TEXAS SNAPSHOT, AUGUST 2005

Dallas Retail Market

The Dallas area is experiencing a great amount of activity from its retail sector. Retail is expanding out into the surrounding cities, as traditional retailers find new ways to reach these growing areas of the metroplex. “Traditional mall retailers are expanding in non-mall locations,” says Stephannie Mower, director of investment services for Houston-based PM Realty Group. “Recently, JC Penney opened in Burleson and Dillard’s and Foley’s will anchor Firewheel Town Center, an open-air center in Garland that will open in October. I believe the merger of Sears and Kmart will also contribute to this trend.”

In many of the city’s submarkets, existing shopping centers are being redeveloped and destination big box retailers are moving in. “Well located grocery-anchored centers continue to be viewed for redevelopment,” Mower notes. Retail developments are underway in every corner of the Dallas area, but the growth is controlled, with developers seeking to reuse existing properties and bringing new projects to underserved submarkets.

Significant developments underway in the Dallas area include Victory Park, Hillwood’s 72-acre mixed-use residential/office/retail community between Dallas’ Uptown and Downtown districts, and the expansion of two other Hillwood properties, the retail component of Circle T Ranch and Lone Star Crossing, in the metroplex. The Nasher Company’s NorthPark Center, just north of Dallas’ central business district, is in the midst of a 2-year, $170 million expansion that will bring the enclosed mall to 2 million square feet. Nordstrom and a 15-screen movie theater will anchor the expansion.

As always, retailers follow the population. Therefore, a majority of the development is occurring in the submarkets surrounding Dallas. “Arlington has a lot of activity with the passing of the new Dallas Cowboys stadium,” Mower notes. “Allen and Frisco continue to pull in national retailers and investment interests, and Keller and other mid-city infill locations continue to expand along with new residential developments.”

Bass Pro Shops is planning to open its second Dallas-area store in Garland and Cabela’s just opened its first location in the Dallas/Fort Worth metroplex at Lone Star Crossing. IKEA will open its first store in the market this month and is rumored to be looking at a site in Arlington for its second location, Mower says.

Though the recent and anticipated retailer consolidations should cause hesitation in the development communities, the outlook is good. Retail vacancy was just under 10 percent at the end of 2004 and is not expected to change drastically in the near future. Investment sales activity is strong — local investors continue to view retail as the best sector to place their capital, and sales figures for shopping centers are hitting market highs.

In the future, Mower expects Garland, with the opening of Firewheel Town Center, and Arlington, with Lone Star Crossing, to experience a significant increase in activity. Furthermore, Hillwood’s massive Alliance Texas development, a 17,000-acre mixed-use community on the north end of the metroplex, will ensure strong sustained growth over the coming years. 

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