DFW Expected to Report Lowest Level of New Retail Space in History
Weitzman’s research has studied the Dallas-Fort Worth and Texas retail markets for more than three decades. And despite all the challenges ranging from Internet competition to pandemic disruptions, we are currently reporting the longest series of healthy occupancy and a balanced supply and demand situation in mind.
Herb Weitzmann
Our market load is strong, our metropolitan areas lead the nation in terms of employment and housing growth, and our economy remains the benchmark for the nation.
All of these factors in our favor should, by historical standards, result in a boom in retail construction. In fact, the opposite is happening: our total retail construction figures are at or near a record low.
Currently, the DFW market is well on its way to reporting the lowest level of new retail space in its history – less than 1 million square feet in addition to a strong market with more than 200 million square feet of inventory.
There are numerous reasons for the small amount of new space, including:
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- The ongoing shrinkage of anchors such as supermarkets, department stores, and even grocery stores;
- Anchors moving to smaller floor plans (for example, Target’s recent DFW store is 55,000 square feet, much smaller than its traditional prototype at 125,000 square feet or more);
- The elimination of new malls (with their footprints of over 1 million square feet);
- Large projects built in phases over several years, such as Grandscape in The Colony;
- Increasingly high construction costs, which can lead to projects being postponed due to rents that are significantly higher than market prices in order to justify new construction in this current environment;
- The trend among retailers to focus on a seamless digital mix encouraged by less strategic locations.
There’s another major reason the construction decline is positive for our retailers and our communities – refurbishments and renovations.
Our market today offers refurbished centers an unmatched opportunity to capitalize on the demand from expanding retailers looking for quality locations. These vital renovations bring new life and energy to existing projects. They represent retail developments that create incredible new value, but usually don’t create new square footage.
With retail projects at key intersections and at the gateway to neighborhoods, an aging and largely vacant retail center can lower home value and even drive potential residents away. Because of this, cities across northern Texas and the state have used financial tools like 380 agreements and sales tax deferrals to encourage developers to renovate retail centers – because those investments pay off in terms of strong communities
Weitzman himself is an example that the renovation work is not reflected in the construction figures. Throughout the company’s history, our renovation projects have breathed new life into projects such as the Golden Triangle Mall, Preston Valley Shopping Center, Trinity Valley / Trinity Plaza in Carrollton, Grapevine Towne Center and Fielder Plaza in D-FW, and Capital Plaza in Austin, Pine Hollow in Houston Market; and HEB-anchored Thousand Oaks in San Antonio.
Our asset management team is currently leading or recently completed 14 renovations at DFW. These projects range in size from 50,000 square feet to over 350,000 square feet, but they won’t add a single square foot to DFW’s retail inventory.
One recent renovation involves the Irving Towne Center, a center anchored in Target that first opened in the 1980s. With its Target anchor and an array of popular shops, services, and restaurants, the center has always done well. But a renovation will ensure it continues to work by updating almost all aspects of the project and adding lifestyle elements.
To give you an idea of the power of renovation, let’s take a look at Fielder Plaza. The center opened about four decades ago as one of the first grocery anchored malls in Arlington. We have paved the way for a renovation to serve the existing neighborhood and attract a new tranche of buyers who had largely bypassed the aging center.
Renovation:
- Modernized appearance of the center with a contemporary, warm look
- Increased tenant identity and visibility through raised facades
- “Lifestyle” elements such as green spaces and seating areas added to make Fielder Plaza a real travel destination
- Re-let to upgrade existing tenants such as Tom Thumb and CVS and Pet Supermarket
- Stressed food and restaurants to increase traffic throughout the day
- A special digital marketing package added to ensure that Fielder Plaza tenants are advertised and appear in buyers’ search results
In addition to the Weitzman renovation, Tom Thumb renovated the interior of his anchor shop, adding wider aisles, new modern facilities and floors, and new and expanded departments such as the bakery and convenience store.
Did the renovation achieve its goals? In terms of re-letting, the renewed Fielder Plaza has attracted strong new tenants, such as Al’s Hamburgers, the legendary 60-year-old burger joint with a strong fan base; the largest site in Texas for Hand & Stone Massage and Facial Spa; and a new 7,000 square foot Workout Anytime fitness facility.
Fielder Plaza today has a refreshed modern look, a beautifully upgraded anchor in Tom Thumb, and a host of strong new retail tenants. Did the renovation achieve our goal of not only retaining the center’s existing customers, but also attracting a new generation of customers who had previously avoided the center?
The answer is a resounding YES. And Placer.ai numbers prove it. (Placer.ai is a provider of location analytics and pedestrian traffic data used by Weitzman to understand shopper dynamics.)
We looked at the pre-renovation (and pre-COVID) buyer stats for Fielder and compared them to the post-renovation numbers. Adjusted for the COVID shutdown and slowdown periods, the statistics reflect a huge increase in shopper visits, thanks in part to the new look for Fielder Plaza.
- Before the renovation (2017-2018), Fielder Plaza received 1,480,000 visits from 230,700 customers.
- After the renovation (2019 +2021 to today), Fielder Plaza received 1,599,400 visits from 401,700 customers.
In short, the renovation resulted in Fielder Plaza seeing an 8 percent increase in total visitor numbers and a 78 percent increase in customer numbers.
Numbers like this reflect more than just shopper visits – they stand for a center that represents what retail can do at its best: offering a location that supports its tenants, many of them small mom and pop shops, and the surrounding area Quality supplied neighborhood place to shop.
Herb Weitzman is Weitzman’s Executive Chairman.
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