Empty retail space is at a premium in the Fort Worth area as the occupancy rate in the market is 95.6%, the second strongest in the state.
That figure comes from a survey of major Texas metropolitan areas by Dallas-based Weitzman, a real estate services provider.
The larger Dallas-Fort Worth area reported an occupancy rate of 93.8%, the lowest of the state’s metropolitan areas. Austin reported 96.5%, Houston, 95.1% and San Antonio 94.5%.
For the first time since 2019, all major categories tracked by Weitzman reported occupancy above 90%, said Bob Young, executive managing director for Weitzman.
If you go …
2023 Tarrant County Commercial Real Estate Forecast
7 a.m. to 11:30 a.m. on Thursday, Jan. 19, at the Fort Worth Convention Center, 1201 Houston St.
Community retail centers, which feature shopping needs anchored typically by a grocery store, saw occupancy climb to 95.2% in the Dallas-Fort Worth market.
“This is an extremely strong result for our largest category with 485 centers totaling 74.1 million square feet,” said Young during a forecast presentation Jan. 10 at the George W. Bush Presidential Library at SMU in Dallas.
Weitzman is closely watching the potential merger of Kroger and Albertsons grocery chains, Young said. The merger would put four competing brands, Kroger, Albertsons, Tom Thumb, and Market Street under one brand. Federal approval would be required and likely force the new larger company to divest some of its stores.
That could have an impact on community centers, he said.
Young expects H-E-B and Sprouts to continue opening new grocery stores in the Dallas-Fort Worth area in 2023.
Neighborhood retail centers, usually smaller ones without a main anchor, ended 2022 with a 94.3% occupancy rate. Neighborhood vacancy is now 2.3 million square feet in the Dallas-Fort Worth area, a big drop from 3 million square feet in 2021, Young said.
Neighborhood centers have proven flexible by adding increasingly popular consumer options for curbside, takeout, and drive-through offerings, Young said.
Mixed-use centers, which include multifamily, office and hotels, reported an occupancy of 95.2% while power centers with big box retailers had an occupancy rate of 94.8%.
Malls were the category with the lowest occupancy rate for retail sectors for the area, at 90.7%.
After years of weaker malls closing that removed 15 million square feet of inventory from the sector, the remaining malls are the strongest ones, Young said.
“They’ve evolved to focus on experience and entertainment,” he said.
One reason for the higher occupancy rate is that not much new space has been constructed over the past year. Young pointed to the increase in the costs of construction because of inflation and interest rate hikes for construction loans. Those interest rates are up since the Federal Reserve began raising the interest rates it charges banks in 2022, Young said.
In 2023, he expects that trend to continue, which likely will increase the redevelopment and revitalization of older centers.
Jeff Johnson, executive vice president of development at Fort Worth-based Trademark Property Company, said retail showed strength in 2022 following a downturn during the pandemic.
“Lots of brands have been expanding, particularly in the food and beverage, athleisure space and even luxury has been expanding,” he said.
Johnson expects the area to see lots of “new-to-market” food and beverage offerings to continue in 2023.
“At our West Bend project in 2022, we opened Sweetgreen and Shake Shack just in the past couple of months,” he said. “I think that trend will continue.”
For tickets and more information: 817-480-1060 or here. Bob Francis is business editor for the Fort Worth Report. Contact him at bob.francis@fortworthreport.org. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.
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