Many North Texans like to shop, and most of us like to eat out at a local restaurant. There’s strong demand for retail space in Dallas-Fort Worth with grocery stores, restaurants, big box, and mixed-used developments driving much of the new retail space. Is there enough supply to meet the demand? What’s the future of malls? We brought together six of the top retail minds in North Texas — Tom Salanty, Jennifer Frank, Alan Shor, Frank Mihalopolous, Herb Weitzman, and Mike Geisler — to talk about Dallas-Fort Worth retail real estate in a discussion at the Amenity Lounge conference room at St. Paul Place in Dallas.
Jennifer Frank, Principal, Segovia Retail Group
Mike Geisler, Founding Principal, Managing Partner, Venture Commercial Real Estate
Frank Mihalopoulos, Owner, Corinth Properties
Tom Salanty, Managing Director, JLL Dallas
Alan Shor, Co-Founder, President, Co-Chairman, Retail Connection LP
Herb Weitzman, Founder, Executive Chairman, Weitzman Group
Lance Murray (moderator), Managing Editor, Dallas-Fort Worth Real Estate Review and Dallas Innovates
Let’s begin with your assessment of the state of the retail market in Dallas-Fort Worth in the past 12 months.
TOM SALANTY: It’s oversupplied in some cases. The easiest way to put it into perspective is that we had a lot of land around here. Thankfully, we had a lot of population growth, too. We’ve been able to keep up with the new demand [and] the new supply that’s been built. We’ve been able to backfill some of the things that didn’t make it. We have around 50 to 60 square feet per capita. ... If you include all the Walmart stores and everything else, it isn’t necessarily in the data. If you compare that to Europe and other areas, it’s 25 [square feet per capita], so there’s a lot of supply. There are winners and losers.
JENNIFER FRANK: Being on the tenant side, I see kind of the opposite. The supply — especially for restaurant and smaller shop space — is really tight and very competitive. Rents are increasing to levels I’ve never thought I would see in Dallas-Fort Worth. On the box side, there’s a lot of repositioning — major boxes getting right-sized. There are tenants coming behind to backfill some of those larger boxes. It seems pretty healthy to me. Where those boxes are the larger grocery stores that are repositioning or moving, there seems to be a good supply of discounters that are coming in to take those over.
The bottom line is, if you can pick a market to be in, this would be it.
ALAN SHOR: We’re very fortunate to be in DFW. Dallas-Fort Worth is a market that’s unlike most markets around the country. When you’ve got a city or [region] that’s No. 1 in job growth and top three in population growth — along with the corporate relocations that have happened here — it puts some stress on the available real estate. But, from our perspective, the retail real estate space is strong. We know there’ll be some boxes coming back, and I think those boxes will get redeployed, both in retail and nonretail use. The bottom line is, if you can pick a market to be in, this would be it.
FRANK MIHALOPOULOS: Our market has been very active. It’s active in multiple ways. We’ve got the mixed-use projects that are going on that are record-setting, like in Collin County and Legacy West — the whole Frisco corridor, which is unheard of — to the corporate relocations that have happened in the last year and are opening up. It’s been a game-changer.
Dallas-Fort Worth has become one of the leading corporate cities in the world. You see the Toyotas and Liberty Mutuals and others that have come in here. Jacobs Engineering and other firms — they’re picking Dallas.
But from the retail perspective, you have retail that’s changing. The big boxes — those rents are probably leveling off or going down. You’re giving rent to make deals work, yet the expenses are higher, and everything is being made on the pads. Everything is small strip centers. The restaurants, there are not enough of them. There’s a proliferation of small strips that are getting built. The rents that used to be $30 and [then] $40 are approaching $50 for some of these small strip centers.
In my career, we’ve never had as little vacancy — which is our challenge. It’s finding enough space. There’s a lot of restraint in building new real estate retail. It’s kept our market very healthy.The users are now going smaller. They’re going with less space, more efficient space: “How can I use the patio for half my seating in the restaurant side?” The big restaurants aren’t as strong as they used to come in. The mega restaurants are all mini restaurants. If you look at some of the projects [now], they’re 2,000 to 3,000 square feet. ... I’ve got to make enough money to make it work.
We’re lucky to be here, but at the same time, the cost of doing business in Dallas-Fort Worth — between land prices and the cost of construction — is getting to a point where it’s difficult sometimes to get deals done. ... We’re doing a lot out of town for that reason.
In my career, we’ve never had as little vacancy — which is our challenge. It’s finding enough space. There’s a lot of restraint in building new real estate retail. It’s kept our market very healthy.
