The Dallas-Fort Worth retail real estate market has regained its worst pandemic losses

The Dallas-Fort Worth retail real estate market has regained its worst pandemic losses

Dallas experts say the cool hash reset is over.

At the annual Weitzman D-FW Retail Real Estate Conference Wednesday morning, presenters said the Dallas-Fort Worth retail real estate market posted a strong recovery last year, reversed some of the worst of 2020, and is poised to continue the recovery.

HE-B’s grocery expansion has spurred new retail construction work, which is expected to reach 2 million square feet this year. Last year there was only 640,000 square feet of new retail construction, the first time that number has fallen below 1 million square feet in a year, Matthew Rosenfeld, Weitzman’s executive vice president, said at the brokerage firm’s online event on Wednesday. 1990.

Michelle Kaplan, executive vice president at Weitzman, said D-FW retail has reached or near pre-pandemic levels for 2019 after a “large retail reset” that restructured balance sheets and closed loss-making stores.

While last year was the worst year for retail building in decades, 3.9 million square feet of retail space was leased, reversing 4 million square feet of vacancy in 2020 when a record level of stores closed nationwide.

Michael Kaplan, executive vice president of Weitzman Corporation of Dallas.
Michael Kaplan, executive vice president of Weitzman Corporation of Dallas.(Weitzman)

It was the third strongest rental market in 22 years for more than 1,400 malls in the area.

Rosenfeld said that in the 200 million square feet retail space in Dallas-Fort Worth, occupancy levels rose to 93.5% in 2021 from 91.7% in 2020 and are expected to rise to 95% this year. Last year’s occupancy was the strongest in 32 years.

Kaplan said retail and restaurant operators have evolved with new innovations for store access and in-store fulfillment as the pandemic has changed shopping behaviors. “The majority of vacancies were filled with concepts stronger than those they replaced.”

This isn’t always the case after an economic downturn, Kaplan said, but this time there were stronger stores of all sizes, restaurants, medical stores, and fitness and beauty services waiting to fill up.

That was also true with vacancies left by Stein Mart, Pier 1 and others, Kaplan said, adding that Sprouts Farmers Market has four new stores in vacant lots in the works.

“So our retailers are stronger. And our market is stronger. And our economy is stronger,” Kaplan said. That’s why Weitzman came up with a rosy forecast that includes new rentals to continue at a strong pace of 2.5 million square feet in 2022.

The market has learned some lessons from years of over-building.

Rosenfeld said the low construction reflected a decade-old trend at D-FW. In the 2000s, the market added 50 million square feet of new retail space, but construction totaled only about 18 million square feet in the 2000s.

Among all types of malls, malls, which occupy about 20 million square feet, or 10% of retail space in the D-FW District, posted the lowest occupancy rate at 89.5% last year. The largest type of center in the area, the community centers that focus on groceries and other large stores, had the highest occupancy rate at 94.5%.

The past year has proven, Kaplan said, that “the brick-and-mortar retail business is still relevant.”

Noam Ben-Zvi, co-founder and CEO of location data analytics firm Placer.ai, said the lion’s share of money spent — 80% to 90% — still occurs in physical spaces.

Ben Zvi was the featured speaker at Wednesday’s conference and interviewed Weitzman’s chief marketing officer, Lisa Barger. He co-founded Placer.ai in 2017 after realizing that a lot of data analytics focus on online spending.

“We’ve had a moment that with mobility data, there’s a great deal of power in knowing what humanity is doing,” Ben-Zvi said.

Noam Ben-Zvi, CEO and Co-Founder of Placer.ai
Noam Ben-Zvi, CEO and Co-Founder of Placer.ai

He had a strong technical background, which included selling a company he founded in Israel to Salesforce, but he didn’t know much about retail real estate. Ben Zvi said that the first time he attended the annual conference of the International Council of Shopping Centers in Las Vegas, he was “walking around and looking at Googling JLL and Brixmor.”

The company uses anonymous mobile tracking, credit card data, and other factors, including retail construction in progress and crime statistics, to answer questions from retailers and developers. Ben Zvi announced at the conference that Placer.ai received $100 million in a third round of funding this week.

Placer.ai data shows that store traffic is picking up and direct-to-consumer brands are finding success with stores. “Many will expand and others will close.”

Barger Ben-Zvi asked an audience of 500 real estate professionals if he thought physical retail is a good investment.

“I think based on the data I just reported, and because people want to go out and don’t want to sit at home buying everything,” he said.

HEB places its first D-FW stores in the suburbs of Collin County.
View the HEB store in Plano scheduled to open in Fall 2022 on the southwest corner of Preston Road and Spring Creek Parkway.

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