Texas Market Reports

It’s no secret retail vacancies in the Dallas-Fort Worth (DFW) area are at all-time lows. Vacancy rates at the end of first quarter 2017 were 4.6 percent, down from 5.5 percent a year ago, according to CoStar. More tenants are actively looking for the right spaces for their businesses so the retail sector is not overbuilt. Junior anchor tenants have “right-sized” requirements, thus decreasing their space needs. For example, Office Depot is downsizing its typical footprint from 24,000 square feet to 14,000 square feet. Grocery stores that have gone dark have been backfilled with fitness gyms, other grocers or entertainment-type tenants. In addition, market rents jumped markedly from $30 per square foot plus NNNs to $35 to $40 per square foot plus NNNs in the high demand spaces. In Class A retail environments such as the Frisco Mile, rates are $50 to $65 per square foot plus NNNs. Even in the new 99 Ranch Market space in Frisco, rents are $50 per square foot plus NNNs and the tenants are not blinking. Requests for higher finish-outs are continuing, but tenants are willing to pay these higher rents in order to use the landlords’ money for their improvements. Job and Housing …

In DFW, retail real estate will experience its eighth consecutive year of performance gains as upward economic momentum strengthens consumption and bolsters the local retail sector. The national economy is operating at near full employment and the rate of job creation will start to slow, bringing two million new job opportunities to fruition in 2017. At least 100,000 of these jobs will be filled in DFW and these dynamics will affect retail property by driving up wage growth, increase rental rates and promote higher retail spending.” As a result, national retail sales are expected to increase 4 percent this year. In Fort Worth specifically, retail trade is one of largest employment sectors and accounts for more than 11 percent of all jobs. Dallas-Fort Worth is expected to see a fourth consecutive year of employers adding over 100,000 jobs as a number of large companies like Toyota, Liberty Mutual and many others expand their footprints in the metro. Advance PCS, Dean Foods, ExxonMobil, Kimberly-Clark, Neiman Marcus, Southwest Airlines and Texas Instruments are among the 21 Fortune 500 companies headquartered in the area. The relocation and expansion of these businesses will draw new residents to the area. Approximately 88,000 individuals are slated …

As we near the end of 2016, we also mark another strong year for the San Antonio retail market. In fact, the market is strong enough that we can retire the word recovery and replace it with expansion. Expansion, in a nutshell, means that the retail market has not only matched the pre-recession occupancy level of 92 percent, it has exceeded it. San Antonio currently boasts a healthy occupancy rate of 94 percent, even as key vacancies from Sports Authority came onto the market during the past year. The Alamo City is able to maintain the balance due to the fact that vacancy added by the sporting goods retailer was offset by fully leased construction and the backfilling of major retail box spaces. The Weitzman Group currently reviews approximately 45 million square feet of retail inventory in San Antonio centers with 25,000 square feet or more. Like the retail market, San Antonio’s economy also continues to grow, based on solid population and job growth. The metro area market, as of September 2016, reports an unemployment rate of 4.1 percent. This is well below the country’s rate of 4.8 percent, according to the Texas Workforce Commission. The metro area also ranks …