COVER STORY, MAY 2007

TEXAS RETAIL UPDATE
Compiled by Lindsey Walker

Texas Real Estate Business recently discussed the booming retail sector in Texas with a number of brokers across the state, and from all accounts, 2007 is the year for retail in Texas. Successful projects are coming on line in nearly every retail category with lifestyle centers and big boxes leading the pack. There is strong demand in all of Texas’ major markets — and many of its secondary markets — for new product, and with the population growing at an unprecedented rate, the state’s retail sector is going nowhere but up.

Interviewees included: Dan Watson, Archon Group; Eric DeJernett and Naveen Jaggi, CB Richard Ellis; Jason Mittman and J.J. Williams, Grubb & Ellis; Jerry Goldstein, Marcus & Millichap; Loch Cook; Page Partners; Stephannie Mower, PM Realty Group; Steven Lieberman, The Retail Connection; Chip Clarke and Steve Williamson, Transwestern; Darrell Hernandez, United Commercial Realty; and Herbert Weitzman, The Weitzman Group and Cencor Realty Services.

TREB: How would you characterize retail development activity in your area this year?

Mower: The most prolific retail development markets of those we work in are Dallas/Fort Worth (D/FW), Austin and Houston. The secondary markets remain active investor markets.

Williams: There is a continued strong surge of retail development throughout all of San Antonio with a strong focus on the West/Northwest.

Weitzman: Each of our markets is experiencing extremely strong retail development activity, prompted largely due to retailer demand for space in both new-growth and mature markets. In Austin, the market added 3 million square feet of new retail construction in 2006. That level may be equaled or exceeded this year. In D/FW, we reported 5.8 million square feet of new retail in 2006. We expect to see that amount or slightly less in 2007. In Houston, the market added 4 million square feet of new space in 2006. Based on the projects in the pipeline, that total will be exceeded in 2007. In San Antonio, we saw 2.2 million square feet of new space. We expect to see slightly less retail space come online during 2007. In all of our markets, the majority of the new space is created for large-format retailers like Wal-Mart SuperCenter, Target or SuperTarget, the traditional and specialty grocery stores, power retail, lifestyle retail on a more limited basis and an influx of smaller neighborhood centers in the 15,000- to 25,000-square-foot range.

DeJernett: Retail development in Central Texas is exceptionally strong. The Central Texas development momentum has been steadily increasing over the last 10 years, and the current inventory of major retail projects coming on line is unprecedented for this area.

Hernandez: Retail development activity has been on a high in D/FW and North Texas and continues to move forward with more and more developments being announced weekly.

Clarke: Development activity is robust in the Houston area with approximately 11.9 million square feet of retail space currently under construction.

Goldstein: Retail development in Houston continued its growth pattern corresponding to the economic expansion and increasing population. In 2006, we saw a nearly 1 million-square-foot increase of new retail construction over 2005 with almost 4 million square feet built.

TREB: How would you characterize retail leasing activity in your area this year?

Clarke: Overall, leasing activity has been strong. Centers anchored by Target, Kroger, HEB, The Home Depot, Lowe’s Home Improvement Warehouse and the like are leasing well and at rental rates in the $24 per square foot range and higher.

Goldstein: Leasing has more than kept up with the pace of construction. Overall occupancy is almost 89 percent, up 1.5 points year-over-year and one of the best occupancy rates we’ve seen in this market in a decade. The kind of absorption we’re seeing is due in large part to the strength of our local economy. In 2006, Houston gained over 99,000 jobs for a 4.2 percent increase. If you compare that to the state-wide average of 2.6 percent, you can get a good sense of Houston’s vitality.

Hernandez: Retail leasing activity in the D/FW area has been strong. The majority of developments that are being announced have solid anchors in place. They are not purely speculative developments; they seem to have a relatively solid leasing base prior to the development breaking ground.

Mower: Small-shop space (even with strong anchors) is taking a little longer for lease-up and investors are expecting master lease agreements to offer any credit in an acquisition.

