Dallas-Fort Worth is about to add 3 million square feet of new retail real estate this year — or the equivalent of almost 30 small Walmart Supercenters.
While that sounds like a lot, it's less than last year's additional 4.2 million square feet of new space that included two whole shopping centers in Tarrant County and Legacy West in Plano, said Bob Young, executive managing director for commercial real estate firm Weitzman. Show Full Story
The market isn't overheating and the new space is all over town, Young said. "It's not all just in Plano or McKinney. It's in Mansfield and Tarrant County and happening everywhere," Young said. "That's part of the health of the local economy with demand following residential housing and job growth occurring all over."
This year, there's a good level of pre-leasing, and projects are phased in with demand, he said at the firm's annual retail forecast breakfast.
Last year was the first time D-FW, the largest retail market in Texas, added more than 4 million square feet of new retail in a year since 2008, he said, but a big difference was that back then occupancy was on the decline.
Young forecast occupancy will rise to 93 percent of available space in 2018, up from an almost record level of 92.5 percent in 2017. The record was in 2016 with 92.6 percent occupancy.
The only wild card is the prospect for more store closings in the ever-changing retail landscape, Young said. About 150,000 square feet was left vacant last year by the closings of Gander Mountain stores.
Department store closings last year in the market — two Macy's at Collin Creek Mall in Plano and Red Bird Mall and a Sears at Valley View in Dallas — are in malls that are being redeveloped. The strongest malls — NorthPark Center in Dallas and Stonebriar Centre in Frisco — benefit from management, marketing and leasing programs designed to stay relevant, he said.
Existing space is creatively being absorbed, he said, with more experiential retail such as the TreeHouse home improvement store at Walnut Hill and North Central Expressway in Dallas and an open-air redevelopment of the former Saks Fifth Avenue space later this year in the Shops at Willow Bend in Plano.
Grocery stores are doing a great job of staying relevant, he said, by personalizing shelves to suit a neighborhood and offering online orders, delivery and curbside pickups.
D-FW ended the year with 197.9 million square feet of retail space in 1,417 shopping centers ranging from neighborhood centers and mixed-use locations to major regional malls. The milestone of "200 million square feet is just around the corner," Young said.