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Tuesday, July 14, 2015
Dallas Retail Building Hits Seven-Year High
DALLAS—With retail occupancy across the Dallas-Fort Worth Metroplex experiencing its strongest occupancy levels in 15 years, the region is also seeing more retail construction than it has in nearly a decade. That’s the top-line assessment from the Weitzman Group, which reports that the majority of the space coming on line this year is already leased.
For calendar year 2015, space in both new and expanded projects is on track to total 3,830,000 square feet. That’s nearly double the two million square feet that came on line in calendar 2014, says the Weitzman Group.
At the same time, retail vacancy in the Metroplex stands at 9%, a low that hasn’t been achieved since 2000, when it reached 8%. It’s also a sizable improvement over the trough of 12.4% seen in 2011. The Weitzman Group says class A centers are faring even better with occupancy levels closer to 96%, thus driving up rents for this class of shopping centers.
As the region has seen over the past five years, grocery stores have dominated the new space.Kroger, the region’s number one grocer, has no fewer than five new builds and two expansions opening this year, including a 123,000-square-foot Kroger Marketplace that is anchoring Castle Hills Marketplace, a 300,000-square-foot shopping center in Lewisville. Other grocers that have been active in terms of expansion include Sprouts, Whole Foods and Walmart.
However, the Weitzman Group says that this year the market has also seen a notable increase in the number of power, mixed-use and specialty retail centers opening or in the works. The single largest project is Nebraska Furniture Mart, the achor for the Grandscape project located along SH-121 in The Colony. The store, with 560,000 square feet of retail space and an additional 1.1 million square feet of warehouse space, is being joined by restaurants including Cheddar’s and Mi Cocina. Upon completion, Grandscape is designed to feature as much as 3.9 million square feet of retail, entertainment and other uses on a 400-acre site.
The construction total for ‘15 is on track to be the highest annual construction since 2008. That year, 4.7 million square feet came on line just as the Lone Star State entered the recession that crippled the economy.
Seven years ago, though, the market saw new lifestyle and mixed-use projects open with as much as 100,000 square feet of spec-space vacancy. In the current market, the Weitzman Group says, even large centers—such as Grandscape—are phased over several years so that construction remains in sync with leasing, a trend that is sustaining the market’s healthy occupancy.
In addition to new retail space coming on line essentially full, the market’s occupancy is also boosted by leasing at existing centers, which enabled some long-vacant spaces to be moved into the “occupied” column for the year, according to the Weiztman Group. For instance, a long-vacant, 50,000-square-foot former Mervyn’s by Ridgmar Mall in Fort Worth was leased by Burlington Coat Factory. Other spaces are being re-leased almost as quickly as they come onto the market.