DeJernett: With the number of new projects coming on line in the Central Texas market, there is a large amount of existing tenant movement throughout the market along with new tenants entering the market. Austin has been on the retail radar for quite some time and new inventory is opening up new possibilities in the market for those tenants. Small-shop and local retailer demand continues to be strong across all submarkets.

Weitzman: Leasing activity is as strong as ever. Texas is on just about every national and regional retailers’ radar, because our growing economy and strong housing market continues to justify expansions. We continue to see retailers, both large and small, enter and expand in our market. This has created an extremely healthy climate for our best-located centers, and even Class B and C centers are seeing strong interest.

Williams: There has been somewhat of a slowdown in San Antonio compared to past couple of years, but there is still strong activity.

TREB: How would you describe the investment sales activity in your area?

Lieberman: The underlying fundamentals of the market continue to improve across the board. When combined with our unprecedented population and job growth, Texas will continue to see tremendous interest from the investment community particularly for value add and new development opportunities. D/FW retail investment sales led the state and again topped $1 billion, consistent with 2005 — another strong benchmark considering this measure declined 17 percent nationally.

Clarke: In the Houston area, it is still a seller’s market. It is not unusual for quality shopping centers to receive multiple offers from qualified buyers at cap rates at or below 7 percent.

Weitzman: We have an extremely active retail investment market. There is more money chasing deals than there are deals. Money in the market is coming from throughout the U.S. as well as Europe and Australia. There’s just a lot of demand for good retail. The bigger the better. We’re also seeing REITS, which typically acquire the best centers, going after properties with upside.

DeJernett: Austin has been at the center of retail investment capital interest for several years, and Austin’s dynamic underlying economy will continue to draw more investment capital.

Williams: Investment properties still continue to bring low cap rates and attract plenty of buyers from both in and out of Texas. We still see a lot of interest from Mexico and California buyers although there are alarming signs of cap rates on the West Coast rising, which will have a negative reciprocal affect on our investment market should those California investors be able to secure similar ROI in their own backyard as being an absentee owner in our market.

Mower: Interest in trophy assets in primary markets remains robust. A large pool of investors are still seeking value-add opportunities with such gusto that secondary markets remain healthy.

TREB: What retail markets or submarkets have grown in the past year? Which markets are poised for growth in 2007?

Watson: With the population in the state of Texas growing at a rate of 700,000 people per year, the growth is going to be widespread.

Williams: The Far West submarket in San Antonio has seen significant growth over the last year and is poised to continue that growth into 2007 because of the influx of new home development outside of Loop 1604 from Highway 90 to Bandera Road.

Hernandez: The retail markets that have grown in the past year encompass almost every major suburban market around the D/FW Metroplex. Naturally, there are numerous planned retail projects surrounding residential growth such as Watters Creek in Allen, the Plaza at Rockwall in Rockwall and Alliance Town Center in Fort Worth. The markets poised for growth in 2007 include not only the suburban markets, but also some of the inner city markets of D/FW. The Uptown/Arts District just north of downtown Dallas is going to see a significant change over the next 12 months, this applies as well to the Museum District near downtown Fort Worth. The corridors that continue to grow include Interstate 35 — The Alliance Corridor; U.S. 75 in Allen and Fairview; and major new projects have been announced in Denton, Mansfield and Cedar Hill.

Cook: Houston continues to be a strong market for retail development. Strong job growth along with a strong housing market create continued demand for new retail in our suburban trade areas. Houston’s strong economy also is allowing for the redevelopment of several high-profile infill locations to create mixed-use urban developments.

DeJernett: We’ve seen retail growth and strong demand in almost all market sectors with the possible exception of the East Austin market. East Austin and East Williamson County are at the edge of a number of new projects pending the completion of State Highway 130.

