Average asking rent reaches record-high in DFW Retail market


Q4 in Review
By the end of Q1 2024, the overall vacancy rate in the Dallas-Fort Worth (DFW) retail market is 4.8%, an increase of 20 basis points over the past quarter but remains flat compared to one year ago. Net absorption remained healthy at 259,209 sq. ft. for the quarter. This latest figure represents 14 consecutive quarters of positive net absorption. This combined with increased retail sales from strong population growth and domestic migration has resulted in retail rates once again reaching new record-highs. Over the past year, average asking rates have increased 8.8% and now stand at $20.49 (NNN) per sq. ft.

Dallas-Fort Worth Economic Update
The Dallas–Fort Worth economy expanded in February. Job growth accelerated, and unemployment held steady for the third straight month at 3.7%. DFW payroll employment expanded an annualized 2.9% (10,000 jobs) in February following job declines in the previous month. In the three months through February, employment was up a modest 1.3% in DFW—below its trend growth rate. Job gains were mixed across sectors during this period, with job growth led by other services and manufacturing. Payrolls were flat in trade, transportation and utilities and declined in information services and construction and mining.


14 Quarters of Positive Absorption
Net absorption-move-ins minus move-outs—is at 503,219 sq. ft., down 60% from the prior year’s 1.2 million sq. ft. Year-to-date, net absorption is at 3.2 million sq. ft., down from the prior year-to-date tally of 7.1 million sq. ft. Despite the decrease, net absorption has remained positive in DFW’s retail market for over 3 years—13 straight quarters—since Q3 2020 (-395,056 sq. ft.). The Mid-Cities submarket led positive absorption for the year at 908,907 sq. ft. (28%). Notable Q4 move-ins within the Mid-Cities submarket include Texas Thrift occupying 27,941 sq. ft. of retail space at 6246 Rufe Snow Road, and Planet Fitness filling 23,400 sq. ft. of retail space at 1551 Highway 287 North. On the other hand, Kroger moved out of 655 Wynnewood Village Shopping Center (-51,000 sq. ft.), and Spirit Halloween vacated 3333 Preston Road (-38,000 sq. ft.) also in Q4. Tenants spanning diverse retail segments are drawn to DFW’s healthy and expanding consumer base, supporting positive sentiment despite the near-term softening.

Construction Increasing, Moving Past 5.5 Million Sq. Ft.
Retail construction is at 5.6 million sq. ft., up 18% year-over-year from 4.7 million sq. ft.  Costco, Target and H-E-B continue to be a significant part of the construction pipeline, with most of the construction concentrated in the northern suburban submarkets of DFW.   The Far North Dallas submarket has the most construction currently underway, followed by North Center Dallas, at 1.5 million sq. ft. and 1.45 million sq. ft., respectively.

Record-High Asking Rents, Up 8.8% Over the Past Year
With a low vacancy rate and strong market fundamentals, average asking retail rates continue to push to new record highs.  The overall average asking rate is $20.49 per sq. ft.  This is up 2.2% from the past quarter and by 8.8% over the past year.  Even with a robust construction pipeline, strong upward pressure on rates is expected for the foreseeable future as 66% of the projects are currently pre-leased.

Related Research Reports

Q4 2023 DFW Retail Quarterly Report

Market Edge | Texas First: Part 5

Steve Triolet
SVP of Research and Market Forecasting
tel 214 223 4008
[email protected]

Deal Spotlight

Partners’ Ranjin Mathew arranged a 1,711-sq.-ft. retail lease with Drizzle Cheesecakes located at 300-360 Las Colinas Boulevard in Irving, Texas.