DALLAS-Texas is a land of firsts, but this is one that the metroplex could do without. For the first time since Q1 1998, the retail market of Dallas, Denton and Collin counties has experienced negative absorption, according to a midyear report from Dallas-based Roddy Information Services.

The reason, George Roddy Sr. tells GlobeSt.com, is two-fold: Montgomery Ward and Sears Homelife closings and the highest sf of completed projects in nine years. In the first six months of the year, completions added 2,779,530 sf to the 112,416,000-sf inventory the tri-county area, which represent 67% of the retail market in the Dallas-Ft. Worth metroplex. That’s 118,780 sf more than at midyear 2000, which closed with more than six million sf coming to market, says Roddy. Some of last year’s completed retail space is still waiting to be filled, he says. Completions coupled with big-box shutdowns puts the three-county region at a negative absorption of 1,117,208 sf.

“The numbers are not necessarily indicative of what it will be this time next year,” Roddy explains. “These are fairly serious one-time declines.”

Yes, Roddy adds, there are pockets of overbuilding in the three counties, but they are few and far between. The most apparent is Frisco, which has nearly six million sf of retail just at the intersection of Texas 121 and Preston Road. The retail situation has sapped some strength at outlying malls, particularly in South Dallas. Plano is the exception to the rule, with crowds packing daily into the newly opened Shops at Willow Bend. Roddy is predicting some retailers will defect from the popular Stonebriar Centre and Galleria to Willow Bend before it’s all said and done. “But,” he says, “that’s yet to come.”

The retail doom and gloom comes when Texans are getting a back-to-school tax break that keeps stores’ cash registers ringing. Roddy says the sluggish national economy and shopping slowdown–even in Texas–could result in more shutdowns. “We probably haven’t seen the end…but the strong ones will be here next year,” he contends.

With the negative absorption came an overall 6-cent drop in rent in the 2000 and 2001 midyear analyses. This year’s average rent at midyear is riding at $14.53 per sf. And, it’s the first drop since midyear 1996 in the three counties.

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