Jaggi: Houston, with close to 100,000 new jobs, has shown tremendous growth. More than 10 million square feet of new retail is in various stages of development in the greater Houston metropolitan. The submarkets of The Galleria/Uptown, Sugar Land, The Woodlands, Katy and State Highway 249 at Cypress are very active. In Dallas, the Victory project has been a success, and markets such as Frisco, Allen, Grapevine are all very active. West Village in Uptown Dallas also has been successful.

Mower: D/FW, Houston and Austin are growing, and the reason is generally major population growth and low unemployment in these markets. Austin is getting an added shot of development as the complexion of the market seems to be changing with a few large-scale developments opening up opportunities  where high barriers to entry have been in place for many years.

Goldstein: Houston is growing at roughly 150,000 residents a year and much of that growth is occurring in the suburban markets on the north, west and south sides of town. Out west in Katy, growth has been outstanding, driven largely by Cinco Ranch. The same goes for Pearland, which is being driven by Shadow Creek and Silverlake. I expect growth in these areas to continue for the next several years as more residential communities come on line. Other planned communities like The Woodlands continue their dominance of home sales in the suburbs.

Williamson: The Northeast Tarrant County submarket has shown substantial growth in the past year, and it appears to be poised for another good year. The North Texas Council of Governments (NTCOG) projects that this area will be one of the fastest growing markets in the entire U.S.

TREB: What retail markets or submarkets are struggling? Why?

Jaggi: Houston and Dallas are generally doing very well. Even maturing markets such as Clear Lake are seeing certain repositioning of older centers as well as new retailers being placed in expansions of existing power centers. In Dallas, North Park recently added a Barney’s department store in the vacant Lord & Taylor space, showing that the subletting of existing space with strong national branding is still possible in regional malls, location dependent.

Mower: Some of the outlying areas of major metros are feeling a pinch due to big box retailers scaling back expansions. They are choosing new secondary markets over additional stores close to existing locations. Couple that with some major vacancies being left by Ultimate Electronics, Comp USA and Mervyn’s, and some of these little submarkets begin to look a little dark.

Clarke: I would hesitate to use the word struggling, alternatively I would characterize it as stagnant. The area in Houston that comes to mind is east of Highway 45 along Interstate 10 as it has seen little retail growth recently. The demographics of this area show income levels well below that of areas that are experiencing retail growth with very few, if any, new residential growth taking place.

Williams: The Northeast submarket continues to struggle as the epicenter of San Antonio trends to the West. The redevelopment of the former Wincrest Mall in this area could spur some new activity.

DeJernett: While the Central Texas market as a whole is strong, the properties that will face challenges are poorly located B- and C grade properties as new competing properties add a large amount of space to the market.

Williamson: Very few retail markets are struggling because there has been a lot of population growth in Texas, which, in turn, has driven huge increases in housing. Retail development and retailers obviously follow the housing market.

Hernandez: The retail markets that will struggle are the unanchored projects that, when conceived, were not positioned correctly. Because of the large amount of growth and development already in place, some retail developments that are currently being built cannot be positioned on the best-suited corner for their project. While these projects may get leased today; the major projects developing on the key corners around them will see the local, smaller tenants struggle with the higher new construction rates and potentially will cause “fall out”.

TREB: What types of retail properties are hottest in Texas? Why?

DeJernett: The hottest retail property types in Central Texas are quality lifestyle centers and big box-anchored tenant centers. Big box-anchored tenant centers continue to drive traffic for their stores as well as junior anchors and small shops within the anchored center.

Weitzman: It’s hard to say any one property type is the hottest, since Texas’ major markets are seeing successful projects come line in nearly every category. In 2006, we saw successful projects that were in all categories: neighborhood, community, power, open-air mall, premium outlet malls, lifestyle specialty center, mixed-use, New Urbanism —  the list goes on. It is this variety of successful projects that creates such a dynamic environment in Texas retail.

Williams: Single Tenant national credit retail investment properties still produce very low cap rate sales because of low maintenance, low risk coupon clipper mentality.