HERB WEITZMAN: Retail is always parasitic to something and reacts to something that’s external — sometimes overbuilding, sometimes interest rates. ... We went from building a lot of centers over the years to hardly building any. What was built was demand based. It was basically built for the grocers and discount stores. They own the stores, and we went down to a million, million-and-a-half feet. Right now, we’re 93 percent occupied, which is the highest since 1981. Retail reacts to overbuilding, and we’re not seeing that. And other categories react to overbuilding as well. We expect that the markets will remain strong and stable for the foreseeable future.
MIKE GEISLER: I'll echo what Jennifer says. It’s a very healthy market. Retail has major things influencing it, but it’s reacting to it very quickly and pretty positively. In my career, we’ve never had as little vacancy — which is our challenge. It’s finding enough space. There’s a lot of restraint in building new real estate retail. It’s kept our market very healthy.
CONSTRUCTION: GROUND-UP VERSUS REPURPOSE
Where are you seeing retail activity in Dallas-Fort Worth? Are you seeing more substantial new builds or more repurposing of properties?
SHOR: We’re going to see more repurposing for the reasons stated earlier. You have construction costs continuing to rise at an unsustainable rate. You’ve got fewer retailers growing. And those that are growing are putting more pressure on rent. You’ve got dark boxes coming back, you’ve got e-commerce. We’ve been a pretty active ground-up developer. I’m telling our guys that development is going to get quiet for a while — let’s find things we can buy and repurpose. With the dark space that will come back — particularly department stores that will get divided up and re-tenanted — we’re seeing that’s going to be the trend for a while.
MIHALOPOULOS: There are only a handful — less than a handful — of big projects going on with the big boxes. They’re in Grand Prairie and north Fort Worth, but there aren’t many mega centers being built. What is being built is mixed-use, so the retail that’s being built is ancillary to another job center or something else that’s coming in and generating the traffic. What is being built is the small strip centers. It reminds me somewhat of the 1980s because unanchored strip centers were probably what most of the FDIC RTC properties were. There were a lot of folks building centers that hadn’t done them before. [Like the ’80s], some are running with small tenants.
The mall business is contracting very, very fast. Even in Dallas, we’ve lost half the malls — either they’re closed, or they’re in foreclosure. The good operating malls ... we were at 26, and now we’re down to 13.
Just as you get involved in the business, and you’re a broker/tenant rep — next thing you know, you’re building ten little strip centers for your tenants, and you’re speculating. It will be interesting to see in the next 12 months how much of that gets done — or what’s left and where it is. ... If we start compromising principles, you will have some issues. Fast-casual restaurant growth has created a big demand for some of this space. And, a center today is not just your shopping center with a big parking lot — there’s a hotel in it, there’s going to be an office building, there’s a retail center mixed in the ground floor of a hospital.
WEITZMAN: I'll speak to new centers. Plano is on fire because of the corporate relocations and the population growth. Those projects [are] unique, [and among] the very few in the United States that big being built. The mall business is contracting very, very fast. Even in Dallas, we’ve lost half the malls — either they’re closed, or they’re in foreclosure. The good operating malls ... we were at 26, and now we’re down to 13. In the non-mall projects, primarily community centers and power centers, we’re actively leasing. 25 are under construction around the state now, and probably another eight where there are very active anchor leases being made for new centers. That part of the business is just excellent; however, you’ve got to be at the right location. And the numbers have to prove out. That sector of the business is the best place to be in today. I don’t know if you need to lose any sleep over that type of retail being in harm’s way of e-commerce. It competes very well.
FRANK: There’s a lot of repurposing of malls. For example, the Midtown project, which is the former Valley View Mall, is being repurposed into a mixed-use development. It’s owned by three separate entities, and they’re planning a high densification for office, some retail, and a wellness component. Ridgmar Mall in Fort Worth is bringing in a big aquarium and an indoor go-cart track. It’s [for] entertainment and the “active lifestyle” that they’re repurposing some of these malls. The Starwood Mall in Plano at Willowbend has taken the former Lord and Taylor space and turned it into about six restaurants. They’re working on a theater deal, as well as a hotel. ... We will see a lot more of that as these boxes continue to shut down.
MALLS, MOVING FORWARD
What do you think about the future of malls?
SALANTY: Absolutely there’s a future for malls.
WEITZMAN: Malls are classified “A,” “B,” and “C.” Class A malls are doing probably $550, $600 a square foot or better. They’re doing very well. ... “C” malls are $300 to $450, and “B” malls are around $450 to $550. Most of these malls have to be upgraded, and it takes a lot of capital. There’s been a polarization of ownership with the public REITs, and they own most of the good malls.
Tom (Salanty) sells a lot of malls in the “B” and “C” category, and they’re like a drug on the market today. In other words, if you’re growing your sales and you put money into it, and you have a good location, you’ve got a good opportunity of doing well — increasing sales, getting tenants, and growing it. But if you’ve got a crowded area with malls that overlap each other in sales, e-commerce is hurting the chain businesses that are in malls. You see it from the top down. Department stores are getting hit, and they’re having a tough time competing on sales. Their sales are dropping across the board. There are a few winners, like Nordstrom.
