver – 58,000 SF

Knoll Trail Plaza – 120,000 SF Build-to-Suit

Weaver – 171,000 SF Multi-market Texas Instruments – 1,200,000 SF

Invensys – 45,000 SF Sublease

Texas Instruments – 70.537 Acres with a 441,362 SF Semiconductor

Flextronics – 1,500,000 SF

ESI – 70,000 SF

TECHNOLOGY LEASE

MULTIPLE TRANSACTIONS

DISPOSITION

ADAPTIVE REUSE OFFICE LEASE