4 Retail Trends to Watch
1. Retailers Adding Stores, but Squeezing Footprints
After the recession, there were a huge number of store closings and the rise of Internet shopping. Fast forward to ’15, and there’s a proliferation of restaurants matching the population growth and a return of retailer expansion. However, The Weitzman Group executive chairman Herb Weitzman says the retailers (including grocery stores) are returning in smaller spaces. Couple that with the 1.2M to 1.8M SF of new retail construction each year, and there’s just not a lot of space to be found.
2. Money to Lend for Retail
West Bay Capital manager Edward Marek (right, with former Dallas Cowboys QB Babe Laufenberg) says banks are very aggressive and a lot easier to deal with in Texas than his home base in California. There’s more flexible capital in Texas and less regulatory red tape, which makes it easier than the uphill battle of doing business in California, he says.
3. Grocers on the Rise
Grocery-anchored developments are coming back strong with 70 under construction or in the works, says Retail Solutions founder David Simmonds. Before the recession, Super Target, JC Penney and Best Buy (among others) were growing leaps and bounds, only to be halted dead in their tracks. The Class-A big boxes will get absorbed, but David says the Class-B, C and D will be redeveloped into other uses. He says Dallas has reason to be pleased about its retail pipeline with about 2M SF of new retail coming on line (to join the existing 200M SF). Pictured is the first panel: Henry S. Miller EVP Mark O’Briant, David, Charter Holdings CEO Ray Washburne, Herb, panel moderator Callaway Architecture CEO Tony Callaway and Edward.
4. Big Boxes Hard to Fill
Mark (left, with HSM’s Monica James) says the big boxes are tough to re-tenant with Sprouts and Trader Joe’s being a good option on the smaller spaces. Among HSM’s retail portfolio, it’s about 85% to 95% occupied, he says. As the region grows with new households and about 20,000 new apartments, retail will still be in demand. But, it’s hard to know how much to push rents because it’s tough for these tenants to maintain a bottom line as costs increase and there’s more competition.