Even as well as J.C. Penney is operating with the level of leadership they have, they’re struggling. I think they’re going to make it. Fortunately, [former Chief Executive Officer] Ron Johnson went ahead and improved a lot of the stores ... They’re new, and they’re clean, and there’s new leadership changing the merchandising mix. It’s helping their sales. I think they’ll do well, but it’s a struggle for those who are moving too slow.
But, e-commerce is converging with brick and mortar. It’s happening. ... Amazon has this tremendous cost of shipping, and you see Wal-Mart coming with 63 percent in e-commerce sales last quarter ... They’ve figured it out, and they can distribute out of their 4,700 stores. That’s convenient to the customer. What I read is, [Wal-Mart] has a store within 10 miles of everyone in the United States. They don’t have the shipping costs. ... There’s a convergence, and it’s still working itself through the market. There are going to be winners and losers.
Mall operators in the “B” and “C” markets are repurposing malls in a nonretail way: You’ve got government annex offices going into the malls. You’ve got junior colleges and community colleges going in the malls.
SHOR: If you believe the press, the experts say that 25 percent of malls are going to be out of business in five years — some 250, 260 malls. That’s a tremendous amount of square footage. The mall operators — and you can count them on one hand — the Simons and the GGPs, they’re saying, “Wait a minute, we’re not just going to stand by and watch this happen.” These guys have started investing in retail companies to put into their malls.
Simon, particularly, has gotten aggressive with what they believe to be growth retailers. They will put money in them, just like a private equity firm. Other mall operators in the “B” and “C” markets are repurposing malls in a nonretail way: You’ve got government annex offices going into the malls. You’ve got junior colleges and community colleges going in the malls. It’s interesting how the owners on the mall side are reacting to this.
They’re not just sitting back and saying, “Let it happen.” They know the department stores are in trouble, but they’re very proactive, and we’re going to see more and more of this in the nonretail and the entertainment spaces where they’re going to be the anchors in the malls.
GEISLER: What you will see in weaker communities are call centers, data centers, and government offices. And in [other] communities, most of these malls are in great real estate. I can see Collin Creek being redeveloped and being much more dense and diverse. And I think that’s one thing you can probably see — any of the malls that are at risk in DFW are at pretty outstanding intersections.
WEITZMAN: I think the malls are going to fail. I think the numbers are correct. We monitor rents on a monthly basis for about 3,000 tenants, and I see the sales in strips. I was in meetings yesterday, and every center had increased sales, but malls — the “B” malls and “C” malls couldn’t say that. Their sales are dropping. It’s just that the country is over-retailed. When you go lay Amazon on top of an overbuilt mall community, so many people are buying more and more on Amazon and online. I see a lot of failures. I’m not saying they’re not going to be repurposed, but I don’t think they’re going to be retailed.
GEISLER: I agree.
MIHALOPOULOS: You have to look at the mall as a whole picture, “A,” “B,” “C,” and “D” malls. We’ve been playing that field for ten years — living with the REITs and living with the department stores. We see the “A” malls will stay “A” malls. Those are going to be general growth — your Macerich, your Simons — they’re going to run those high-end malls, and keep them going. They’ll always be there.
Then there are the “B” malls that are evolving to try to be “A” malls. There’s Tommy Morel who sold The Starwood [Group]. There’s a group of people who have tried to fix those malls, [like] Rouse Company, and the second layer of ownership — Starwood and WP Glimcher. Now it’s going to be Prime again. They’re trying to create the malls and keep them going. Throw in a Dick’s, throw in an H&M, and try to get them to a “B-plus” or an “A-minus” mall.
Then you’ve got a category of the “B” to “C” malls that are operating. In some cases, they might be the only place in town with nothing around for 200 miles. Those will survive. Pueblo, Colorado — or somewhere in the middle of nowhere — [those malls are] the place for 300 miles. In cases where there’s a big mall down the street — or even 50 miles away or another city — those are going to suffer. There’s a layer of financing from foreign money buying the “C” malls just to cash flow them. They’re being dumped on the market by the REITs, so they’re buying them at a 12 percent.
MIHALOPOULOS: They’re not even paying utility bills sometimes. They’re just trying to grab as much as they can — get their money out as quickly as they can — and then there will be a skeleton left. You have something like ten malls that sold last year in this category. And you hear horror stories where tenants are trying to stay open. So those are going to die.
The next level we look at is location. It can be a dying mall, but a great piece of real estate. We ask, "Can you repurpose it?"
The next level we look at is location. It can be a dying mall, but a great piece of real estate. We ask, "Can you repurpose it?" We’ve been able to take these and put in medical clinics. We did one of the big ones with Pinnacle Medical Clinic ... 450,000 square feet of retail and 450,000 square feet of offices and medical clinics. It’s the model of mixed-use in Nashville.
