The retail markets in Texas’ major metro areas continue to show improvement, thanks in part to a statewide economy that, despite challenges, still outperforms the nation. For example:
• Texas has regained all of the jobs it lost during the recession. From May 2007 to May 2012, the state ranked as the No. 1 job creator with 410,400 jobs over the five-year period.
• Texas had eight of the nation’s 15 most rapidly growing large cities, according to an August 2012 report from the U.S. Census Bureau for the period of April 1, 2010, through July 1, 2011.
• Texans are spending. Example: a 2012 Zagat report showed that Texans lead the nation in dining out with a statewide average of 3.8 meals per weak—20 percent higher than the national average.
The major metro markets in Texas are all benefiting from this increased economic stability, as well as from fewer store closings, ongoing retailer and restaurant expansions, and construction that is limited to space built for specific retailers. Let’s take a quick look at what our Midyear 2012 Retail Report shows for Dallas-Fort Worth, Austin, Houston, and San Antonio. (The complete report can be found at our website.)
DALLAS-FORT WORTH: Occupancy gains, thanks to limited new construction
Here in North Texas, our retail market reported an occupancy rate of 87.5 percent, up slightly from year-end 2011’s rate of 87.4 percent. The occupancy rate is based on a total D-FW retail inventory of 183.6 million square feet in multitenant retail centers with 25,000 square feet or more. Based on projects opening, set to open, or announced, the D-FW retail market is on track to add approximately 1.2 million square feet of retail space in new and expanded centers during 2012. Developments include Paragon Outlets Grand Prairie, the largest retail project for 2012, which at 432,000 square feet is 100 percent leased.
AUSTIN: Still No. 1 for occupancy
Austin currently ranks as the strongest major retail market in Texas, with an overall occupancy rate of 93.5 percent. Thanks to steady leasing and a stable outlook for the market, we expect to see occupancy continue to gain traction for the foreseeable future. In 2012, the Austin-area retail market is on track to add approximately 329,000 square feet of new retail space, based on projects opening, under way, or announced for completion this year, for tenants such as Whole Foods Market, Randalls (Safeway) grocery, Alamo Drafthouse, and IKEA, which expanded its suburban Round Rock store by 54,000 square feet.
HOUSTON: New construction, primarily for box stores
Houston’s metro market reported a retail occupancy rate of approximately 89 percent, a slight increase over the occupancy rate posted at year-end 2011. Based on projects opened, under construction, or set to open, Houston is on track to add approximately 750,000 square feet of new retail space during 2012. That compares to approximately 600,000 square feet of retail space added during 2011 and approximately 832,000 square feet added in 2010. New retail construction is adding space for concepts including Walmart, Kroger, Academy, Sam’s Club and LA Fitness.
SAN ANTONIO: Retail occupancy stable, thanks to leasing and limited construction
San Antonio’s retail market posted an occupancy rate of 91 percent at mid-year 2012, a slight increase over year-end 2011’s occupancy, thanks to construction limited to anchor space, steady small-shop leasing, and the backfilling of key box vacancies in the market.
During 2011, the market saw major closings from Borders Books & Music, which closed its three stores in the market, and from the AMC 24 multiplex at Huebner Oaks. During the first half of 2012, however, all of these vacancies found new tenancy.
Based on new projects announced, opening or under construction, the market is on track to see approximately 507,000 square feet of retail space added during 2012, including a 182,000-square-foot H-E-B Plus! store, as well as new Target and Whole Foods stores. Last year, the San Antonio area added only 301,220 square feet of new space.
Herbert D. Weitzman is chairman and CEO of The Weitzman Group and Cencor Realty Services. Contact him at firstname.lastname@example.org.