For the first time since Weitzman started surveying the market in 1990, the Dallas-Fort Worth retail space inventory is reporting occupancy that exceeds 95 percent.
Despite decades of back-to-back challenges, from recessions to the rise of e-commerce to a global pandemic, D-FW’s retail market has continued to evolve and emerge stronger and able to reach this significant milestone. The retail real estate category in D-FW currently is the strongest commercial real estate category in terms of balanced supply and demand.
At year-end 2023, D-FW reported an occupancy rate of 95.2 percent, exceeding 2022’s also-record occupancy of 94.4 percent. Historically, based on our legacy database and research, the 2023 rate is the highest ever for the Metroplex’s retail market, exceeding the previous record high of 94.8 percent rate recorded in 1981. The 2023 inventory, with slightly more than 199 million square feet of retail space, compares to just under 80 million square feet in 1981.
In addition, 2023 is the 14th time in 33 years that D-FW has reported occupancy that exceeded the 90 percent rate. Eight of those times have been recorded consecutively since calendar-year 2013, when occupancy reached 90 percent or higher for the first time since 2004.
Our 2024 Survey & Forecast is based on Weitzman’s review of a total D-FW retail market inventory totaling approximately 199,232,000 square feet of space in projects with 25,000 square feet or more. (The current inventory reflects projects totaling approximately 500,000 square feet that were removed from the database due to redevelopments for non-retail uses and other factors.)
This inventory is the largest for any Texas metro area, encompassing 42 submarkets that incorporate both the Dallas and Fort Worth markets and their suburbs.
One of the most important results for our survey is absorption, which is the measure of net leasing. During 2023, absorption totaled nearly 1.8 million square feet.
Thanks to strong net leasing during this past year, marketwide vacancy dropped from 11.2 million square feet at year-end 2022 to 9.6 million square feet as of year-end 2023. Vacant space marketwide has declined from nearly 17 million square feet as recently as 2020 and has now fallen below the 10-million-mark for the first time in decades.
The market continues to experience the extremely conservative development climate that began in 2018. The limited deliveries continue to elevate existing space to a premium, which is keeping rates stable and reporting rent increases for the best-located space. Retail developments in detail for 2023 and 2024 and beyond are outlined later in this report.
During 2023, retail construction totaled 1,018,400 square feet of space in new and expanded retail centers. The amount of new space exceeded the 1-million-square-foot mark (barely!) for the first time since 2020. But deliveries overall remain extremely conservative for a market reporting record-high occupancy and a healthy level of retail demand as retail concepts look for new locations in what is arguably the country’s strongest metro economy.
While 2023’s construction total is low, it exceeds the construction of 538,700 square feet reported in 2022. The 2022 total marked the lowest deliveries total Weitzman has ever recorded for D-FW.
As recently as 2017, D-FW’s retail construction exceeded 4 million square feet of new space.