By Spencer Brewer – Staff Writer, Dallas Business Journal November 10, 2021
Retail leasing velocity is increasing in Fort Worth as more tenants, desperate to get deals done, become willing to ground lease than in years prior.
“I feel like there was a shift away from it for a while where the majority of the tenants only wanted to purchase their real estate and now you have a much wider pool again,” said Gretchen Miller, senior vice president at Weitzman.
According to CBRE’s Dallas/Fort Worth Retail Marketview Q3 report, the North Texas retail market continued to rebound in the third quarter, and year-to-date total net absorption has topped 669,000 square feet in Fort Worth. The third quarter saw a total net absorption of about 583,000 square feet in Fort Worth.
One of the only things that could stall this momentum is if the retail industry cannot fix the ongoing staffing shortage, Miller said.
“There are definitely people willing to grow, and I think everyone who is growing right now is hoping that they’re going to be able to continue to staff these stores,” she said.
As leasing velocity has picked up, vacancy has drifted down, but Miller said this isn’t necessarily what it appears to be on the surface. Some tenants still aren’t paying full rent following the pandemic-induced turmoil of last year.
According to Weitzman’s Texas Snapshot: Mid-Year 2021 Retail Report, the North Texas market is also benefiting from the backfilling of available anchor stores, absorbing several of the vacancies created in 2020, and an extremely conservative development climate that is driving demand to existing retail properties.
Miller spoke with the Dallas Business Journal about ongoing trends affecting retail leasing and what it means for the market in Fort Worth:
From your perspective, what areas of town seem to have the most retail leasing velocity?
University Park Village has been able to push rents significantly with some of their renewals. … Even though Hulen Mall itself, people kind of shy away from malls, the surrounding retail is still doing really well. And people are continuing to look for stuff in that area. Then you have the new developments, such as Chisholm Trail Ranch and everything going on in the Alliance corridor, just continuing to add to that retail.
What’s happening with land pricing, and how is it affecting the retail market?
Infill land prices across the board have gone through the roof, which is amazing because construction prices are so high. The fact that people can continue to build and make the numbers work still amazes me.
What are your thoughts on the construction pipeline? Do you think supply is going to be able to keep up with this wave of demand?
We talked about the fact that land prices are so high. So you see new construction, but not nearly as much that’s in town because the numbers don’t make sense.
We are going to continue to see rent inflation. There’s only so much space.
You mentioned the ongoing staffing shortage in retail might affect leasing velocity. Can you expand on that?
Restaurant owners still aren’t operating at full capacity. They might have tables for their customers, but if they don’t have kitchen staff or waitstaff to give them the proper experience, they aren’t necessarily going to seat all of those tables. So that’s hypothetically impacting their sales and their willingness to take on additional locations and restaurants.
The same applies to service users. I had a conversation with one of our tenants, a hair salon, about their upcoming renewal. Right now, she’s willing to renew: she has the customers, but she doesn’t have the staff, and they need licensed cosmetologists. So she isn’t making any money right now.
I had another shopping center that I leased, a grocery-anchored shopping center. The concept that we were in lease negotiation put everything on hold because they opened their first of three units, and they told us they couldn’t keep enough staff. They were trying to overstaff the store, knowing that they had two more in the pipeline.
They had to kill the deal because they were concerned that even if they did sign a lease and open it in a couple of months, they wouldn’t have the ability to staff it properly.
