Herb Weitzman, the dean of local retail real estate, tried to stay upbeat this morning at his annual review of the state of the market. However, there wasn’t much news for the standing-room only crowd of real estate professionals to cheer about. I found a few interesting items in his team’s presentation, though, which I hereby pass on to you:
– Real estate types are basically bad dressers. Really. Most of the suits looked like they came off the rack at Men’s Wearhouse.
– Did you think that Dallas likes to shop? You would have been right. DFW has the highest retail space per capita of any major market — and double most of them.
– Maybe too much retail real estate per square capita. $4.5 billion in commercial real estate in DFW is “distressed.”
– Commerical real estate value has dropped 40 percent since its peak in 2007.
– Growth in 2010 will continue to come from grocery stores, discounters, and drug stores. Kroger’s is opening a 120,000 sf “marketplace store” in Frisco. Herb stressed retail is now about “need,” not “want.”
– Mixed-use projects (stores, apartments) are in big trouble. Occupany is down from 96% to 86% — generally, 88% is breakeven. I thought the Weitzman Group’s assessment of why this is happening was spot-on, although I had never really thought about it. Too many owners lease to small store owners who are counting on residents and the larger destination tenants to bring them traffic. Doesn’t work. “Every store needs to be a destination.” They should be able to succeed on their own. Owners should look for shops that attract traffic, not depend on it.
– Look for yet another new grocery chain to enter the market: Aldi. No, I had never heard of them either.
– There will be a minimum of new retail construction in 2010, minimum being defined as as close to zero you can get.
Now, go out there and have fun!
9 comments
Aldi’s coming to town is great news! My parents in Illinois find lots of good deals there regularly.
For those interested in Aldi in the Dallas area – http://www.city-data.com/forum/dallas/702693-there-aldi-stores-dallas-area.html
Aldi is for the truly budget-conscious shopper, i.e. bag your own, bring your own bags (or pay per bag for theirs), no name brands, etc. It’s a German brand that previously did well in lower income neighborhoods due to their often significantly lower prices on items, but recently have branched out into higher income areas where folks are willing to bag their own and not find name brand items. Interesting concept to say the least.
Having seen Aldi at work in Britain, all I can think of is a new Millenium Sack and Save. Personally, I’ll stick to what we have, not a great deal of excitement from this fencepost.
More importantly Aldi owns Trader Joe’s (at least according to the manager of the one I recently visited in SoCal).
That would save me a lot of money checking bags on AA!
Oh Oh Oh maybe we could get a Trader Joes!!!!
The mixed use projects with retail downstairs and apartments upstairs works where there is rail.
Rail + attraction in area = success for these projects.
@Comfortable – there is rail in West End and Victory, but those don’t seeem to be successful. No?
@BF Victory seems a bit pricey for those urban hipsters. Not sure about West End’s prices.