Goldstein: Class A properties are always in high demand. Grocery-anchored neighborhood and community centers generate a lot of interest.

Mower: Mixed-use and urban storefront is still the development of choice at present. However, these assets have yet to prove investment performance as few have traded thus far. Fortress malls and neighborhood centers with first-rate grocers neither have been impeded by the Wal-Mart effort. 

Clarke: Traditional shopping centers with major anchors like Kroger, HEB, Target, The Home Depot or Lowe’s Home Improvement Warehouse are hot properties, as these anchors are major traffic generators and supporting retail can be successful near them. With the residential growth in Houston, these anchor retailers are targeting sites at intersections near new residential growth.

Cook: Lifestyle and mixed-use properties are the hottest, primarily because of the quality tenants they attract and because of the welcoming environments created for the customers.

Williamson: Single tenant triple-net retail properties. There is tremendous demand from the investment market for this type of product.

TREB: What types of retail properties are struggling?

Mower: Grocery-anchored neighborhood centers located near Wal-Mart, Target or Whole Foods may have some struggling to do in the near term because ailing supermarkets cannot compete against the selection, the convenience and the price of these behemoths. Anchor closings will drastically affect markets as malls and freestanding retailer consolidations could push some of these malls toward new uses such as church or call center tenanting.

Goldstein: The properties that are struggling are unanchored strip centers in areas where entitlements are relatively easy and availability of land is plentiful. These properties are primarily suburban, and there are pockets where a number of these are languishing without many tenants.

Clarke: Although this sounds obvious, there are quite a few of these poorly located, unanchored strip centers, typically in the 10,000- to 20,000-square-foot range, popping up in our suburban areas. Fortunately, they make up a very small percentage of our overall retail market and should not affect overall occupancy or rental rates.

Weitzman: The properties we’re seeing struggle are those that were built in the saving-and-loan-fueled boom of the 1980s, when availability of funds rather than retailer demand justified new retail construction. The best-located of these properties have found tenants, but the ones that were built in secondary or tertiary locations or without correct layouts continue to struggle. These projects were built spec in the ‘80s, without key tenants in place. Some of these properties will never make it is as retail, but instead are best suited to other commercial uses.

Jaggi: Matured regional malls are showing flat per square foot dollars. Grocery-anchored power centers are showing vacancies, with Randall’s struggling and Albertson’s leaving certain markets.

TREB: What retailers are most sought after? Why?

Cook: The retailers that are most sought after depends on the type of project being built. Lifestyle/mixed-use developers continue to seek interesting apparel retailers. There seems to always be plenty of quality restaurants to choose from.

DeJernett: There are several different retailer categories — depending on the sector. Lifestyle developers are looking for tenants like Apple, Barney’s Co-Op, Whole Foods and Anthropologie, while power center retail developers look for big box tenants like Target and HEB, as these are strong tenants that draw tenants to the development.

Clarke: Big box retailers are highly sought after as they are the traffic generators desired to help make a retail development successful and, in many cases, viable. For inline space, ideally we look for either national or regional retailers as they are typically more creditworthy than local retailers and the name/brand recognition they have add to the marketability of the center.

Williams: Financial institutions and drug stores hold a captive interest in the investment community based on strength of financials and low risk mentality from the investment market.

Hernandez: The anchor tenants most sought after include Target, Kohl’s, JCPenney, Wal-Mart and some specialty grocers such as Whole Foods, Central Market and United Marketplace. These tenants traditionally increase the number of visits to the center weekly, which in turn creates more activity for other junior anchors and pad users to help supplement the overall project. If a development has key anchors, the retail development will be more  solid.

Williamson: The retailers who are the most sought after are the ones that have an excellent credit rating and that have an excellent concept. Retailers with great credit help developers and investors finance their deals. Retailers with great concepts drive both traffic and co-tenancy, which is beneficial to the specific retail center. Both of these items are vital to a retail centers’ financial success.

