The pace of retail construction across North Texas has slowed, allowing retailers to lease most vacant store space in the area.
Dallas-based real estate firm Weitzman stated that a growing number of spaces that closed down during the pandemic are starting to open back up. Due to soaring construction costs and developer hesitancy, about 6% of Dallas-Fort Worth shopping space was available midyear.
This is one of the lowest retail-vacancy rates the area has seen in decades, said Marshall Mills, Weitzman president and CEO, speaking with The Dallas Morning News.
“One of the major components to the low vacancy is the small construction total and the addition of less square footage,” Mills said. “With construction costs as high as they are, to get the rental rates required to make a profit, a lot of tenants can’t afford to pay that.”
Only about 760,000 square feet of new and expanded retail projects are set to open in the DFW area this year — a near-record low quantity of shopping center construction in North Texas not seen in decades.
“H-E-B is taking a third of the new square footage coming online for 2022,” Mills said. “In 2023 and 2024, I think we will see the grocers starting to catch up with the housing demand that’s built over the last 24 months.”
According to Mills, restaurants and shopping centers are returning to pre-pandemic operating levels. This leaves regional malls and outdated shopping centers as the remaining vacant property space for retail in the DFW area.
This past December, the DFW region led the nation in industrial construction – representing 12% of all industrial construction in the United States. Furthermore, North Texas construction activity in the first three months of 2022 totaled more than $9.2 billion — up 19% from the first quarter of 2021.
“Dallas-Fort Worth’s central location makes it ideal for companies that want to serve customers across the nation, said Becky Thompson, a principal at Lee & Associates, speaking with Dallas Business Journal. “Anyone who is growing is looking here,” she said.