DALLAS - As market momentum from 2015 spilled over into the first quarter 2016 for the DFW metropolitan area, commercial retail metrics are still firing on all cylinders, says Jason Vitorino, president, Vitorino Group.
The three key market indicators of occupancy, absorption and development are robust and expect to remain that way for the foreseeable future.
With fundamentals in check and a thriving economy led by strong employment and population growth, metro Dallas will continue to be a thriving marketplace and a safe haven for investor capital.
Record High Occupancy
DFW retail market ended 2015 with an impressive 93 percent occupancy achieving its highest occupancy rate in the last three decades. The continued occupancy increase is directly related to net absorption and largely attributable to positive population and employment growth in the Metroplex.
First quarter 2016 absorption totaled over 1.6 million sf, with half of that figure attributed to new deliveries.
With ascending occupancy and steady absorption, the development pipeline remains conservative and is not based on speculation.
In spite of 4 million sf of development forecasted to deliver within the next 12 months, 77 percent, or 3 million sf, is preleased. Thus, the retail market in Dallas remains constrained and balanced.
The vibrant Dallas economy continues to grow as a result of significant inward migration associated with a low cost of living and high employment opportunities.
The area’s population has grown by 11 percent in the last five years, and growth of 8 percent is projected over the next five years.
Furthermore, the population of metro Dallas is young and affluent.
Prepared for Growth
All the stars have aligned for the Metroplex to continue its impressive growth while maintaining strong real estate fundamentals. A lack of supply coupled with tremendous demand has produced a fundamentally sound Dallas retail market.
Overall market conditions will remain solid for many years to come. And even if history tends to repeat itself, we are just a third of the way through the current cycle before the next major market correction.