The second mall we did [was] in York, Pennsylvania — a small town. There was a purpose for it to be a town center. We opened it up, turned it inside out, and put in traditional tenants and the DSWs of the world, Ulta, and Burlington. ...
Another case, one we’re doing in Atlanta, is in a neighborhood that can’t compete with the perimeter malls or [other nearby centers]. We see it as a mixed-use. We have a Macy’s, a Penney’s, and we’re working with Sears to — hopefully — put them out of their misery. In that case, maybe we can get a grocery store to take over that wing.
We’re [also] working on 300,000 square feet of offices. We can deliver offices $10 to $15 [per square foot] below market rate because we open up the mall and mix-use it. [It’s] the whole idea of having a better workplace — with higher ceilings — so it’s a fun place to work.Now it becomes a place to entertain and react. What we’re trying to do is create a different place.
WEITZMAN: Have you ever made money on those? Interest rates are picking up, and everybody is getting squeezed from home builders on up. How does it look for the future in the conversion, because it’s awfully expensive?
MIHALOPOULOS: We have to buy it right. We’re not buying the specialty income. There are a lot of temporary tenants and specialty tenants in these malls. That’s where it’s kind of like a drug that keeps going. You can’t pay for that. We’re buying it for land and building values, and that’s how you can get it fixed. We have participation from public money, we’re tearing down a building, and we open up a park. You’re going to get some incentives. It’s a case-by-case basis.
When a department store meets with a mall owner, it’s a summit; it’s not a meeting.
Every property has its own story. The problem is, there are too many malls. There was a dysfunctionality of the big mall developers and the department stores. It started back in the ’70s and ’80s. If you remember: I’m going to build this wonderful mall — but [in the case of a] department store, you’re going to have to take three of my malls, because I am building these other secondary malls around the country. If you want to be here, you are going to do these deals. When a department store meets with a mall owner, it’s a summit; it’s not a meeting. It’s how they’re going to manipulate all their portfolio. That created a lot of the things that shouldn’t even be here today.
SHOR: That’s also an opportunity that goes beyond the malls. We just bought a center in Longview, Texas. It’s a center that’s adjacent to the mall there — the only mall there. It’s got temporary tenants in it. It’s probably 80 percent leased. We bought it right, to Frank’s point. We got it at the right basis. It’s almost like a cash-flowing covered land play. We will cash-flow it — cash flow is very healthy — until it’s time to rebuild it. We’re holding. We’re going to hold cash flow. We have a three- to four-year plan to redevelop and rebuild it. In the meantime, the risk is mitigated by the cash flow and the cost basis. Those are going to be the opportunities going forward.
SALANTY: I do this around the country. There are 1,300 malls. I think there are 300 to 400 that closed. But I think that what you need to understand is what happened. The department stores’ net worth in ’07 was $85 billion. Today, it’s $26 billion. The off-price retailers’ value in ’07 was $18 billion. Today, it’s $75 billion. That’s market cap.
You might add a million square feet to a market, and you didn’t add any new people. That’s not true in Dallas. ... We’re growing, so we keep up. We’re unique in the United States.
The shift is, in the ’70s and ’80s we built all these malls in population centers. Then [it was] the power centers in the ’90s — most of them late ’90s, early ’00s. You might add a million square feet to a market, and you didn’t add any new people. That’s not true in Dallas. ... We’re growing, so we keep up. We’re unique in the United States. I tell people when I go into a meeting: I live in Dallas, Texas. I live in the best city, in the best state, in the best country in the world. That’s what I tell people, because we have a lot of good things happening here.
Today, we are going through another shift. Retailers change the way they merchandise and the way they distribute — that’s what is going to happen. This has happened several times. If you want to look in Dallas at examples that you can understand, the old Prestonwood Mall was a Neiman Marcus-anchored center. They didn’t go to the Galleria because it was too close — it was within five miles of NorthPark mall. They go up to Prestonwood, and it goes from a Neiman Marcus center to a data center that then failed in the telecom boom. Today, it’s a Wal-Mart. Back to the discounters with the growing value. One of the first malls I ever sold was Six Flags Mall over 15 years ago. Finally, it’s selling, or making a deal with the City of Arlington now, and GM is picking it up to do supplier work. The same thing is happening in Detroit with the mall Ford is taking over.
LIVE, WORK, PLAY ... & MIXED-USE
How have multi-use developments in the so-called live-work-play areas changed how retailers approach where they’re putting their locations?
GEISLER: There’s so much density that’s come in and around Uptown that didn’t exist 15 or 20 years ago. It’s created a lot of demand for services and needs in retail. The customer today wants to live-work, but I still don’t think there’s a lot of that product that exists. A lot of people end up working for whoever they have to work for. One of the things I find fascinating is you have more people going north in the morning [now], and it used to be everybody was north, going south. But, a lot of the people in Uptown have to work in Legacy. I don’t think that’s what they want, but I think there’s only a handful of office users that are really trying to meet the needs.
