Despite ups and downs, and more than 150 retail bankruptcies as part of a trend recently dubbed the “retail apocalypse,” experts say the retail real estate market is breaking occupancy records in the Dallas and Fort Worth area.
While construction of retail space is lower due to high costs to build, experts at the recent annual Weitzman retail forecast say the area is seeing the most grocery store construction activity in more than a decade.
Bob Young, the executive managing director of the retail real estate company Weitzman, saw something he’s never seen in 2023: The Dallas-Fort Worth retail market surpassed the highest occupancy rate ever recorded. Starting out the year, the area is seeing a 95.2% occupancy rate — the highest since 42 years ago in 1981, which reached 94.8%.
Retail has been through a lot since that high point in the early 1980s, Young said: multiple recessions, the COVID-19 pandemic, the 2008 real estate crash, the rise and fall of the mall market. At a low point, nearly 20% of retail space in the DFW area was empty in 1990.
Now, retail is at a high point — and Young predicts occupancy will remain high, increasing to 95.8%. Weitzman conducts an annual in-person survey at 1,400 shopping centers of 25,000 square feet or more.
“Retail real estate learned the lessons taught by each downturn, emerging stronger than ever,” Young said. “Brick-and-mortar retail is proving to be more essential than ever
thanks to the industry’s ability to transform with ‘tech and mortar.’”
What type of retail spaces have the lowest vacancy in Fort Worth?
Community – 3%
Neighborhood – 4.5%
Mixed-use – 2.93%
Power centers (outdoor centers with more than three big box stores) – 3.01%
Malls – 10.35%
Last year was littered with big box closures such as Bed Bath & Beyond and Tuesday Morning. Despite the closures, demand for retail space continues to be strong with high occupancy. While Young noted general retail construction is still low due to high costs to build and the trend of phased construction, grocery stores are seeing record construction.
“This year will be the most active new-construction market for grocers in over a decade,” he said.
At least 14 new grocers will open or be constructed this year across the area, Young said, the most activity since 2014. H-E-B, for example, is building a location in the Alliance area in far north Fort Worth and one in Mansfield. Both are expected to open in the spring.
Community centers, retail spaces anchored by a grocery store, climbed to 96.2% occupancy, and benefit from the daily traffic of grocery stores with the mix of shops and quick serve and casual restaurants, Young said. That type of retail center is a major reason why Weitzman is seeing record occupancy levels.
He also sees larger vacant spaces being leased by Sprouts, Barnes & Noble, Nordstrom Rack, Ross and Joe V’s. Fitness chains such as Planet Fitness also were active, he said.
Retail follows rooftops, Young said.
“There’s not a better marker of what’s happening for Tarrant County along with Dallas County than two H-E-Bs that are announced,” he said.
Weitzman executive chairman Herb Weitzman, who founded his namesake company, said more than 100 national retailers’ stores went bankrupt during 2020, leaving hundreds of empty spaces that were quickly snatched up. He pointed to Tuesday Morning and Bed Bath & Beyond as examples.
“It looks like we’ve gone through the cycle where those companies really didn’t adjust fast to online sales,” he said.
Anton Pil, global head of alternatives at J.P. Morgan Asset Management, agreed with Weitzman.
“I will tell you the secret thing that nobody knows, retail is doing tremendously well across the entire country,” Pil said. “Doubly as well in Texas.”
Seth Bodine is a business and economic development reporter for the Fort Worth Report. Contact him at seth.bodine@fortworthreport.org and follow on X, formerly known as Twitter, @sbodine120.
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