Tariffs 'Line Of Sight' Emerges For DFW Retail

After a few months of working through the Trump administration’s tariff policy, Metroplex-area retailers are beginning to breathe a touch easier.

Newmark Chairman Mark Masinter said conversations his company has with retailers today are very different from those in early April when it was fairly common for companies to freeze all transactions due to the uncertainty around the situation.

“The word ‘uncertainty’ is bad for every business, [and] it's especially bad for retailers, especially retailers in particular who source from China or Vietnam or India,” Masinter said during Bisnow’s DFW Retail and Mixed-Use Summit on Thursday at the Hilton Anatole in Dallas.

“What's happened is people are now getting a line of sight to where they think tariffs are going and are able to make informed business decisions.”

That's not to say tariff tumult is over. Weitzman Executive Managing Director Bob Young said the situation is improving, but it is impossible to know tariffs' full effects or when uncertainty will come to an end. 

U.S. retail sales fell in May for the second month in a row, according to Commerce Department data released Tuesday. That may indicate heightened anxiety about tariffs is spurring a consumer pullback.

“We just need to keep our head down and do what we can to control and ... assuage the uncertainty that we're hearing from our customers and figure out solutions with which to move them forward,” Young said.

Retail developer Banyan is one company that has hit pause on decisions related to long-term capital, planning and development, partner Vivek Sinha said.

“We see tariffs as a short-term, volatile event that can shift any direction,” Sinha said.

Banyan is looking at different building approaches with contractors, like whether to use concrete or steel, to mitigate costs and keep projects moving through the pipeline. 

But uncertainty isn’t universal.

7-Eleven Real Estate and Development Manager Lauren Dannemiller said her company hasn’t slowed down at all. 7-Eleven officials have their “foot on the gas” and expect to come out the other end of the tariff quandary stronger than before, just as they did during the pandemic, she said.

The company isn't alone. Young said demand for retail expansion is happening in a variety of sectors in the Metroplex, including entertainment, fitness, food and beverage, beauty, and medical and dental. Yet grocery stores are still king in DFW, led by the expansion of H-E-B. 

“It's coming from powerful residential growth and job growth,” Young said, adding that the Metroplex’s continued robust development is also driving expansion efforts.

Anticipating that the tariff picture could clear within the next few months, Dallas-Fort Worth's retail market is expected to see demand remain high, with next to no growth despite the region's record-low supply.

Masinter said he regularly engages with retailers all over the country as well as in Europe, and he has found that many of the most prominent brands in the U.S. are looking for space in the Metroplex.

DFW used to be further down the list of prospective expansion sites for those high-end brands. Now, Masinter said many of those companies “cannot get here fast enough,” and that is especially true for women's apparel labels.

“They're all seeing a very addressable market in the Metroplex, and that's good for all of us,” Masinter said.

At the mixed-use development on Henderson Avenue in Dallas that Masinter is overseeing through his Ignite-Rebees partnership with developer Tristan Simon, that means targeting luxury brands that don’t currently have locations in Texas.

Young said the DFW market is active, with limited supply and “unbelievable” demand. 

“We are upping our game relative to strategies to upgrade the tenant mix [and] to be accommodating for other uses that weren't on our activity plans a decade ago,” Young said. “The status of the retail market in DFW is absolutely stellar, and we're encouraging that.”

Renewals aren’t usually the “darling” of the retail sector. But Young said Weitzman is getting 15% to 20% bumps in base rents due to the high level of leasing activity in the market.

“There's not a lease that's done that doesn't have at least a three-year annual increase,” Young said. “This is a hot asset class, and we're happy to be part of it.”

The demand bubble for retail shows no sign of popping as the region deals with historically low supply growth, Sinha said.

“Retail seems to be the darling of institutional capital today, or at least we're getting there,” Sinha said. “Institutional capital is going to make the tide go higher … so we feel very strong in retail, but we feel even stronger in DFW.”

Dannemiller said 7-Eleven is constantly on the hunt for sites throughout the Metroplex. It’s nearly impossible to find a corner location that doesn't already have an offer on it.

“That wasn't the case, I would say, two to three years ago,” Dannemiller said, adding that it isn’t just other convenience stores competing for those spots. Coffee brands, chicken concepts and other new and innovative retailers are vying for those parcels.

O'Brien Architects principal and Director of Planning Mick Granlund said his firm has a plethora of retail projects in the pipeline. The biggest challenge it faces is getting those projects to the starting line, though several are preparing to go vertical. 

“There is momentum building, and the prospects for our area here over the next several years look extremely good,” Granlund said.