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May 06 , 2011

Retail property market gaining ground, experts say at DMN-sponsored event

 May 6, 2011
by Steve Brown| The Dallas Morning News.
After more than two years of cutting rents and getting back vacant shopping center space, North Texas retail building owners and brokers are hoping the worst is over.
 
"The market feels so much better than it did two years ago and a great deal different than a year ago," Terry Montesi, CEO of Trademark Property Co., said at a Friday breakfast meeting sponsored by The Dallas Morning News. "Most of the retailers are now healthy"
 
And for good retail spaces there is a ton of demand," the Fort Worth-based developer said. "But nobody is building squat."

With retail construction in the Dallas-Fort Worth area at the lowest level in more than 15 years, the shopping center market will have a chance to recover from the recession that saw increased store closings and consolidations, industry leaders say.

"On the supply side we are seeing very little new development," said Steve Lieberman, CEO of Dallas-based Retail Connection. "We think it will be another 18 to 24 months" before construction picks up.

Most of the retail development this year and into 2012 will be focused on remodeling and repositioning existing centers, Lieberman said.

His firm and partners just purchased the Village on the Parkway shopping center in Addison with plans to renovate the aging property.

"About half of that project will actually be torn down and redeveloped," Lieberman said.

Supermarket and food specialty stores are now the hottest segment of the retail market — as evidenced by the announcement this week that the almost cult status Trader Joe's grocer is coming to North Texas this year.

"If you are making grocery deals, you are in good shape," said Mickey Ashmore, CEO of Dallas-based United Commercial Realty. "Baby boomers are getting older and trying to save their money.

"But you have to buy groceries," he said.

Because of the growth of Internet retailing, Ashmore predicts that some merchants will be cutting back on the size of their sticks and bricks outlets.

"Everybody still likes to shop, but it's changing," he said. "We don't need that much more retail space.

"What we need is better space."

Cencor Realty is doing two of the very few new retail development deals in North Texas this year.

The Dallas-based company recently landed a new Costco Wholesale Corp. store in its Frisco Trails Shopping Center on the Dallas North Tollway.

And on the tollway at Parker Road in Plano, Cencor hopes to begin work this year on its West Plano Village retail and mixed-use development, which has been delayed for several years.

"The consumer is driving the tenant mix," said Cencor executive vice president David Palmer, who's courting tenants such as dental clinics and spas to fill empty retail space. "Restaurants continue to be big drivers in this retail market."

While most of the recent investment property buzz has been about apartment buys or office building sales, CB Richard Ellis managing director Jennifer Pierson said the outlook for shopping center purchases is improving.

"Retail is much more in favor than it was last year or the year before," Pierson said. "They are all going for core retail assets."

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