The gap in retail’s “haves” and “have-nots” continues to widen in DFW – and e-commerce is not the reason
Shopping centers in DFW have been performing well, driven by the region’s ongoing household and income growth
June 12, 2019
- Shopping centers in DFW have been performing well, driven by the region’s ongoing household and income growth. Currently, vacancy stands at 6.2 percent for all shopping centers, down from mid-11 percent in 2010.
- While the media advances an “apocalypse” brought on by e-commerce, that is not the case. ICSC reports that 85 percent of core retail sales still take place in bricks and mortar stores – although some shopping categories are particularly vulnerable to online’s onslaught.
- For shopping centers in the “haves” category (assets with occupancy above 85 percent), the market is tight. These highly desirable locations have minimal vacancy at 1 to 3 percent, well below industry averages.
- For the “have-nots”, vacancy has skyrocketed and now averages 38.5 percent for community-scale centers.
- This is not due to development still in lease-up. Rather, the broad repositioning of retailers has translated into 4.6 million square feet of negative net absorption over the period, or 17 percent of the leasable area going empty.
- These under-performers have entered a vicious cycle that will be hard to beak in today’s competitive market, due to less than compelling tenant rosters, possibly lost anchors, and declining trade area demographics.
Source: ICSC; JLL Research