Retail construction lags in Dallas-Fort Worth. But here’s why experts aren’t worried.
Retail construction levels in the Dallas-Fort Worth metroplex are still below pre-pandemic levels, but that’s not necessarily a bad sign.
Overall, Texas’ retail market remains healthy this fall, real estate experts say. Retail construction, which dropped during the pandemic, have recovered in all major Texas metros except Dallas-Fort Worth. As of this fall, retail construction in DFW is now 1.6 million square feet below the metroplex’s pre-pandemic average, according to commercial real estate company Transwestern.
Transwestern said falling DFW construction could be attributed to otherwise healthy levels of retail growth over the past decade. It has to do with available geography across the metroplex, said Andrew Matheny, research manager at Transwestern.
Retail has already been built in many areas across DFW, so there may not be space for a big-box shopping center with stores like Best Buy, Marshall’s, Bed Bath & Beyond and more. Instead there may only be room for strip centers, or smaller shopping centers with stores at the intersections of local roads, Matheny said.
Despite falling construction, retail vacancy across DFW remains low. Fort Worth vacancy was just over 5% this fall, as demand for retail continues to exceed the supply of available space.
Fort Worth has less than 6.3 million square feet of vacant shopping space out of more than 122 million square feet of inventory. Available retail space consists of “power” or big-box shopping centers, neighborhood centers with an anchor grocery store and smaller centers along local roads.
“There’s been some growing uncertainty around our economic trajectory with the Federal Reserve raising interest rates,” Matheny said. “There has continued to be job growth in DFW and continued migration so there is demand for more retail services. There’s not as much space to move to as there normally is, so we’re really seeing vacancy rates drop throughout the market as a result.”
