DALLAS-During 2012, space in the retail sector began to tighten up, thanks to increased demand and a lack of new space coming online. Experts tell GlobeSt.com that 2013 won't be a whole lot different, though depending on the economy, the Dallas-Fort Worth area could see more tenant demand, but a definite lack of space to meet that demand.

Terry Montesi, chairman and CEO with Fort Worth-based Trademark Property Co. points out that retailers between 2007 and 2009 streamlined activities and battened down the hatches during the Great Recession and its financial aftermath. What's happening now, however, is that those retailers have better cash flow, lower debt – and they're interested in expanding.

The problem, however, especially in the Dallas-Fort Worth area, is that space is hard to find for that expansion. "On the leasing side, finding quality sites, namely those in infill, high-density markets has been challenging, especially for those looking for 20,000 square feet and up," comments Jeff Brand with Dallas-based Brand Capital Partners. He notes that there are some new developments on the board, such as one at Walnut Hill Lane and North Central Expressway (US 75). However, "that's not coming online until 2014," Brand observes. "If you have a client who needs to open immediately, you need to jump on opportunities that are immediately available."

Stephen Lipscomb, principal with Velocis in Dallas points out that much of the development activity is actually coming from grocers that are interested in infill locations. Whole Foods, HEB and Kroger, for example, are making waves and Trader Joe's seems to be on the expansion express as well – Trader Joe's, in fact, is the anchor tenant at the above-mentioned development at Walnut Hill Lane. But on the other side of the coin, the big box business continues slow. And Lipscomb echoes Brand's observation: "Other than some isolated grocery anchored deals," he notes, "There isn't a whole lot of new construction in retail yet. And I don't see that changing in 2013."

The lack of appreciable space has led to some creative tenant solutions. Brand tells the story of working on behalf of Specs and its push into the DFW area. "Specs wanted to open a store on Hulen Street (in Fort Worth) and there were no obvious opportunities," he says. "We approached the gentleman who owns Marvin Electronics and discussed the possibility of having him give up a portion of his space." Once the dust had settled, Specs was able to take the entire 19,000-square-foot building.

This speaks to another potential trend – that of taking space from right-sizing tenants. Electronics stores and office supply stores are starting to give back space because of competition from ecommerce. Brand says this provides a good opportunity for tenants that need to open shop.

The experts point out that the DFW retail scene in 2013 will be highly dependent on what happens with the economy and in Washington DC. Montesi, for one, believes that 2013 won't be a whole lot different from 2012, except that acquisitions and dispositions might be somewhat more active, thanks to the fact that buyers and sellers are figuring out how to price the product.

As for development, Montesi points out that developers such as Trademark are being cautious, with the majority of developments actually consisting of redevelopments – another trend that will continue next year. Lipscomb is also sounding a cautious note, pointing out that unless more residential subdivisions come online, the retail construction will continue sluggish. "Financing is so difficult, unless you have an anchor tenant," he comments.

However, in addition to the Walnut Hill development, Sundance Square in Fort Worth is seeing some good development.  Turtle Creek Village in the uptown submarket is under redevelopment, as is the area of Gaston Avenue and Garland Road on the east side  – all of this is slated to come online in late 2013-2014, which should provide more opportunities for tenants. Additionally, "A lot of grocers, such as HEB, Kroger and Trader Joe's have purchased land, and will begin to develop those properties," Brand says. "Those will start to come online in 2013 and 2014, and that'll create opportunities for small-shop leasing and pad sites for restaurants and other retailers, especially in the suburbs."