Retail in the Metroplex set a new record in 2023 as a dearth of new construction and rebounding tenant demand converged to create the highest occupancy in 42 years.
Dallas-Fort Worth shopping centers of 25K SF or more were 95.2% occupied at the beginning of 2024, slightly outpacing the previous occupancy record of 94.8% in 1981, according to data shared at Weitzman’s annual forecast event today.
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Since the last peak, the market has powered through a series of challenges, from the rise and fall of the mall market to a global pandemic, Weitzman Executive Managing Director Bob Young said at the event.
“Retail real estate learned the lessons taught by each downturn, emerging stronger than ever,” he said.
The market absorbed 1.8M SF, mostly through the backfilling of large-format vacancies, Young said. There is 9.6M SF of vacant retail space in DFW today, down from 11.2M SF in 2022 and 17M SF in 2020.
“If you’ve got a well-located box vacancy in today’s market, you likely won’t have it for long,” he said.
Grocery-anchored centers, which were more than 96% occupied at the close of 2023, once again drove the bulk of leasing activity.
Those centers were also the most active in terms of construction, accounting for nearly a quarter of new retail space. H-E-B groundbreakings in McKinney and Allen alone made up 22% of 2023 deliveries, Young said, noting that the trend of grocery-led deliveries is slated to continue in 2024.
“This year will be the most active new-construction market for grocers in over a decade,” he said. “At least 14 new grocers will open or be underway.”
More than 1M SF hit the market in 2023, which is double the amount delivered in 2022 but still extremely low for a tight market with healthy demand, Young said. Weitzman predicts that number will once again double in 2024, driven mostly by demand from big-box tenants.
“The tight market for space means we could see anchor demand push new construction or infill redevelopments," he said.
Weitzman predicts 2024 will slightly outpace 2023 with an end-of-year occupancy of 95.8% and positive net absorption of 2.2M SF.
“Clearly, we’re all fortunate to be in Texas, the greatest retail real estate market in the country,” Young said.
CORRECTION, JAN. 12, 9:17 A.M. CT: This story has been updated to clarify the number of grocers opening or under construction in 2024.
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