Dallas-based retail real estate firm Weitzman hosted its annual survey and forecast yesterday, live-streamed from the George W. Bush Presidential Center. The event opened with a summary of highlights from the firm’s 2021 year-end industry report, before moving into a discussion on the importance of place and 2022 predictions with chief marketing officer Leisa Barger and Noam Ben-Zvi, founder of Placer.ai, a San Francisco startup that tracks location-based metrics such as customer visitation.
Founder Herb Weitzman offered closing remarks. “We’re in a place in a time of change in retail,” he said.
At the close of 2021, DFW’s retail market inventory was made up of roughly 200.2 million square feet in projects of 25,000 square feet or more—the largest for any Texas metropolitan area, according to Weitzman’s report.
Here are some key takeaways:
The 2021 market ended strongly with record-highs for occupancy and absorption.
- The report cited 2021 occupancy rates at 93.5 percent, the third-largest rate the firm has recorded since 1990 and behind 2019’s number by only 0.2 percent.
- Absorption totaled 3.9 million square feet, creating the strongest leasing market DFW has seen since 2015.
New deliveries to the market were at a record low last year.
- New construction added only 640,000 square feet, according to Weitzman’s report—the lowest the survey has ever recorded. The pandemic and construction costs created a plethora of open space in the market.
Grocers were “the MVPs of retail” in 2021.
- Occupancy rates were up 2 percent in the category in 2021, reaching 94.1 percent. Both Sprouts and H.E.B. continue to make expansions into the DFW market.
Unanchored neighborhood centers reached all-time occupancy highs.
- The subgroup, which account for 41 million square feet of retail inventory in North Texas, finished the year at 92.5 percent occupancy—the highest ever recorded by Weitzman.
Malls, often written off as a dying breed, recovered with greater occupancy and fewer closings.
- Mall occupancy reached 89.5 percent, up roughly 2 percent from 2020. Northpark continues to pace mall openings locally with openings, including Balenciaga, Shake Shack, and Eataly, in 2021.
- After some high-profile closings from JC Penney, Bed Bath & Beyond in 2020, last year included only two Macy’s closings locally.
- Samsung Experience announced it will open one of its first stores at Stonebriar Mall in Frisco.
In-fill projects remain strong for DFW, as vacant anchor spaces left by Pier One and Stein Mart are being gobbled up by competitors.
- Grocer giant Sprouts is making an aggressive expansion and backfilled four empty anchor locations in 2021.
- At Home Group took over a 99,700 square-foot of a former JC Penney store in Northeast Dallas.
- Dick’s Sporting Goods opened a nearly 50,000 square-foot anchor store in Lewisvillle, formerly occupied by Gander Mountain Sports. It plans to open another store of a similar size in 2022 in Fort Worth.
- Market by Macy’s overtook a 30,100 square-foot former Stein Mart in Flower Mound and a 20,000 square-foot space that was formerly a Tom Thumb.
Ghost kitchens abound as restaurants cut dining space.
- Retail spaces are being modified for drive-up windows.
- Chipotle is rolling out new designs with smaller kitchens, no dining rooms, and without their signature production line.
All of this adds up to a market with tons of opportunities for the year ahead. Construction on new retail is predicted to double in 2022 from its record-low 2021 numbers as smaller neighborhood projects and the regional draw of DFW will continue to drive demand.
As Weitzman’s Michelle Caplan said: “For 2022 and 2023, we are looking forward to a healthy retail market where supply and demand remain in balance.”