The gap in retail’s “haves” and “have-nots” continues to widen in DFW

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

The gap in retail’s “haves” and “have-nots” continues to widen in DFW – and e-commerce is not the reason