DFW Retail Construction Hits Highest Point in Three Years

DALLAS-The North Texas love affair with shops of all types has retail developers pushing out more space this year than they have since 2001. Lenders, though, have kept their check on spec so the 5.9 million sf now rising is significantly pre-leased.

Retail appetites from consumers and developers have CB Richard Ellis Inc.’s Dallas office again putting out a retail report, the first one in several years. Likewise, the North Texas Commercial Association of Realtors has teamed with International Council of Shopping Centers for its first retail summit and bus tour of the northern tier where much of the space is coming on line.

The Dallas/Fort Worth market has 192.1 million sf in 3,280 shopping centers. Occupancy is 91.4%, according to CBRE’s second-quarter analysis.

The overall market outlook is sunny, but the current construction pace, though significantly pre-leased, needs to be closely watched, says Bob Ginsburg, a CBRE vice president in Dallas. “It’s something to watch because it’s such a big block of space,” he tells GlobeSt.com about the 5.9-million-sf pipeline, “plus we have some retailers who are leaving. If we look up and next year there’s another five million sf, we could be in trouble.” Still, CBRE numbers show less than 5% of the pipeline is rising with 20% or less pre-leased, with Ginsburg giving credit where it’s due … to the lenders.

In 2001, three million sf delivered, much of it in malls north of the Dallas line. In the current development cycle, construction is underway in all directions. This year, mall developers again are breaking ground. So are “lifestyle” centers as power blocks of national names or plazas with less than 30,000 sf in a specialty shop lineup, both serving as replacement product for the one-time suburban staple, grocery anchors. The trend is an outgrowth of grocers holding back on development but, Ginsburg cautions, “it takes a lot of consumers to support the high-end lifestyle centers.”

The current building cycle is spawning regional pockets in areas like Northeast Tarrant and Collin counties, where inventories are pushing full and a redefined version of a mall is underway or set to break ground before the year ends. CBRE’s calculations show five of the region’s 40 submarkets now exceed 95% occupancy and 24 are more than 90% leased.

With a rapidly growing population and rental space pretty much filled, North Texas has been on radar screens of retailers and investors alike this year, last year and most likely will be again next year as solidly leased listings pull dozens of offers at top prices. The NTCAR inaugural summit, set for Aug. 20, starts with a luncheon at the Marriott Legacy in Plano, and a keynote speaker hailing from the ranks of newest national name in town, Ikea, a Plymouth Meeting, PA-based retailer building a 310,000-sf store to anchor the $90-million Centre at Preston Ridge in Frisco, a development of Oakridge Investments of Dallas and New Plan Excel Realty Trust of New York City. The bus tour will crisscross Plano, Frisco and the Colony.