A lot of the movement for the office tenants in Uptown are Deloitte and [those] that want to attract better talent. Part of why they’re officing around the [Klyde Warren] deck park and paying big rents is that it’s a good insurance policy that you’ll have a better opportunity to win the best talent. But there are still a lot of businesses not doing that.
SALANTY: Live-work-play is great. If you’re a young person and you don’t have a family yet, you’re going to want to live in that environment close to that activity. An empty nester like me [might] live downtown. I did it for three years. I didn’t get in my car for four days. And my wife said she didn’t cook for a month because we went around to all the restaurants. That was fun. But [young people] get married and have kids, and they need to find a good school system. If we want to keep Uptown and downtown vibrant and family oriented, we need to have good school choices, otherwise [they will] bolt to the suburbs for the schools.
SHOR: And then move back when they become empty nesters.
MIHALOPOULOS: The whole way of life today is mixed-use. And it’s going to vary from the suburbs to the urban areas. The reason these companies are coming here is they have an opportunity. Their employees aren’t going to drive an hour and a half to commute to get to work, be it in California or the East Coast. [The companies] want them to have an environment where they’re working, and they can run out for 30 minutes and come right back — not lose them for an hour and a half. If you’re looking from employment base to the housing base, they’re all intertwined together, and that’s where this mixed-use works. For the different age groups, it’s going to have a different scenario, too.
They call 121 the freeway that never stops giving. It’s like the “golden goose” of Collin County, 121.
A lot of young kids first came to Addison because they thought it was the place to go. They lived in those apartments for six months and then came back to Uptown as soon as they could. They realized, “I’m in the suburbs. Even though it looked cool, it didn’t feel like what I wanted.” There are people now who are moving to the Plano and Frisco area, and 121, but they’re commuting from Westlake and Southlake, because their family needs are, “I want to be on a golf course.” [Highway] 121 now is easy for me to integrate. They call 121 the freeway that never stops giving. It’s like the “golden goose” of Collin County, 121. NTTA put in that toll road and, look, it’s exploding. That’s what’s connected now from McKinney to the airport: You can be there in 20-something minutes. It used to be an hour-and-a-half commute.
Each sector has its uniqueness. But mixed-use is going to be here to stay. It’s going to be an evolution — and there’s more depth to it if you do it right. State Farm came, and they wanted mixed-use. They created their retail mixed-use because that’s what their employees wanted. They didn’t want to get a big company to come in and do the “company cafeteria.” They wanted to bring in restaurants that would allow their employees to go out real quick. But it had to be affordable. Like the failures of Victory, it can’t be too expensive. It’s got to meet the demographics of what your employee base is.
SALANTY: Those restaurants will need residents around them for dinner. A restaurant can’t survive on lunch or dinner by itself, at least very few of them.
The moral of the story for the mixed-use discussion here is that retail will never lead a mixed-use development. At the end of the day, it’s an amenity.
SHOR: The moral of the story for the mixed-use discussion here is that retail will never lead a mixed-use development. At the end of the day, it’s an amenity. You’ve got to have that core office and multifamily — that built-in customer — then retail and restaurant will follow.
MIHALOPOULOS: They complement each other.
WEITZMAN: We’ve seen prices on land go up, particularly south of LBJ. And it’s getting harder and harder to get anything new if it’s not in a mixed-use project. ... Right now, we’ve been in a cycle, and it’s a good way to lose money three different ways at once. Prices are extremely high. They’re as high as they’ve ever been. We could see some problems because rents are very high for retail and the stars are lined up right — we are doing fantastic, economically. However, everybody is asking the question, “Where are we in the cycle right now?” We’ve been in this cycle for a pretty good while.
LESSONS FROM ICSC
Let’s talk about International Council of Shopping Centers (ICSC). I assume most of you may have attended the RECon (The Global Retail Real Estate Convention) last May. What were your major takeaways?
MIHALOPOULOS: It was very active — 37,000 people. I expected more of a negative, fewer retailers to be there, but that wasn’t the case. There was a lot going on — on a lot of different fronts. This ICSC was more about the changes that are happening in retail. For the first time at ICSC, in all the years I’ve been in business, I never thought a hedge fund would be part of our industry. But in three of the meetings I had, it all had to do with hedge funds, either shorting the retailer, shorting the REIT, or shorting the mall market. ... We’re having a big short happening in our business because the retailers get on a call, or the REITs get on a call, and there’s a hedge fund guy there trying to knock it down.
In all the years I’ve been in business, I never thought a hedge fund would be part of our industry.
