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January 26 , 2007

The retail risk

The retail risk

Market expected to lose speed, but not momentum
January 26, 2007 - by Lesley Hensell and Jane Hill | The Dallas Morning News. In the retail market, everything old is new again.
Or so it seems when you survey the real estate development market, which has seen mall construction slacking off in favor of space that offers consumers one of two key features: convenience or entertainment.
Dallas-area retail trends are worth national attention. After all, the city is home of Highland Park Village, which became one of the country's first outdoor shopping centers in 1931. In 1965, NorthPark Center opened its doors as Dallas' first mall.
So what's on tap for retail during the coming months?
"Retail is parasitic to residential development," says Herb Weitzman, chairman and chief executive officer of The Weitzman Group and Cencor Realty Services. "Even though Texas is in better shape than most states, there will be a paring back of housing. This will slow down retail development a bit, and it should."
Mr. Weitzman predicts stability in 2007, because most projects that have broken ground are about a year from completion..
Ironically, Mr. Weitzman says, today's lifestyle centers are an updated version of similar developments created in the 1960s. These shopping centers combine high-end stores with entertainment venues and restaurants, encouraging customers to come and stay a while. An example is Garland's Firewheel Town Center,
an open-air development that includes more than 100 department and specialty retailers, restaurants, green space and a movie theater.
"Retailers need to give consumers a reason to shop at their stores, rather than buying online," says Alan Shor, president of The Retail Connection L.P. "Big developers are only building one mall every couple of years. And we're getting away from neighborhood grocery anchor centers and power centers. Lifestyle centers are helping to capture the population of various submarkets with their density and wide range of shopping and entertainment options."
In both urban and suburban markets throughout the Dallas-Fort Worth area, new retail space is popping up in mixed-use developments as well. These outlets tend to create a buzz in the marketplace, because developers tout the convenience of a coffee shop or dry cleaner adjacent to a high-rise office or apartment building. Yet the overall impact on the retail market of these mixed-use retail projects is minimal, Mr. Weitzman says.
"In the grand scheme of things, it isn't that much space," he observes. "It's basically insignificant.. Other than being a great amenity and complimentary to everything else we do, I don't see mixed-use retail having a big impact on our future."

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