As a native of Dallas, I have always said, “Thank God for Texas,” and now others in the retail real estate industry are singing the same tune. Although our area is not immune to the problems well-known retailers are having, the job growth of over 100,000 new jobs per year bringing approximately 250,000 people to the area annually, has made Dallas-Fort Worth one of the hottest retail markets in the country.
This was very evident at the recent International Council of Shopping Centers (ICSC) convention in Las Vegas. Our Retail Connection team of more than 50 retail brokers met with about 35,000 of our closest friends from across the country and DFW was where the retailers wanted to be. This explosive job growth (and lack of new retail development) has propelled retail occupancy rates to all-time highs of more than 94 percent.
Restaurants, fitness, and entertainment continue to be highly active in DFW, as do almost all retailers. However, most junior anchors and lifestyle tenants are maintaining strict rental discipline, thus making transactions more complicated and longer to complete. This retailer discipline, coupled with higher construction and land prices, has dramatically limited the amount of ground up retail development relative to previous cycles.
In past development cycles the suburban, big-box anchored shopping center would be planned for almost every major retail intersection. However, now most new development is either grocery anchored with limited shop space, or smaller centers (30,000-40,000-square-foot) led by restaurant and service uses.
The bottom line is this: Dallas is a great place to be, and barring some unforeseen economic decline, we expect this to continue for the next 12-18 months.
Steve Zimmerman is a managing director at The Retail Connection.