SHOR: Probably fewer deals got done, but we’re in this situation where retail is not in the cycle — retail is in sort of permanent change with what’s happening with e-commerce. [The] Amazon announcement that they’re buying Whole Foods for $13.7 billion ... That’s also very telling for what’s happening in the state of retail.
MIHALOPOULOS: And what it did to their stock.
SHOR: When you look at the number of retail bankruptcies that have been announced — the number of store closures that have been announced in the last ten months — it already exceeds the number of store closings during the recession. It’s the highest 12-month period in the last 35 years, and that’s in a pretty healthy economy. That’s with a stock market that’s booming, low unemployment, and an economy that’s pretty good — not great. That tells you this is a permanent change. And so, the discussions we have with retailers, almost every time e-commerce was a topic of discussion at ICSC, is how do they react?
The retailer that’s going to survive is going to have to do both really well. There’s a reason why e-commerce retailers are opening up brick and mortar stores, because they’ve got to have both. You have to do both really well to survive. That’s the change that we’re in.
FRANK: I’ve done a lot of work with Ulta Beauty over the last 12 years. They’ve experienced 13 consecutive quarters of double-digit comps and 50 percent year over year on their e-commerce. They know how to do that well. They’ve been looking at opening a hundred new stores every year, and they’re going to continue to open a hundred new stores every year. It’s about market share — really penetrating the market — especially with the “Amazon effect.”
The takeaway from ICSC that I gained this year was creating a “mousetrap” in development, where you’re bringing in the entertainment and the right components — the right restaurants, the right mix of local chef-driven food concepts.
The takeaway from ICSC that I gained this year was creating a “mousetrap” in development, where you’re bringing in the entertainment and the right components — the right restaurants, the right mix of local chef-driven food concepts. “Food hall” is a big buzz word. Alongside food and theater, alongside all the new [retail experience] concepts— whether it’s an iFly indoor skydiving [center] or a multitude of different indoor concepts — it’s [about] bringing experience to the retail segment so the consumer will want to go to this destination to do their shopping, versus across town where there aren't all the experiential-type components to it.
SHOR: They're the new anchors.
FRANK: They are definitely the new anchors. Grandscape is a good example in The Colony of bringing [Nebraska Furniture] in ... Who would have thought of a furniture store that size?
GEISLER: Legacy West is all about experience.
FRANK: Right. So they’ve created that effective mousetrap.
GEISLER: I think the summit at ICSC was very positive, more than I expected. I think that everybody was there to do business. But there was less business being done. It’s a healthy industry, but it’s an industry that’s adapting and reacting to tremendous change, more change than it’s ever experienced in my lifetime.
WEITZMAN: The interesting thing is, the non-mall business is probably 96 percent of all the centers in the country. Most of the business is still done in non-mall projects. And there’s a whole group of tenants that thrive with visibility and easy in, easy access that serve the neighborhoods. Those are the community centers which are really the backbone of retailing in this country.
MIHALOPOULOS: The other part I sensed was capital — the banks being very cautious, traditional banks on construction loans — it’s very hard to get loans right now unless you put enough equity in. But the equity players that were there — the capital structure — it feels like there were more people bringing capital to the markets because they think there’s an opportunity. Because of the change in what’s going on, there’s also a change in how the structure looks at it. Half our meetings were with capital people.
What Amazon is building is what [Sears] already had. All they had to learn was ... get on the internet. [Sears] had the infrastructure, and they would’ve been a package.
I saw an interesting presentation by Marcus & Millichap. They showed us Sears versus Amazon: Where Sears was, what Sears had, and what Amazon is trying to build. Sears — the stores, catalog, distribution centers, and warehouses — the whole network was there. It was the number-one company at one time in America. And then Amazon started with an idea of selling books online. What they built was exactly what Sears had — a distribution facility, the catalog store. Now, [Amazon] is starting to get into brick and mortar to some extent. It was because Sears didn’t understand — they didn’t get the play of the internet and what was changing in the world — that they became a real estate play that was bought. They merged with Kmart. They’re falling apart on this side, and Amazon is building up ... What Amazon is building is what [Sears] already had. All they had to learn was ... get on the internet. [Sears] had the infrastructure, and they would’ve been a package.
Evolution happens to these retailers. How many of us did Blockbuster deals? It was a leading tenant in the ’80s and ’90s, and then something called Netflix showed up and changed the whole world. It’s part of what we see — there’s change every day here. One thing is, the majority of all sales — still 85, 90 percent — are still done brick and mortar, not on the internet. If you ask somebody in this room the total of internet sales in trillions of dollars of sales, [they would say] it’s 13 percent. Some call it 15 percent.
There’s education that needs to go on in the stores. There are a lot of products out there, and people don’t know what’s right for them.
