By Ian Pierce, VP-Communication
Key Takeaways:
• DFW retail space is maintaining its record-high occupancy rate, surpassing the previous high point of 1984.
• DFW retail construction for 2017 is reaching its highest level in nearly a decade - since 2008
• Construction is at a high point and expected to decline in 2018
• While closings are happening, the market has a great track record of backfilling the vacancies
• THE FULL REPORT, with retailer and property details, can be found at http://www.weitzmangroup.com/report
Dallas-Fort Worth’s retail market as of mid-year is maintaining its record-high occupancy rate of 92.7 percent, despite some high-profile closings.
That conclusion is based on Dallas-based real estate firm Weitzman’s review of a total
D-FW retail market inventory of approximately 195 million square feet of space in projects with 25,000 square feet or more – the largest retail inventory for any metro area in Texas
Fortunately, existing center leasing, the absorption of vacant anchor spaces and new projects opening significantly leased are keeping the retail market strongly positive.
The mid-year 2017 occupancy rate for the market, in fact, ties that of 2016 as the highest occupancy for D-FW retail in more than three decades.
Occupancy remains extremely healthy due to:
• a metro-area economy that ranks as one of the strongest, if not the strongest, in the nation based on housing, population and employment growth;
• a demand-based construction market that brings new projects online significantly or fully leased;
• retail demand that continues to absorb existing retail space, including box-store vacancies;
• new and renovated projects coming onto the market with significant space dedicated to food, entertainment, services, fitness and other experiential-type uses, all of which help drive customer traffic on a regular basis during a time of increasing ecommerce competition.
BACKFILLED SPACE, REDEVELOPMENTS BOOST OCCUPANCY
For 2017, leasing in and redevelopment of existing projects is boosting occupancy and taking spaces both large and small from the market. During the year so far, anchors opening in or under way with new stores in existing vacancies include:
• Austin-based, 35,000-square-foot green home improvement store called TreeHouse, which opened in the second quarter;
• Grocers Tom Thumb, Central Market and WinCo Foods;
• SeaQuest Interactive Aquarium, a 28,000-square-foot entertainment concept;
• WinCo Foods, with a new store totaling approximately 85,000 square feet that will open at the site of a closed Target store in Trinity Valley Shopping Center, located at SH-190 and Josey Lane. The new WinCo is now under construction;
• Cinemas including Alamo Drafthouse and Studio Movie Grill;
• Fieldhouse USA, a 106,000-square-foot sports-themed entertainment concept.
CONSTRUCTION REACHES HIGHEST LEVEL IN NEARLY A DECADE
For calendar-year 2017, thanks to rising retail demand created by an incredibly strong economy, D-FW is projected for calendar-year 2017 to total slightly more than 3 million square feet in new and expanded projects with 25,000 square feet or more. The construction total represents a notable increase from 2016’s construction total of 2.1 million square feet. The new space on track for 2017 would also represent the most active new-space market since 2008, when 4.9 million square feet of new retail product came online.
Based on projects currently in the pipeline for 2018 and later, we expect that the 2017 construction will mark the high point for this decade.
The strong D-FW retail market activity is a reflection of the metro area’s economy, which ranks as one of the strongest in the country.
With powerful growth expected to continue in the key areas of jobs, population and residential growth, the outlook for the D-FW retail market for the remainder of 2017 is for a year with steady gains that will help repeat 2016’s record performance.
