By Liviu Oltean, Associate Editor
Q4 2014 marked for the Dallas-Fort Worth Metroplex retail market the end of one of the best performing years of the decade. Recent research data compiled by CBRE showed that, throughout the final quarter, the DFW retail market had an overall vacancy rate of 7.6 percent; 4,410,795 square feet of pipeline retail space; 658,830 square feet of completions; and a positive net absorption of 1,336,082 square feet.
In spite of only a marginal quarter-over-quarter increase, the retail occupancy rate reached an impressive 92.2 percent, which accounts for the highest occupancy rate recorded by CBRE. Additionally, in Q4 2014 the DFW area registered the highest positive net absorption of 2014: approximately 1.3 million square feet of space, down 500,000 square feet from the previous quarter.
Both Dallas and Fort Worth pulled their own weight with a per year net absorption of 2,329,167 square and 2,129,421 square feet, respectively. While vacancy is slightly higher in Dallas at 8 percent, the amount of total vacant space in Dallas is double than that of Fort Worth’s at 14,230,965 square feet.
While lease rates increased to $14.07 per square foot in Q2 2014, the average triple net lease rates have decreased to $13.81 per square foot in the last two quarters. The lower leases have been ascribed by CBRE to the flight-to-quality phenomenon. As more and more top tier retail projects were leased in the DFW Metroplex in the beginning of 2014, the average lease rate decreased on account of Class B and Class C leases by year-end.
As Class A big box spaces have become almost extinct in the DFW market, new projects are expected to be delivered in the following two years. At the time of the study, there were only eight big box space Class A properties available on the market, while Class B and C assets counted more than 100 properties.
Charts courtesy of CBRE