Press

November 22 , 2007

Retail construction doubles in 07

Retail construction doubles in 07

November 22, 2007 - by Lauren D'Avolio | Dallas Business Journal. With no real geographic features - not even an ocean or natural lake - at their disposal, many North Texans consider shopping a recreational activity. There's certainly not a shortage of retail space in the Metroplex, and there's plenty more on the way.
According to a recent report from CB Richard Ellis Inc., 3.9 million square feet of retail construction was completed in North Texas in 2006. That figure has nearly doubled in 2007, with year-to-date development of 7.3 million square feet.
Another regional retail player, The Weitzman Group, hasn't yet tabulated its 2007 construction figures. But its figures say 2.7 million square feet of retail space was added in Dallas in 2006, and 550,000 square feet in Fort Worth.
A midyear analysis by The Retail Connection puts retail construction at 5.5 million square feet so far in 2007 - a drop, it says, of about 25 %. To understand the variance between its numbers and CB Richard Ellis statistics, you need to understand the meaning of the word "completed."
A large number of projects currently under construction won't wrap up until 2008 and won't be evidenced in the statistics until then, thereby skewing numbers for 2007, says Steve Lieberman, CEO of The Retail Connection.
"What's important is everybody is using a consistent baseline," Lieberman says. "Some people count what's completed and what's under construction, and that's why you have a discrepancy in the numbers."
Activity undertaken by Connected Development Services, The Retail Connection's development arm, is consistent with CB Richard Ellis research. The group delivered 250,000 square feet of retail space in 2006 and currently has 1 million square feet under construction, of which 600,000 square feet will be completed in 2007. Those numbers will be identical in 2008, Lieberman says.
"Retailers are cautiously optimistic about what's happening with the economy," he says. "There are a lot of variables out in the marketplace that are catching consumers' eyes."
Lieberman says the outlook for Dallas-Fort Worth's retail market is strong, with the area's burgeoning population and solid job growth. The hottest projects, he says, are tenant-driven, such as large shopping centers anchored by Target, Wal-Mart or Best Buy stores, and mixed-use developments.
Suburban aggression
Steve Triolet, research manager for CB Richard Ellis in Dallas, said his company surveys a five-county region - Dallas, Collin, Tarrant, Denton and Rockwall Counties - and tracks everything that's 10,000 square feet or larger. The firm's four-person Dallas research staff uses a combination of data vendors and proprietary software.
Based on what's in the pipeline, Triolet says, there could be some overbuilding in select submarkets. For example, more than half of all retail construction, ringing in at 6.3 million square feet, is under way in Grand Prairie-Arlington, and far North Dallas is adding 3million square feet. If construction continues growing at that pace in those areas, Triolet said, that would be cause for concern.
"Developers are being a little bit aggressive, which probably will hurt occupancy rates in the next few quarters," he said. So far, "it's not to the point that it will really hurt the markets - it will just hurt them marginally."