Weitzman: What retailers a developer seeks for a project depends largely on the type of project and the location and market where it is being built. Today’s open-air mall developers seek commitments from our active anchors like Macy’s, Dillard’s, JCPenney and Belk. For community centers anchored by a grocery store, developers are working with everyone from Wal-Mart SuperCenter, the mass grocer, to Kroger Signature, our most active traditional grocery, and Central Market and Whole Foods, our most active specialty grocers. For a power retail project, we’re seeing developers work with one or more of the active big box retailers such as The Home Depot, Ross Dress for Less, Barnes & Noble, Linens ‘n Things, T.J. Maxx, Office Depot and so on. So it’s hard to give a hard and fast list of sought-after retailers, because there are many such retailers in many different categories. One category in demand for almost all retail property types, though, is restaurants. Restaurants drive traffic several times a day and make excellent co-tenants. Restaurants in Texas brought in $30 billion in sales in 2006, a number expected to increase by 4 percent this year. In D/FW alone, diners eat out an average of four times a week, making D/FW the number two restaurant market in the country.

TREB: What do you think needs to happen in order for the market to improve in 2007 and 2008?

Mittman: There needs to be stabilization of construction material costs, as well as interest rates being held at current levels.

Hernandez: I think continued steady residential and new job growth will help the market improve. Many of the developments that are planned are created ahead of the residential curve and for them to continue to obtain the right retailers and be a success, the residential growth needs to stay on course.

Jaggi: Low interest rates and increased job growth with steady fuel prices will keep the Houston and Dallas markets attractive for retail developers and retailers.

Lieberman: So long as we see retail infrastructure, such as job growth, housing formation and road systems, continue to develop out we will see our markets continue to improve. Clearly, Texas’ powerful economy is running on all cylinders and will continue to lay the infrastructure for the state’s sustained growth. 

Weitzman: We’ve been fortunate in D/FW that we have seen a steady improvement in our market every year this decade. We have one of the most active construction markets in the country, yet our occupancy rate remains right at 90 percent. This steady, healthy occupancy is due to the fact that construction for the most part is demand-driven, meaning that new projects add to occupancy, not vacancy. For the market to continue to improve, developers must stress pre-leasing prior to construction.

Goldstein: The fact that Houston’s economy is strong and jobs will be created here, things look positive for 2007. Population growth has propelled the Houston metropolitan area to become the sixth largest ahead of Miami in the latest Census Bureau report. The 2008 Houston economy will be more a question of the national economy than anything, but the energy business and the Port of Houston will remain in the uptrend they are in.

Clarke: We are in a good retail market now. In general, keep doing what we are doing and stay the course. Most of our current retail developments are driven by major anchor retailers and the small percentage of speculative space being built around the anchors is being absorbed quite fast.

Mower: The capital market needs to demonstrate more discipline in their investment strategies. Job growth needs to continue and mortgage lending practices need to provide more stringent guidelines.

Williamson: Continued job growth, continued low interest rates and no catastrophic event(s) on U.S. soil.

TREB: What retail trends will emerge this year and next?

Mower: Development will focus more on development of urban infill opportunities instead of new construction. Mall owners will alter traditional anchor concepts and embrace lifestyle center boxes. New store concepts will emerge from traditional retailers to capture consumers seeking the unique.

Lieberman: Retailers are continuing to actively penetrate and expand their operations throughout Texas’ major markets. There is a renewed focus on balancing the consumer’s overall shopping experience and value proposition. Lifestyle retailers are providing quality and entertainment values comparable to department stores, but at prices that bridge the gap between discounters and the department store operators. 

Weitzman: For 2007 and 2008, we’ll continue to see an influx of specialty lifestyle centers and mixed-use projects. These can do very well if they are in the right location with the right demographics. But they have a lot of moving parts and are complicated to make work, so their number will be limited. We’ll also see our markets continue to embrace open-air malls. In the past 2 years, open-air malls have opened in D/FW and San Antonio, and more new open-air malls are under way in D/FW, Austin and Houston.

