Retail

Despite the fact that demand for retail space in McAllen is at an all-time high, average asking rents are not rising at rates that preclude new users from entering and expanding within the market. According to the McAllen Chamber of Commerce, the retail occupancy rate currently stands at just under 95 percent. The user base is balanced between big box home furnishing and service tenants, neighborhood retailers providing essential services, entertainment concepts and both national and regional food and beverage users. As one might imagine in a market with 95 percent occupancy, there is considerable new development underway. And while rents, which currently max out at about $24 per square foot for new Class A product, have displayed a steady ascent, they also stand at levels that allow for both users and landlords to comfortably turn profits. Most retail real estate professionals in McAllen live in fear of being overbuilt. And indeed, there is new product of all varieties — freestanding, strip centers, power centers — coming out of the ground. A prominent example of new retail development lies in Shops at 29, a power center anchored by Dave & Buster’s and leased to other large-format users like Burlington and …

2018 was a year of redevelopment, adjustment and correction for the Fort Worth retail market. Some real estate professionals believe this activity was the result of the collective, pent-up demand among quality retailers for a store presence in Fort Worth. Some believed they that could duplicate the atmosphere created by The Domain, a 1.2 million-square-foot mixed-use destination in Austin that has achieved tremendous success. The previous three years saw more than 2.5 million square feet of new retail space delivered in Fort Worth, a figure that exceeds the combined total for the previous 10 years. For example, in September 2017 Simon Property Group, in partnership with Cassco Development Co., opened The Shops at Clearfork, a 500,000-square-foot, open-air luxury shopping, dining, entertainment and mixed-use destination situated in the heart of Fort Worth. The Shops at Clearfork also includes office space. Other retail projects that contributed to new supply included WestBend, Waterside, Left Bank and Presidio. This new development caused a spike in vacancy to 8.7 percent by the end of the year as landlords were all looking to stabilize their assets from the same tenant pool. At the same time, retailers, restaurants, service firms and experiential companies were cautious and calculated …

Entertainment concepts have long since adopted an “everything under one roof” approach that packages some combination of food, drink, movies, bowling, arcades and other games into a single destination. But competition in the space is growing, and owner-operators are facing mounting pressure to offer an ideal mix of activities that keeps people onsite longer and boosts return visits. What that combination is varies from market to market and even site to site. But without question, the breadth of games and activities offered at entertainment centers in Texas is expanding and evolving. What’s Hot, What’s Not Virtual reality (VR) shooting games and driving simulators, axe-throwing arenas and elevated food and beverage (F&B) components are among the key features that are driving traffic to entertainment centers and the retail properties that house them. Movie theaters and bowling alleys are evolving as well. According to Jeff Benson, CEO of Dallas-based Cinergy Entertainment Group, it’s very unlikely that new theaters in large and mid-sized markets will ever be built without certain features. “The movie business has changed a lot in 20 years, and I doubt you’ll ever see another theater built without a bar, recliner seats and dine-in options,” says Benson, who founded dine-in …

Developers of new retail product in the e-commerce era face an array of roadblocks, from rising land and construction costs to heightened scrutiny from lenders on cash flows. Besides a larger economic downturn, in today’s Darwinian retail environment, nothing makes a new project fizzle or a stabilized center depreciate faster than lost income and occupancy brought on by an un-engaging, uninspiring tenant mix. Consequently, developers are devoting more of their budgets than they have in years past to researching, meeting and analyzing users to ensure they nail their tenant rosters on their first try. This is particularly true for developers whose business models center on long-term holds of their properties. “If we put a problem tenant in a center on day one, we inherit that problem for the term of the lease,” says Anderson Smith, co-founder of Capital Retail Properties, a Houston-based retail firm that holds its developments for the long term. “So it’s very important that we do it right the first time.” Smith says that his firm’s first move when researching a potential tenant is to check out that company’s Instagram account, which provides insight on the retailer’s approach to store build-outs and quality of product or service. …