This week, analysts have concluded that the Dallas-Fort Worth area is experiencing the highest demand for retail space in more than a decade. At the same time, limited supply and substantial growth in this area makes it a great space for investors – but a challenging landscape for retailers looking for a space to lease in the near future.
New Fort Worth Retail Space is Being Added – Fully Leased
Analysts have been careful to point out that new retail space is being added to the greater Fort Worth area. Dallas-Fort Worth is on track to see 1.9 million square feet of retail space entering the market this year. However, the report specifies that most of the new retail space is “opening basically fully leased.” The newest shopping centers in the best locations have a vacancy of just 5 percent or less. This is great news for investors, but retail establishments face a real challenge in finding a vacancy at all, and may be at the mercy of high rents and poor terms.
The largest share of the new retail development is grocery stores. The company’s report states: “Approximately 40 new traditional and specialty grocery stores are opening in 2014 and 2015 across the Metroplex. With a few exceptions, these locations represent new construction.”
A Substantial Commercial Real Estate Improvement Since the Recession
These statistics illustrate a substantial improvement in commercial real estate since the height of the recession in 2009. The entire North Texas’ retail market posts a vacancy of less than 10 percent, which is a 10-year low across North Texas. During the worst period of the recession, shopping center vacancies in Dallas-Fort Worth rose to 14 percent. Between the height of the recession and now, vacant retail space has cost owners and investors millions of dollars in lost income. With vacancy rates as little as under 5 percent in the newest, best-located shopping centers, this translates to a big turnaround for the industry.
Investors Enjoying the High Demand
While this shift in demand signals a challenge for retailers, the rise in retail demand is great news for investors. With the right property in the right location, investors can realize a substantial return on high-demand retail space. Because of strong population and job growth in Fort Worth, the local economy continues to improve and demand for retail space is projected to grow apace for at least the next few years. Partnering with an experienced commercial real estate investment firm is key to finding the right opportunities and getting would-be investors the best return.