DFW Retail Market Maintains Stability Amid Slower Growth in late 2024
EXECUTIVE SUMMARY
Q4 in Review
The Dallas-Fort Worth (DFW) retail market remained resilient through Q4 2024, with a stable vacancy rate of 4.7%, near historic lows. Net absorption for the quarter was 187,031 sq. ft., reflecting limited new construction deliveries, which capped growth but ensured balance between supply and demand. For the year, total net absorption reached 1.8 million square feet, with notable contributions from suburban Fort Worth, Far North Dallas, and North Central Dallas. Leasing activity, while robust at 1.9 million square feet, was down 24% year-over-year.
While construction deliveries dropped significantly in Q4, totaling only 197,767 sq. ft., the under-construction pipeline grew to 4.8 million sq. ft., concentrated in the northern suburbs to align with housing growth. Average asking rates dipped 2.8% quarter-over-quarter to $20.08 per sq. ft. but remained 4.5% higher year-over-year. Central Dallas and North Central Dallas continue to command premium rents, while Southeast and Southwest Dallas offer more affordable options. Overall, the DFW retail market exhibits a healthy balance of demand, investment, and growth opportunities given its strong market fundamentals.
DFW Economic Update
Employment in DFW dipped in November after holding steady in October. Job growth was sluggish (1.0% annualized growth, or 11,000 jobs) but broad based across the major sectors for the three months ending in November. The strongest gains were in financial activities and information, while employment slipped in manufacturing and professional and business services. The unemployment rate in DFW was unchanged at 4.0% in November. The Dallas−Fort Worth economy slowed in November. Employment fell slightly, and unemployment held steady at 4%
MARKET OVERVIEW
Vacancy Remains Unchanged at 4.7%, Near Historic Lows
Net absorption-move-ins minus move-outs—is at 187,031 sq. ft., this is down significantly from recent quarters, but inline with new construction deliveries. For 2024, total net absorption was a healthy 1.8 million sq. ft. Suburban Fort Worth, Far North Dallas and North Central Dallas were the leading submarkets with net absorption of 686,947 sq. ft., 571,879 sq. ft. and 538,689 sq. ft., respectively. Notable late 2024 move-ins include QuickLotz taking 144,000 sq. ft. at the old Cinemark space at Music City Mall, Red White & Blue Thrift Store took 40,025 sq. ft. at Cooper Oak Crossing, and The Picklr moved into 33,351 sq. ft. at 1701 S Cherry Lane in White Settlement and also into 25,652 sq. ft. at Lakepointe Crossing in Lewisville.
Net Absorption Remains Positive but Limited Due to Little New Construction
Net absorption-move-ins minus move-outs—is at 872,396 sq. ft., up a significant 86% from last quarter. Year-to-date, net absorption is at 1.6 million sq. ft., down from the prior year-to-date tally of 2.7 million sq. ft.
Notable 2024 move-ins include QuickLotz taking 144,000 sq. ft. at the old Cinemark space at Music City Mall; Red White & Blue Thrift Store taking 40,025 sq. ft. at Cooper Oak Crossing; and The Picklr moving into 33,351 sq. ft. at 1701 S Cherry Lane in White Settlement and also into 25,652 sq. ft. at Lakepointe Crossing in Lewisville.
Leasing Activity Remains High, but Off 24% From Last Year
Leasing activity slowed in Q4 2024, coming in at 1.9 million sq. ft., this was down 20% from the previous quarter and down 24% from Q4 2023. Recently signed leases include H-E-B signing a lease for a new 140,000 sq. ft. grocery store in Forney, Malibu Jack’s signing a lease for 137,222 sq. ft. at the former Garden Ridge in North Richland Hills at 8651 Airport Freeway, Netflix House signing a 110,000 sq. ft. lease at the Galleria Mall for a new retail/entrainment venue, and EoS Fitness signing a lease for 70,853 sq. ft. at the Collin Creek Shopping Center.
Low Construction Deliveries Muted Absorption, but Construction Pipeline up Slightly
Construction deliveries were down sharply over the past quarter, with only 197,767 sq. ft. being completed in Q4 2024. This is down 76% from the past quarter and down 82% from Q4 2023. The under construction pipeline, however, did see an increase, rising to 4.8 million sq. ft. (this is up 14% from last quarter and up 4.6% year over year). Far North Dallas, North Central Dallas and the Suburban Fort Worth submarkets have the highest levels of construction currently under way, with 1,526,169 sq. ft., 938,464 sq. ft. and sq. ft. 786,971 sq. ft., respectively. These largest shopping centers are concentrating mostly in the northern suburbs, following the recent delivery of several thousand residential homes.
Investment Sales Trends
CoStar Capital Market Analytics reports the cumulative 12-month sales volume at $425 million in the DFW retail market. With 856 deals completed, the average transaction price currently stands at $273 per sq. ft. with an average cap rate at 6.6%. Notable sale transactions in late 2024 include the Fairmont Group purchasing the Carrier Parkway Shopping Center from SSK Holdings. The 170,100 sq. ft. strip center has tenants including Family Dollar and Little Caesars. Also, Macy’s sold their 122,320 sq. ft. location at Fairview Town Center to Lincoln Property Company.
Rates Dip Slightly for the Quarter but Still Up Year Over Year by 4.5%
Rates dipped slightly from record-high rates by 2.8% over the past quarter (at $20.08 per sq. ft.), but are still up 4.5% year over year. The submarkets with the highest rental rates include Central Dallas ($26.56 per sq. ft.), North Central Dallas ($25.94 per sq. ft.) and East Dallas Outlying ($22.05 per sq. ft.)—which are well above the metro. On the other hand, submarkets with lower asking rents included Southwest Dallas ($15.69 per sq. ft.) and Southeast Dallas ($16.17 per sq. ft.).
Steve Triolet
SVP of Research and Market Forecasting
tel 214 223 4008
[email protected]
