The Dallas-Fort Worth commercial real estate market has recouped its worst pandemic losses

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Dallas pundits say the great retail reset is over.

At the Weitzman D-FW Annual Commercial Real Estate Conference on Wednesday morning, presenters said the Dallas-Fort Worth commercial real estate market experienced a strong recovery last year, reversing some of the worst of 2020, and was poised to continue the rebound.

The expansion of HE-B’s grocery store is boosting new retail construction, which is expected to reach 2 million square feet this year. Last year, there was just 640,000 square feet of new retail construction, marking the first time that number has fallen below 1 million square feet since 1990, said Matthew Rosenfeld, vice-president. executive chairman of Weitzman, at the brokerage firm’s online event on Wednesday.

D-FW retail is at or near 2019 pre-pandemic levels after the “great retail reset” that restructured balance sheets and closed loss-making stores, said Michelle Caplan, executive vice president of Weitzman. .

While last year was the worst year for retail construction in decades, 3.9 million square feet of retail space was leased, wiping out the 4 million square feet of vacancies of 2020 when a record level of stores closed across the country.

Michelle Caplan, executive vice president of Dallas-based Weitzman.(Weitzman)

It was the third rental market in 22 years for the region’s more than 1,400 shopping centers.

In Dallas-Fort Worth’s 200 million square feet of retail space, occupancy levels increased to 93.5% in 2021 from 91.7% in 2020 and are expected to reach 95% this year, Rosenfeld said. Last year’s occupancy was the highest in 32 years.

Retailers and restaurateurs have evolved with new innovations for drive-up access and in-store processing as the pandemic has changed shopping behaviors, Caplan said. “The majority of vacancies were filled by stronger concepts than those they replaced.”

That’s not always the case after a downturn, Caplan said, but this time there were stronger stores of all sizes, restaurants, medical shops and fitness and beauty services waiting to fill up. .

That was also true for anchor vacancies left by Stein Mart, Pier 1 and others, Caplan said, adding that Sprouts Farmers Market has four new stores in ongoing vacant anchor spaces.

“So our retailers are stronger. And our market is stronger. And our economy is stronger,” Caplan said. That’s why Weitzman offered an optimistic forecast that sees new leases continuing at a steady pace of 2.5 million square feet in 2022.

Matthew Rosenfeld, executive vice president and director of D-FW brokerage at Dallas-based Weitzman.
Matthew Rosenfeld, executive vice president and director of D-FW brokerage at Dallas-based Weitzman.

The market has learned some lessons from years of overbuilding.

The weak construction reflects a decade-long trend in D-FW, Rosenfeld said. In the 2000s, the market added 50 million square feet of new retail space, but construction only totaled around 18 million in the 2010s.

Of all mall types, malls, which occupy approximately 20 million square feet, or 10% of retail space in the D-FW region, had the lowest occupancy rate of 89.5% Last year. The region’s largest center type, community centers anchored by grocery and other big-box stores, had the highest occupancy rate of 94.5%.

Last year proved that “physical retail remains relevant,” Caplan said.

Noam Ben-Zvi, co-founder and CEO of a location data analytics company Placer.ai, said the lion’s share of money spent — 80% to 90% — still happens in physical spaces.

Ben-Zvi was the featured speaker at Wednesday’s conference and was interviewed by Weitzman’s chief marketing officer, Leisa Barger. He co-founded Placer.ai in 2017 after realizing that much of the data analysis was focused on online spending.

“We had an a-ha moment that through mobility data there’s a lot of power to know what humanity is doing,” Ben-Zvi said.

Noam Ben-Zvi, CEO and co-founder of Placer.ai
Noam Ben-Zvi, CEO and co-founder of Placer.ai

He had a strong background in technology, which included selling a company he founded in Israel to Salesforce, but he didn’t know much about commercial real estate. The first time he attended the International Council of Malls’ annual convention in Las Vegas, Ben-Zvi said, he was “walking around and Googled JLL and Brixmor.”

The company uses anonymous tracking of mobile devices, credit card data, and other factors, including ongoing retail construction and crime statistics, to answer questions from retailers and developers. Ben-Zvi announced at the conference that Placer.ai received $100 million in a third round of funding this week.

Placer.aiData from shows that in-store traffic is rebounding and direct-to-consumer brands are finding success with stores. “Many will be expanded and others will close.”

Barger asked Ben-Zvi in ​​front of an audience of 500 real estate professionals if he thought brick-and-mortar retail was a good investment.

“I think I’m doing it based on the data you just reported,” he said, “and because people want to go out and don’t want to stay home buying everything.”

HEB sets up its first D-FW stores in suburban Collin County.
Rendering of the HEB store in Plano slated to open Fall 2022 at the southwest corner of Preston Road and Spring Creek Parkway.

Twitter: @MariaHalkias

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