Investors are hungry for retail acquisitions in Dallas-Fort Worth, signaling a recovery for a commercial real estate sector that’s struggled since the pandemic.
While sales of office buildings and other commercial properties have slowed, shopping center transactions have surged, the Dallas Morning News reported.
Only 4.3 percent of retail space in the region was vacant at the end of the third quarter. About 1.2 million square feet of retail space was leased, outweighing the 915,600 square feet of new supply. This scarcity of retail space has driven up shopping center rents by an average of 8 percent year-over-year, enhancing their attractiveness among investors, the outlet said.
Despite earlier predictions of a retail apocalypse due to the rise of e-commerce, the current landscape suggests otherwise. Retail spaces are proving resilient, with upward pressure on rents and occupancy.
“There’s been a kind of a reverse of fortune,” Robert Young of Weitzman told the outlet. “Retail is currently probably the strongest commercial real estate category in terms of supply and demand.”
Investors have poured more than $1.3 billion into DFW shopping centers so far this year.
Notable transactions include CTO Realty Growth’s $61 million purchase of the 446,500-square-foot Plaza at Rockwall, and Precision Investments’ acquisition of the Shops at Eastside in Richardson. Other properties to change hands this year include the 163,000-square-foot Prestonwood Park shopping center in Plano and the Northview Plaza in northeast Dallas.
Enticing retail centers, such as the Village at Allen and Park Village in Southlake, are on the market.
Meanwhile, construction costs are so high and debt is so expensive that building speculative retail isn’t affordable.
“There is a shortage of retail for expanding retailers,” Terry Montesi, CEO of Fort Worth-based Trademark Properties, told the outlet. “We stopped building after ’08, and we haven’t built anything. And that’s 15 years of essentially no shop space, no spec space.”
—Quinn Donoghue
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