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AREA REVIEW: A retail rodeo

Thanks in part to strong population and employment growth, major retail markets in Texas are full of activity. New chains are arriving, a plethora of grocery store chains are competing for their share of an expanding market, and shopping center vacancy rates are low. “We've got new retailers moving in, and existing ones are expanding — things are generally doing very well across the state,” says Andrew Alexander, president/CEO of Houston-based Weingarten Realty Investors.

“Texas retail is still outstanding,” according to Richard Carduner, national director of retail services for Grubb & Ellis, San Antonio. “The big boxes, including Costco, The Home Depot, and Lowe's continue to look for sites throughout the state,” he reports, “while the grocery stores are expanding in all markets.”

Major markets in Texas are magnets for discount retailers these days, according to Brian Murphy, vice president for Staubach Retail Services, Dallas. In the megastore arena, Target is going to its new SuperTarget concept in Dallas/Fort Worth, Houston and Austin, he reports, while Wal-Mart is unleashing its Neighborhood Market concept in Dallas. Meanwhile, Lamps Plus and Rooms To Go are ramping up operations in the Dallas-Fort Worth market.

Dallas-Fort Worth is typically the first stop for retailers making their way into Texas, notes Carduner. “Staples, Costco, and Kohl's, for example, all initially entered the Texas market with locations in Dallas,” he says.

Dallas-Fort Worth (DFW) active

And that market has been growing at a brisk pace lately. According to Census Bureau figures, the Dallas-Fort Worth CMSA reached a population of 5.2 million in 2000 after growing at a nearly 3% average annual rate during the 1990s. Job-growth wise, total non-agricultural employment here grew by a brisk 4.8% pace during 2000, producing approximately 92,000 new jobs.

Meanwhile, residential developers are slated to complete some 33,000 new home starts, according to Mickey Ashmore, president and CEO, United Commercial Realty (UCR), Dallas. Put it all together and you've got one healthy marketplace, he notes. “Even though we are seeing some of the same kind of layoffs everyone else around the country is, our economy is still very strong.” In the retail market, “activity is good, as is leasing, although like everywhere else, the market is not as frantic as it has been in the past.”

Coming on the heels of a strong 2000, “the DFW market has seen steady leasing from existing retailers and retailers new to the market, active new construction for community, neighborhood and mall projects, steady rental rates and healthy occupancy rates in 2001” says Herb Weitzman, chairman and CEO of The Weitzman Group, Dallas.

This 133 million-sq.-ft. retail market is about 90% occupied, reports Weitzman, with new construction totaling around 4 million sq. ft. and rents averaging $12.40 per sq. ft. and ranging into the mid-to-high-$20s. A number of new retailers have entered the DFW market or announced their intent to do so in 2001, he says, including H-E-B's upscale grocery concept Central Market, Louis Shanks Furniture, Last Call From Neiman Marcus, Ultimate Electronics and Galyans Trading Co.

Along with Houston, “Dallas-Fort Worth is probably one of the most competitive grocery store markets on earth,” notes Scott MacDonald, president and CEO of Houston-based CenterAmerica Property Trust. Kroger, Albertson's and Tom Thumb are major players here, he says, with H-E-B, YesLess Food & More, Wal-Mart Neighborhood Market, and SuperTarget now entering the fray.

Hot Houston

In Houston, some 62,000 new jobs between May 2000 and May 2001 helped bolster a strong economy and new housing market. “Kroger continues to expand to gain market share, while Albertsons and Randall's are also opening new stores,” reports MacDonald. H-E-B is opening a number of larger, 83,000 sq.-ft. stores here, he adds, with YesLess and Wal-Mart also entering the grocery market.

“The Houston market entered mid-year on a strong note,” says Weitzman. Some 6.6 million sq. ft. of new space is slated to come on-line here during 2001, he notes, much of it freestanding big-boxes for retailers such as The Home Depot, Lowe's, Target, Sam's, and Wal-Mart. Overall, rental rates remain steady, he reports, hitting the $20 mark in some submarkets, with occupancy near 90%.

On the drugstore front, CVS is entering Houston with two sites under construction, says MacDonald. Meanwhile, in the regional mall arena, Urban Retail Properties' Houston Galleria is undergoing a $25 million renovation that will include the addition of Foley's and Nordstrom department stores.

San Antonio and Austin

Overall occupancy in the San Antonio market has dipped to 85%, the result of store closings by Montgomery Ward and Bealls, reports Weitzman. Meanwhile, new construction has added nearly 923,000 sq. ft. to the market this year, with rents for this new space averaging $20.17 per sq. ft. New and/or announced retailers here include Lowe's, with four new San Antonio locations; SuperTarget, with two stores; and Costco and AntiqueLand.

Meanwhile, in Austin, Kohl's is entering the market with three new locations slated to open in October, according to Weitzman, with Costco also in the process of opening its first store here. Existing retailers such as Target, Wal-Mart, Sam's, Home Depot, and a variety of restaurants and grocery stores fuel demand for new space these days, which should surpass the 1.5 million sq. ft. added to the Austin market last year. This 25 million sq.-ft. market is approximately 96% occupied, he reports, basically unchanged from year-end 2000's figure of 95%.

Martin Sinderman is an Atlanta-based writer.

Willow Bend says howdy to new-to-Texas tenants

Developed by Bloomfield Hills, Mich.-based Taubman Centers Inc., The Shops at Willow Bend is a two-level, 1.5 million-sq.-ft. mall that opened in August in the north Dallas suburb of Plano. Anchored by Neiman Marcus, Dillard's, Lord & Taylor and Foley's, the center showcases 130 stores and restaurants, with a total of more than 175 (including Saks Fifth Avenue) planned to open by 2004.

Taubman tenanted the mall with a number of retailers opening their first sites in the Lone Star State. “We are bringing in almost 50 stores that are completely new to the state of Texas,” says Taubman President Robert Taubman. “To be able to attract nearly 50 new-to-the-state retailers speaks not only to the quality of the shopping center, but also to its outstanding location.”

Taubman is enthusiastic about the trade area of The Shops at Willow Bend. “We have a terrific, 360-degree trade area in the center of the north Dallas market,” he says. The trade area contains more than 1.1 million people in some 446,500 households, according to Taubman, while household income within a 10-mile radius of the center averages a healthy $86,700.

Of the many stores and restaurants that comprise the Dallas market's newest super-regional shopping center, more than a third are newcomers to Texas. These include a number of fashion retailers, including the country's first Armani Collezioni, Giorgio Armani's newest retail concept for both men and women, along with Agatha Paris, Bernini, HUGO Hugo Boss, Jacqueline Jarrot, Nicole Miller, Reference, and the first Talbots store in Texas to include Talbots Woman.

Children's retailers include Strasburg Children, featuring boy's and girl's special-occasion apparel and accessories. Footwear retailers Aldo, Bruno Magli, and Rangoni Firenze will also make their Texas debuts here, along with personal car products retailer Caswell-Massey, high-fashion swimwear and accessories retailer Everything but Water, and El Portal fine luggage and leather goods.
— Martin Sinderman

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