Jon McDaniel, NAI Robert Lynn
As the 16th largest city in the United States and one of the fastest growing metro markets, Fort Worth is consistently a hot market in Texas and hasn’t slowed down post-recession.
The current retail market is showing a low vacancy rate of 6.5 percent along with increasing rental rates. Surprisingly, these rates have not slowed leasing activity. Instead, the combination of increasing rates and dwindling vacancies have spurred new development.
In years past, Fort Worth has been seen as a secondary market to Dallas, but with its strong economy and high returns, the city is now able to stand on its own.
Fort Worth is seeing a lot of capital being tossed around the market. With a strong economy and low operations costs, money is pouring in from all angles, including from out-of-state and international investors.
California, New York and overseas investors are beginning to recognize the stability of the city and the potential for stronger returns, and are aggressively starting to pursue opportunities here.
For example, Iowa-based Lockard Development is in the process of expanding its Walmart anchored Renaissance Square power center at Berry Street and Hwy 287 in East Fort Worth to include more national credit tenants.
Lockard recognized the opportunity to develop in Fort Worth even when the economy was down, and is poised to further develop its already successful power center to better serve the local community.
On the sales side, there are more investors in the market and increased competition, causing the buying and selling cycle to shorten.
We are seeing multiple offers on anything and everything that hits the market, and the process from the time a building is put on the market to the sale closing is drastically decreasing. The days of taking time to make a decision are quickly fleeting.
Fort Worth currently has just over 1 million square feet available with quoted rates averaging $12.75 per square foot.
Despite the low vacancy rates, leasing activity is high, with numerous deals on the table and more in the pipeline.
Local and national credit tenants are reactive to the market and are aggressively pursuing sites. And the quality of tenants is much higher compared to pre-recession times — Whole Foods, Fresh Market and Niemen Marcus to name a few.
Nevertheless, low vacancy has caused a shift back to a landlord’s market. With fewer options to choose from and multiple tenants fighting for space, landlords can be more aggressive during negotiations.
Companies looking for space need to know what they are looking for and be aggressive decision makers.
High demand from both tenants and investors has spurred a tremendous amount of new development.
Mixed-use deals including retail and multifamily components have become popular.
For example, Trademark has three developments underway and one which was recently completed — WestBend, Waterside, Clearfork and Alliance Town Center.
• WestBend, located at South University Drive and River Run, will include 278,000 square feet of retail, dining and office space, including a Fresh Market and Class A office space.
• Waterside, located at Bryant Irvin Road and Arborlawn Drive, is a master-planned, 63-acre mixed-use development. A 45,000-square-foot Whole Foods will anchor the development along with 175,000 to 200,000 square feet of additional retail space and riverside restaurants, 20 acres of multifamily and townhomes, 200,000 square feet of office space, a hotel and a large public space called “The Grove.”
• Clearfork, located off State Highway 121, at completion will include 2 million square feet of office space, 1 million square feet of retail space and 2,500 multifamily units. Phase one is underway and will include 392 residences, 375,000 square feet of retail space and 100,000 square feet of office spaces.
• Alliance Town Center, which was completed in 2014, is located at Interstate 35 West and Heritage Trace Parkway. It encompasses 1 million square feet of retail, office, residential and hospital uses with seven national anchors including Belk, JC Penney, Best Buy, Hobby Lobby and Dick’s Sporting Goods.
Based on the healthy leasing activity and the amount of capital being invested, Fort Worth remains a top retail market, and will continue to thrive throughout 2015 and the coming years.
— By Jon McDaniel, president of Fort Worth Retail, NAI Robert Lynn. This article originally appeared in the August 2015 issue of Texas Real Estate Business magazine.