DFW Likes Retail: Q&A with Weitzman’s Robert Young Jr.

Weitzman recently released its 2018 Shopping Center Survey & Forecast for DFW. Robert Young Jr., Weitzman’s Executive Managing Director, answered questions about, and presented key highlights of, the new survey. The report analyzed 197.9 million square feet of inventory in more than 1,400 retail centers throughout the Dallas-Fort Worth area.

Q. There’s a popular narrative that brick-and-mortar retail is struggling. Is that the case in Dallas-Fort Worth?
A. Actually, the opposite is true. In 2017, the market posted an occupancy rate of 92.5%, the second-highest we’ve ever seen. We saw the highest a year ago, which was 92.6% at the end of 2016. As you can see, we’re in an era of incredible stability.

Q. Why do you think the market is performing well at a time when all we seem to hear about is how the “Amazon effect” is hurting traditional retail?
A. There are several reasons. One, retail is evolving. There is a heavy focus on food, experience, entertainment, fitness, beauty and medical … all things that are difficult or impossible for e-commerce to do well. Two, as vacancies come on to the market, we see them re-tenanted by these types of concepts. Three, we have an incredible economy, leading in residential growth, population growth, job growth and all of the factors that retailers look for when making location decisions. Four, our new spaces are anchor-driven and demand-based, adding to occupancy. This is not a spec-space market at all. And finally, our retailers have learned how to make their physical stores a key component of their omnichannel strategy. ICSC just released a study showing that 95% of all holiday purchases, even if online, involved retailers with physical stores.

Nine years ago, DFW retail occupancy was on the decline, ending that year at 87%. So today, we’re in a much better place.

Q. What is happening with construction?
A. Last year, the market added 4.2 million square feet in 27 new and expanded projects. That’s the first-time construction reached the 4-million-square-foot level since 2008, when 4.6 million square feet came online. New space is dominated by the categories I talked about above: Food, like grocery store and restaurants; experiential retail, such as mixed-use and entertainment; and adventure (or treasure hunt) shopping, such as Tanger Outlets or the expansion of the Allen Premium Outlets.

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