Retailers Are Planning to Open 80,000 New Stores Over Next 48 Months
Retailers are feeling pretty good about their business with net absorption of 88M SF and occupancy projected to increase another 1% next year; new development can be expected to continue for the foreseeable future, says Alan Shor, president of Dallas-based The Retail Connection (left, with colleague, Steve Zimmerman at Bisnow’s Dallas retail event on Tuesday). There’s almost 80,000 new stores on the planning board for the next two years; that’s a 4.2% increase over the last two years. Another boon for retailers: holiday sales for this Christmas period are projected to increase by 4%, reflecting nice, solid growth, he says.
Alan tells us the retailers with the greatest amount of expansion planned include the dollar stores like Family Dollar, Dollar General and Dollar Tree, as well as other discount stores like Aldi, Forever 21, Sprint and Aaron's. The QSR category, including Subway, Pizza Hut and Dunkin Donuts, continues to have explosive growth, as well. There are also certain parts of the country outpacing the norm, he says. California is having a development boom with San Francisco, San Jose, San Diego and Orange County leading the way. Denver, Seattle and Boston are also seeing a strong rebound in new retail projects. But, Alan believes there is no better place to be than Texas; Dallas-Fort Worth, Austin and Houston are three of the top five markets for retail real estate investment and development, according to PwC.
As a direct result of this strong growth, there is little quality space currently existing. Nationally, occupancy rates are at 90%, a level not seen in many years, Alan says. In Texas, the market is even tighter, with occupancy averaging approximately 94% in the four major Texas markets. This scarcity of space has led to a rapid acceleration of redevelopment and new, ground-up retail development, which was nonexistent over the past five to six years. This resurgence of retail construction and new product is occurring all over the country. Pictured is TRC's 700k SF ground-up The Village at Cumberland project in the East Texas town of Tyler.