Cook: Because of consumer’s positive response to the environments offered in lifestyle and mixed-use projects, we may see more developments trying to incorporate some of those elements (such as inviting public spaces and water features) even if the tenant mix is not entirely traditional lifestyle-oriented.

Goldstein: A lot of the developments that have been talked about in past years are going to come to fruition. The mixed-use concept is really taking hold; there are nine such projects moving forward in Houston as we speak, including the Houston Pavilions downtown, BLVD Place in Uptown, and CityCentre at Interstate 10 and Beltway 8. We’ve also seen massive development of branch banks, drug stores and Starbucks Coffee around Houston. I’ve seen estimates of 25 new banks opening this year with 10 drug stores and as many as 50 new Starbucks.

Williamson: Continued development of new retail projects because of sustained job growth and because investment capital will desire the higher investment returns afforded by new development.

DeJernett: We will continue to see large retail development along the newly developed State Highway 130 and beyond Austin into the submarkets like Buda, Kyle, Bastrop Round Rock and Georgetown. The overall market is also seeing a strong preference for mixed-use environments.

Clarke: A number of national retailers, not currently present in the our market, will take notice of Houston’s strong economy, compared to the rest of the nation, and will announce their plans to enter the Houston market, and will do so.

Williams: Rental rates should begin to flatten out as tenants will start to see a ceiling to what is affordable to do business. Should also see an increase in overall cap rates, especially multi-tenant or higher risk opportunities, based upon effects on investor home markets.

TREB: How would you describe the lending environment for retail properties in Texas?

Weitzman: Good deals do not have any trouble finding money — there is more money in the market than deals. If you believe what you read, that is starting to change. However, we are not yet really seeing any evidence of change yet in our markets. There continues to be a flood of capital wanting a place to invest.

Clarke: Lenders are aggressive and view well-planned retail developments very favorably.

Williamson: The lending environment is incredible; low interest rates and an abundance of capital.

Cook: Lending environment for retail appears to be strong for well-placed and well-planned projects.

DeJernett: The lending arena remains strong even thought lenders are underwriting a bit more cautiously due to concerns in other parts of the country from overbuilding and the softening of markets.

Goldstein: The underwriting for loans in Houston has tightened up a bit, but we’re still seeing reasonable rates based on aggressive amortization schedules in the CMBS market.

TREB: How will interest rates affect real estate in Texas?

Mower: The remaining pool of capital earmarked for real estate investment coming from pension funds and the like is keeping the market flush with funds that don’t react much to interest rates. The main concern pertaining to interest rates is what that does to consumers. We expect expansion in the single-family residential market to slow and, in turn, retail development will turn back toward the core of major markets. While this could damage retail spending in the short term, it will protect the investment market from dangerous oversupply.

Watson: A rise in interest rates would reduce the amount of new development.

Williams: I anticipate that the slight increase in interest rates will have a minimal effect on commercial real estate in Texas as the relatively low interest rates are still attractive to buyers.

Lieberman: The tremendous amount of investment capital looking to be placed in real estate combined with our powerful economy and housing market should lead to Texas real estate values continuing to  increase. Interest rates are expected to rise however we are expecting such to be modest and very manageable. With the economy continuing to grow and the sustained health of our labor markets, we do not anticipate any material change in our markets.  In fact, with supply constrained, the demand will lead to premium valuations for the best properties.

 Jaggi: As long as the rate increase is not quick and unexpected, the impact will be minimal.

Goldstein: Cap rates generally correlate with interest rates, and I expect that if interest rates tick upward, cap rates will eventually follow.  

Williamson: We believe that rates will remain steady in 2007; in fact, there could even be a decrease in rates.

Weitzman: For the past year, we’ve seen rates at 50 basis points on one side or the other of 460. There’s not a lot of pressure on rates to go up. So barring unforeseen events, we expect the next 12 months to look like the last 12 months. I would not, though, be surprised to see significant changes in 2008.

