By Mark Newman
Very few things stir the retail industry quite like the International Council of Shopping Centers (ICSC) deal making conferences. These conferences are where deals get done and companies plant or strengthen roots in markets across the U.S.
In advance of the ICSC Texas Conference & Deal Making event, let’s take a look at what makes Dallas-Fort Worth such a vibrant and viable market and how it sets the stage for retailers to make an impact.
The most significant thing going for Dallas-Fort Worth is its tremendous job growth, which in turn has fueled continued retail growth.
If we’re talking about job growth in the Dallas area, the best example is what’s happening in and around Legacy Business Park with the new campuses for Toyota, JP Morgan Chase, Liberty Mutual, FedEx and their related businesses creating up to 30,000 new jobs for the area. That anticipated job growth cannot be separated from the development and growth along the Dallas North Tollway, with the Star and the Wade Park development, and the retail boom along Hwy 121 to the west ignited by Nebraska Furniture Mart.
The entire trade area is a phenomenon almost unrivaled in the country. It seems every vacant piece of available land is in play, and it almost makes us forget the incredible rise of the CityLine development in Richardson, which seemed to appear out of nowhere to accommodate State Farm and Raytheon expansions. Those two also fueled new retail development.
Another important influence on the retail scene is the increasing urbanization of our cities. This has created distinct urban neighborhoods and the demand for unique goods and services to serve them. Torrid multifamily construction has become a nationwide topic and has brought with it new and exciting retail and restaurant developments.
This trend actually follows in the footsteps of more established areas like West Village and even downtown Fort Worth. Fort Worth has been in the vanguard of urban development with Sundance Square downtown (a Bass Brothers Enterprise project) and eventually the West 7th projects. Fort Worth was cool before anything else was cool. The city had downtown living, downtown theaters, and downtown restaurants.
These urban mixed-use projects are booming, and what is being built is often exciting and different. They are creating places where people want to be.
Restaurant and entertainment
The whole movement in retail, at least in bricks and mortar, is toward creating the kinds of spaces where people want to be — the kind of atmosphere that appeals to your senses. People no longer want to just go out and buy something, they want to be somewhere — somewhere that is “cool.” That’s a significant trend.
What we are seeing now is a focus on ramping up vibrant, thriving urban cores consisting of cool multifamily living, restaurants, shopping, services and entertainment.
Red Development’s Union project now under construction in Uptown is a good example. The project will have a Tom Thumb on the first floor, Streetlights is building a residential tower on top and alongside it will be an office tower. Attached to all of that will be additional retail and restaurants with an inviting plaza. Having the incoming restaurants and the grocery store on-site helped attract tenants for the office building.
This trend is also exhibited in the design and layout of shopping centers being built, with generous common areas and entertainment. That leads us to restaurants.
People often ask what there is to do in Dallas-Fort Worth. The answer is eat and shop. Restaurants have become a destination for entertainment, with everyone becoming a novice foodie, knowing where to go for the new taste trend and making recommendations to friends.
In turn, clusters of restaurants have started to become something of an anchor for shopping centers. You typically talk about shopping center development in terms of securing anchors and then getting the rest of your tenants and restaurants. Historically, typical retail anchors would be supermarkets or big box stores. These days, because of consumers’ increasing desire for place and entertainment, restaurants can serve as an anchor.
The DFW meteroplex is surely one of the most competitive trade areas for supermarkets. For the past decade, Walmart, Kroger and, to some degree, Sprouts, have been in overdrive developing new stores, adding square footage and market share in the “Grocery Store Wars.”
While Kroger has steadily gained in market share, Walmart remains the market leader. Boise-based WinCo has entered the scene in an impressive manner with six openings and a handful more under development.
The acquisition of Safeway by Albertson’s has brought together three great brands — Tom Thumb/ Randall’s here in Texas, Albertson’s, and United grocery stores (Market Street). Contrary to what people thought might happen, the new, larger company has been in an aggressive growth mode since the merger took place.
On top of that, HEB, already with a presence here via their Central Market stores, has come in and bought over 25 parcels of land with no declared intent on what they’re going to do with them, though that hasn’t stopped the curious from asking.
Aldi has also done a good job of peppering the area with their stores. Now, we’re hearing that Lidl, a growing presence in the European grocery marketplace, is negotiating on numerous properties.
Can they all survive and prosper? That is the question.
Impact of the Internet
Retailers are gaining a better understanding of how millennials shop and refining how they sell. These consumers might come in to the store for a sense of place and to feel what they’re buying in their hands, then order it from their phone. That’s I-Tailing.
Retailers are planning ahead for that, keeping a limited inventory on hand and shipping out of their industrial buildings. Many retailers maintain warehouses in the Metroplex to be able to provide a quick turnaround in getting items out to the consumer.
The result will surely translate into a reduction in gross leasable area in retail, some of which will be countered by grocery and entertainment demand.
The bottom line is that we are anticipating a healthy retail market over at least the next two years. Things are always evolving, but as it stands there is no better place to be than in Dallas-Fort Worth. Article featured in October edition of Texas Real Estate Business magazine.