SALANTY: The last set of numbers that were published by ICSC was 10 percent, and it was based on 2015 numbers. It’s certainly getting bigger. We don’t know where the number is today. It’s interesting to note that mail order — the pure-play online retailers — was 3.7 percent of the 10 percent at that time. Mail order catalog [is] still 3.1 percent. That business has been around for a long time. Omni-channel retailers are 2 percent. There’s another percent, the non-merchandise stuff, which is shipping. That’s what makes up the 10 percent. And all that is growing a little bit. We’re watching this change, but the brick and mortar is the last mile. There’s also education that needs to go on in the stores. There are a lot of products out there, and people don’t know what’s right for them, so they go into IKEA and pick something. They go into Best Buy and pick something.
The top five internet retailers are Amazon, Apple, Dell, Walmart, and Staples. How many of those have stores, of those five? A majority.
MIHALOPOULOS: But Amazon is over 50 percent of the internet sales.
SALANTY: Getting bigger — and getting brick-and-mortar stores.
SHOR: You look at what Wal-Mart is doing in the dot com. Wal-Mart made the decision, “we can’t do it organically like Amazon — we’re going to do it by acquisitions.” They buy jet.com for a billion dollars, which gives them the infrastructure. They buy Bonobos, Mod Market, and one or two other specialty retailers and e-commerce retailers. They’re going to do it by acquisition. I think they’re going to be a very formidable competitor to Amazon. And Walmart.com is going be a very strong player.
SALANTY: They’re not going to give up, I will tell you that.
MERGERS & ACQUISITIONS
In the last five years, there’s been a lot of merger and acquisition activity in the retail sector, and it seems to be affecting a lot of the retail sectors. How is that going to change the real estate component when you have companies merging, and they’re not going to need all of their physical locations?
MIHALOPOULOS: It’s rightsizing. We’ve got an example of a Staples store. We know it’s too big. But when they leave, we’ve got an Ulta and a Petco to take whatever space they want to give us.
SHOR: And much higher rent.
MIHALOPOULOS: I mean, they’re in a spot — most of their business is on the internet now. The office supply business is a perfect example of the mergers.
SALANTY: Number five retailer right now online, Staples.
MIHALOPOULOS: Dollar Trees and Dollar General, they cater to a different market. They’re going after the Walmart and below customer. ... My parents are Greek immigrants. They came to this country for the American dream, and they worked in the factories. They made money, and they made more money. Today, that dream is gone. You’re working either at Walmart or McDonald’s, and you’re making minimum wage or a little above minimum wage, and you’re going to have to shop at a Dollar Tree, Dollar General because that’s where you are going to be able to balance your food budget.
Neiman’s has so much debt. It’s one of the best operations in the country, but they’re in jeopardy.
SHOR: That’s the demographic that’s not going to buy on the internet, for the most part. That’s why the value guys are doing so well. Not just the Dollar Generals and Family Dollars and Dollar Trees, but TJ Maxx, Marshalls, and Ross. Their business continues to boom.
GEISLER: A lot of these companies are financed, whether it’s private equity or publicly traded. The public markets want short-term results, and that affects good decision making — long-term decision making. The private equity companies are there to push them to grow, and they load them with debt. I think we have some really great retailers that are victims — or becoming their own victims because they pushed growth too much. Neiman’s has so much debt. It’s one of the best operations in the country, but they’re in jeopardy.
SHOR: It’s really a shame. I got out of public company retail because I couldn’t stand having to run a business quarter to quarter. It doesn’t allow you to be strategic because if you have a bump in the road on one quarter’s earnings — you miss it by a couple of pennies — your stock gets beaten up. That’s an issue. The bigger issue is private equity’s activity in retail. Neiman Marcus is sort of the poster child of this. You buy a great brand with a great operating team [and] you load it up with debt to take your investment out, because these guys have to get a return on their investment, and now you’ve got a little bump in the road. Neiman has had negative comps, but not terrible negative comps — minus three, minus four, minus five points. I think Neiman, unfortunately, is in real trouble, because they can’t find a buyer. Nobody is going to take the debt. They will take the assets, but they won’t take the debt. What does Neiman do? They pull themselves out — they were in talks with a couple of major buyers. I don’t know how you get from under that debt.
If you have a bump in the road on one quarter’s earnings — you miss it by a couple of pennies — your stock gets beaten up. That’s an issue.
GEISLER: Nordstrom is talking about going private, right? I think that’s a great solution in these times. You have to get back to running a business with long-term in mind.
SHOR: Exactly. That’s exactly right.
SALANTY: The bond holders have to take the loss.
GEISLER: You look at rue21 and Children’s Place, all of these concepts that have been through these really aggressive expansions in the last five years, they’re all dying because of too much expansion, poor operations, and debt.
MIHALOPOULOS: Store closings have been the highest [in] years, and it’s going to continue. There’s a catharsis going on. There’s a cleaning up, and a lot of it has to do with how Wall Street and how money created this. Go back to the other companies that we’ve done, and every time there’s a leveraged buyout of a retail company, it’s like, “Oh, no.”
