July 27, 2020
Weitzman’s analysis of the Dallas-Fort Worth retail market shows an occupancy decline due to the COVID-19 pandemic. But the market, fortunately, still has strengths to report. Marshall Mills, president and CEO of Weitzman, discussed the market outlook.
Q. What’s the current state of the market?
A: When 2020 began, D-FW reported 93.4% occupancy and the best balance of supply and demand in memory. So we were in much better shape going into this downturn compared to previous downturns. The pandemic has hit some already-struggling retailers hard, and closings from JCPenney, Pier 1, Tuesday Morning and others created nearly two million square feet of vacancy. At mid-year, we’re reporting 92.6% occupancy, which is down but remains healthy.
Assistance for retailers is also helping stabilize occupancy. For example, we worked with tenants on the PPP loans as soon as they were available, as well as on lease workouts and rent deferrals. We are aggressively marketing our centers and our tenants, working with them to beef up their digital marketing, because that’s necessary in a world where decisions are made via mobile search.
A: Overall activity is down, which is to be expected, but the market continues to see leasing in existing retail projects. One big reason is that our residential growth and development continues, and retail follows rooftops. We’re seeing demand from restaurants with drive-thrus, along with discounters, automotive categories and even fitness and activity concepts, which see opportunities in spaces vacated by 24 Hour Fitness and Gold’s Gym.
Q: D-FW has long been known as an overbuilt retail market. Is that still the case?
A: We project the market will add approximately 1.3 million square feet in 2020, basically a rounding error on our 200 million-square-foot inventory. Over the past decade, we’ve seen annual construction shrink as new space remains firmly in line with demand. This lack of overbuilding is another positive we have as we deal with this unprecedented health crisis.
The largest project is the expansion of Grandscape in The Colony, where a single store—Scheels—added 331,000 square feet.
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