Clarke: As long as interest rates do not tick up drastically, which does not seem likely, I see little to no effect on our real estate.

Cook: Increased interest rates and rising construction costs will cause developers to re-think certain projects.

TREB: What are your predictions for Texas retail in 2007 and 2008?

Williamson: A great market outlook is almost a given for Texas in 2007 and all or part of 2008.

Hernandez: I see many of the major announced projects actually being built; I also see a strong amount of projects that are planned or are under construction also becoming reality and I think there will be a number of other areas that will take us into the years beyond 2008 that are being announced now. In summary, my prediction is that 2007 will be as strong as or stronger than 2006 and 2008 is looking just a bright.

DeJernett: New large developments will continue to attract the highest producing tenants while second generation centers will need to carefully manage their properties to remain competitive. State Highway 130 will see retail growth along major arteries as large areas of Central Texas are opened up to new residential development.

Cook: In certain markets in Texas, we may see a slowing of new retail development while the market absorbs what was built in the last year or two.

Clarke: Retail will remain strong. Occupancy will remain in the 86 percent range even though we have over 11 million square feet of retail under construction and rental rates will either be flat or increase slightly. Assuming interest rates don’t explode over the next year, which does not seem very likely, and we do not have another 9/11 — 2008 should be a strong year for retail as I expect our area’s residential growth to remain vibrant through 2008.

Mittman: There will be stable growth and continued strength in the Austin, San Antonio, and Rio Grande Valley and the rise of the Fort Hood and College Station/Bryan areas.

Goldstein: I think 2007 will be another good year for Texas retail. This is especially true in the Houston market where population and job growth remains healthy.

Weitzman: We’ll continue to have an active construction market. Several massive new projects of up to 1 million square feet will be opening, and these are well-located, well-tenanted and should find success. We’re seeing projects like this in all of our markets — Austin, D/FW, Houston and San Antonio. We’ll also see the retail markets in these metro areas improve. All of these markets report occupancies in the 90 percent range, and based on current retail leasing demand, I think those will improve.

TREB: Are there any additional comments you’d like to make regarding the real estate market in Texas?

Williams: I feel the most significant indicator for fluctuations in our market will be the effect of rising cap rates for investment sales on the West Coast and other Tier I markets.

Williamson: We are predicting that the upcoming year will be another great year for retail in Texas.

Weitzman: We believe Texas has the best real estate market in the United States.

FOREST CITY BRINGS MAIN STREET TO FRISCO Cleveland-based Forest City Enterprises is developing Frisco North, a new Main Street-style mixed-use project located at the intersection of the North Dallas Tollway and Virginia Parkway interchange in Frisco, Texas. Frisco North, a new mixed-use project being developed by a public/private partnership between the city of Frisco and Cleveland-based Forest City Enterprises, will be more to Frisco, Texas, than simply another lifestyle center — it will create a Main Street environment that will provide a unique sense of place for the residents of this northern Dallas/Fort Worth suburb. “This vision is in keeping not only with the national trend to develop Main Street environments but also with our own mission to provide total community experiences, not simply shopping venues,” says Brian Jones, president and chief executive office of Forest City Commercial Development, West Coast. “Our company’s corporate culture is about developing projects that provide the greatest economic and social value to the communities they serve.” Combining a range of retail and residential uses, as well as other mixed-use components, the pedestrian-friendly development will target a variety of shoppers, from families to affluent Baby Boomers to multi-generational family groups, according to Jones. “The current trade area is growing rapidly, both in population and income,” he says. “It is educated and ready to ‘trade up’ in its spending habits for select, luxurious items.” The more than 180-acre project, which is located at the intersection of the North Dallas Tollway and Virginia Parkway interchange, is being planned by Dallas-based RTKL Associates. With its exceptional accessibility, appealing ambience and outstanding retail and entertainment, Frisco North is sure to be a draw for both residents and visitors to the Dallas/Fort Worth Metroplex alike. “It will be a town center environment where visitors will linger, dine, shop and enjoy entertainment,” Jones says. “Its architecture will mix the successful forms of historic main streets with the materials and attitudes of today to reflect a new center of excitement and community in Frisco.” Frisco North is one of four projects Forest City currently is undertaking in the Dallas/Fort Worth market, including The Shops at Broad Street in Mansfield, Texas. — Lindsey Walker

