DFW Retail Sailing Along Despite Slight Slide

"The pioneer premium is not lucrative enough when you balance it with the leverage of expanding in existing markets," Steven A. Lieberman tells GlobeSt.com. Today's trend, in essence, is bringing a somewhat smaller design in locations closer together to accommodate consumers who simply are shopping closer to home.

Those who are expanding are the retailers who've found "the sweet spot of where the consumer is spending," Lieberman says. "Quality at a value is what is selling." In today's economy, most consumers are giving their hard-earned dollars to Wal-Mart, Super Target and Bed, Bath & Beyond instead of the Saks of the retail world.

Not only are consumers shifting their "cents," but they're also shifting their shopping habits as more steer clear of malls and head to strip and power centers, where it's easier to get in the door and out the parking lot and prices for comparable products are just a shade less.

Lieberman says the DFW metroplex is just about "malled" out. The only one on the drawing boards is Ross Perot Jr.'s dream for an AllianceTexas mall. Simon Property Group's Firewheel Town Center will be breaking ground soon, but it's rising as a power center and not a mall.

Weitzman's just-released midyear report shows occupancy dipped from 91% at the 2001 end to 89% at midyear. Still, there's no cause for alarm. "Our consumer has always had a propensity to spend," says Lieberman as he predicts that occupancy will track north before the year ends.

The slight occupancy backslide is being blamed on Kmart and Winn-Dixie, where common sense says better locations will find new partners and the others will most likely be converted to alternative uses. A high number of the "better" locations already have been claimed by other retailers.

The report's bright news is that supply and demand are balanced. "We are not building ahead of ourselves," Lieberman stresses. What is being built is coming online with tenants in hand.

Weitzman's researchers say this year's construction will add three million sf. In comparison, 6.2 million sf delivered last year and 8.8 million sf in 2000. Of course, a sizable chunk of that belonged to new malls.

There is a downside to the stability: rent, by and large, is flat. New in-line space is bringing $16 per sf to $22 per sf. Regional malls are charging $27 per sf to $32 per sf, with small-tenant space in the top malls going for even higher rates, says the Weitzman team. Older neighborhood centers are getting $3 per sf to $5 per sf.