Hit by the recession and an abundance of new construction, retail occupancy in Dallas has been sliding since 2008, but there are signs of life at the top centers, according to real estate executives.
This story first appeared in the May 20, 2010 issue of WWD. Subscribe Today.
A number of retailers, from purveyors of fast fashion to European designers, are making their Dallas debuts this spring and fall.
“When we bought Highland Park Village a year ago, I had prepared myself for a two-year window where it would be difficult to get deals,” said Stephen Summers, a partner and leasing director. “Nationwide, I feel like retailers have loosened the reins [and] are seeing sales trend up.”
Christian Louboutin and Diane von Furstenberg will both bow at the Village in September, and Leggiadro and Villebrequin opened there this spring. Summers is also negotiating with three European designer brands.
At Galleria Dallas, Shasa, a fast-fashion chain from Mexico, will enter the market June 1, said Angie Freed, mall general manager. Brahmin handbags and BCBGeneration, the young contemporary division of BCBG Max Azria, launched here this month, and Dooney & Bourke is prepping for a fall opening.
“Things are definitely improving,” Freed said. “We have seen an increase in retailer interest, and we have a couple more deals getting ready to be executed — good names, and ones that will be new to the market. Appointments for [the ICSC RECon show next week in] Las Vegas are good.”
NorthPark Center, which has become North Texas’ dominant mall, has a waiting list for space, according to Nancy Nasher, president of NorthPark Development Co., which runs the center.
It has announced leases with Elie Tahari; East 5th Hub, the new retail concept of MEK Denim designer Kevin Chen; Disney, and Essensuals London, a salon. A long-anticipated Gucci store is relocating to NorthPark from Galleria in September.
Dallas is appealing because it is a strong market with comparatively low operating costs, said Jeffrey Paisner, a broker with Ripco Real Estate who represents Louboutin and von Furstenberg.
“Rents, whether in NorthPark or Highland Park Village or anywhere, are half to a third of what it costs to open a street store in Chicago or San Francisco,” Paisner pointed out. “So in this economy, where is there less risk?”
Still, overall retail occupancy in the Dallas metro area has fallen steadily to 86.4 percent in January from 87.7 the previous year and 89.1 percent in January 2008, according to the Weitzman Group.
Malls have lost more ground but have less vacancy — they are 90.9 percent full, down from 92.6 the year before and 96.3 percent in early 2008. Top-tier properties are faring best in Dallas and nationwide, realtors said.
“Leasing is picking up to an extent,” said Ian Pierce, a spokesman for Weitzman Group. “It has to be the right concept in the right location.”
One positive indicator is that sales tax revenue in the city of Dallas rose 4.23 percent in April, according to the Texas Comptroller’s Office. In comparison, sales tax receipts dropped in all of the preceding 12 months except in January, when it inched up 0.6 percent.