BRYAN TOWN CENTER TO BREAK GROUND IN JUNE Bryan Town Center, a new hybrid power/lifestyle center by Lauth Property Group in the Bryan/College Station market, is scheduled to break ground in June. Next month Lauth Property Group will break ground on a new hybrid power/lifestyle development in the Bryan/College Station market of Texas. Located at the intersection of Highway 6 and Briarcrest Drive, and in close proximity to Texas A&M University, Bryan Towne Center will offer shoppers a convenient location coupled with a strong tenant lineup. “The property is strategically located in the heart of the area’s growth track,” says Bob Oliva, vice president, retail for Lauth. “This center will be the newest and most unique format in one of America’s largest and best known university towns, and as such will be a vibrant and special opportunity for retailers to serve a diverse customer base.” Featuring one anchor location, five junior anchor spaces and eight out parcels, Bryan Towne Center will span approximately 400,000 square feet, with 100,000 square feet of small shop space in a village-style format. The development, which is being designed by Carter-Burgess, will feature a proposed Target as the anchor retailer. Plans also include the use of regional materials and colors giving Bryan Towne Center a contemporary Texas feel. “The response of the community has been very strong to Bryan Towne Center,” says Oliva. “The area is embracing the development, teaming with Lauth to make infrastructure improvements in the area, and is excited about this new retail center in their city. Bryan Towne Center will be a destination for all shoppers. The development’s major anchor and neighboring tenants will draw people doing their regular shopping and people seeking a different shopping experience.” — Stephen O’Kane

CONSTRUCTION BEGINS ON 1 MILLION-SQUARE-FOOT LIFESTYLE CENTER Construction has begun on The Village at Fairview, a 1 million-square-foot mixed-use development of The MGHerring Group in Fairview, Texas. Dallas-based The MGHerring Group has broken ground on The Village at Fairview, a regional lifestyle center located at the northeast corner of Stacy Road and U.S. 75 in Fairview. The Village at Fairview, which will be anchored by Dillard’s, Macy’s and JCPenney, will span approximately 1 million square feet, including 500,000 square feet of specialty shops and restaurants, a 200,000-square-foot Class A office component, more than 1,000 residential units, a 280-room hotel and an 80,000-square-foot conference center. The project is being developed in conjunction with The Village at Allen and, upon completion in fall 2008, the developments will offer a total of 2 million square feet of retail and 1 million square feet of office, residential and hotel space. Both projects are being designed by JPRA Architects and developed by a joint venture between The MGHerring Group and Prudential. — Stephen O’Kane

CULLINAN PROPERTIES’ BURLESON COMMONS UNDER DEVELOPMENT Cullinan Properties has begun developing Burleson Common, a 33-acre retail destination in Burleson, Texas. Burleson Commons, a new retail project of Cullinan Properties, is currently under development in Burleson. The development site is located on a 33-acre tract of land at the intersection of State Highways 174 and 731. Anchored by a 12-screen Screenworks stadium-style theater, Burleson Commons is being planned as a convenient shopping destination housing retail, entertainment and dining space. “Burleson Commons is an extremely convenient location for the theater, a fitness center and a wide variety of quick casual restaurants,” says Chuck Boysen, director of marketing and lease management for Cullinan Properties. “The location offers retailers a high visibility intersection and affluent customers within easy driving distance.” Cullinan Properties focuses on retail development on the periphery of major markets. By recognizing the need for retail in these locations, the company is able to fill the need for convenient retail in a prime location.  — Stephen O’Kane