On Jan. 14, we presented our annual shopping center survey numbers for Dallas-Fort Worth to an audience of industry professionals. And the news? Well, it’s good!
When we first began doing our survey 25 years ago, we only thought North Texas was a big market. But over the past 25 years, amazingly, we’ve nearly doubled our inventory. That’s almost 100 million square feet of new retail space over the past two-and-a-half decades!
DFW’s population almost doubled during that time, so the jump in inventory really isn’t that surprising.
Our average construction over these past 25 years was close to 4 million square feet per year. However, I don’t think we’ll ever see that repeated, because today we’ve got a strong market with low vacancy, steady retail sales, and incredible jobs and population growth. Yet we are only adding around 2 million square feet a year. And frankly, I think that this will be the new norm.
We are in a new Omnichannel world, where retailers see brick-and-mortar and digital working together as they grow market share. Further, in making my point, over the past 25 years, we added 10 million square feet of new malls and 41 million square feet of power centers. Power was a category that was just getting started in 1990 and had reached 40 million square feet by 2008. Since 2008, though, the category has added only around 400,000 square feet—and most of that was in the successful Timber Creek Crossing in Northeast Dallas.
So, although these two categories alone added 51 million square feet to our market since 1990, from a new-product perspective, both are all but dormant today. Notwithstanding, our overall market continues to add demand-driven space.
As to our survey highlights, at the top of the list of questions, year after year, is how does occupancy look? Well, our market not only matched but exceeded the rate seen in 2013, when we finally hit 90 percent after years of vacancy rates above—sometimes well above—10 percent.
For year-end 2014, North Texas posted an occupancy rate of 90.5 percent. That’s a full half percent than year-end 2013.
The Dallas area reports 90.2 percent occupancy—that’s the first time in five years vacancy has dipped under 10 percent. The Fort Worth area looks even better with 91.2 percent occupancy.
We also saw total vacant space decline to 18.0 million square feet, compared to 23 million square feet during the recession three years ago. As I said, our inventory is now almost double what it was 25 years ago. But our total vacant square footage in 1990 was higher!
In 1990, we posted 18.7 million square feet of vacant space on an inventory of around 100 million square feet. Today? We have 18 million square feet of total space on an inventory that surpassed the 190-million-square-foot mark in 2014.
Without a doubt, these are the new ‘good old days!’
Bob Young is managing director of The Weitzman Group. Contact him at [email protected]