SHOR: Here we go again.
MIHALOPOULOS: We have a Fresh Market store that’s 45 days from finish out and opening its doors. It was bought out by Apollo, and they’re paying rent, but the store is not going to open. We don’t know when it’s going to open. It’s leveraged buyout controlling it. It’s a bean counter controlling the operations of a store.
SHOR: It doesn’t give you any margin for error. You put debt on at the current business level; the company can carry the debt load. If there’s a little bump in the road, if business turns negative a little bit, it could be the end of the business. It’s a shame because these are great brands.
VACANCIES & OCCUPANCIES
Is there a lot of vacant property in Dallas/Fort Worth right now that’s on the market, retail-wise?
GEISLER: 94 [percent occupancy].
SHOR: 93 [percent occupancy].
SALANTY: 93, 94 [percent occupancy].
SHOR: The numbers I have are a little over 94 percent occupancy rate.
SALANTY: Which is the highest in my career here.
MIHALOPOULOS: Ninety has been our norm. I mean, we’ve gone down to the 80s through some of the Great Recession, some in the 80s. But the 90s, you want to keep it 10 percent, and 94, so we are above, where it stood traditionally for 30 years. Part of that is lack of product being built over the years. We don’t have the tremendous amount of speculation going on. Most of the stuff that’s been built, the majority of everything is driven by a user, and there’s less space. Then there’s the growth of the smaller shops adjusting and taking up the space.
SHOR: You’ve got the job growth and the population growth.
SALANTY: We have a lot of supply, but our population growth keeps running and it fills it up.
MIHALOPOULOS: Seven-plus million people in DFW. When I came here in the ‘70s, we were 2.5 going into 3 [million].
SALANTY: Right. And we are 3 to 7.5 [million] now.
SHOR: Close, pushing 7.5.
MOMS, POPS, & SERVICE RETAILERS
Are you seeing a lot of retail opportunities, as far as availability for mom and pop operations and small corporate retailers?
GEISLER: very little space right now for the tenants that are active — [they] can’t find the space they want.
FRANK: It's creating new retail areas — specifically, Grand Prairie. We did ventures involved in the property at I-20 and the Tollway, 161. IKEA is opening this fall. Weber and Co. has 60 acres under development. It’s actually retail boxes and a lot of restaurants.
The city of Grand Prairie is building The Epic — it’s a 150,000-square-foot waterpark. It’s like a Great Wolf Lodge without the lodge. It’s created a whole entertainment and retail area that was not there. There wasn’t even a road to access this corridor before. And then the 287/Haslet corridor out by the Alliance area continues to grow, with another IKEA location there. The Presidio was built last year — a million and a half square feet. That came on top of Alliance Town Center that was over a million square feet.
SALANTY: Virtually 100 percent leased. They're finishing the last buildings in the fall.
GEISLER: There’s not a lot of spec space being built.
FRANK: It’s being absorbed right away.
MIHALOPOULOS: There are a lot of smaller of 5,000-,6,000-square-foot buildings around. That’s what is being built today.
GEISLER: And it’s not for retail, it’s for restaurants and services.
You see a lot of health-care- oriented structures being built right now. I'm not sure that’s really retail.
MIHALOPOULOS: I call it convenience.
MIHALOPOULOS: It’s the convenience of health. The [healthcare systems], I understand, have the satellites, so they can get to where the paying customers are and bring them to the main ship when they need to. Each one does their own, because there are a lot of hospitals being built in the suburbs, too. But the health care, their goal is to give the most care for the least amount of money, how we can do that, especially with everything changing in their world with the Affordable Care Act, and every day there’s a new way. They are trying to get lean and mean.
SoulCycles, Barre, Equinox. That’s your new anchor. That, and the grocery store, which is going to be really interesting now with Amazon and Whole Foods.
FRANK: Another one of the big buzz words, when you are looking at these mixed-use concepts now is health and beauty. I have sat in [a number of] charrettes looking at mixed-use developments, and there’s a whole component for wellness and beauty. There are the core power yogas — they cluster them together.
FRANK: SoulCycles, Barre, Equinox. That’s your new anchor. That and the grocery store, which is going to be really interesting now with Amazon and Whole Foods. So the grocery store component, the wellness component, the beauty with Sephora or Ulta — all really, really hot topics.
MIHALOPOULOS: That’s being overplayed, though.
FRANK: Legacy Hall is about to unveil a 35,000 to 40,000-square-foot food hall, so we’re going to see how that goes. [They will have] 40,000 employees at that intersection.
MIHALOPOULOS: That’s a little different.
FOOD: IN THE HALL, AND IN THE STORE
Do you think anybody has really figured out how to do food hall right yet?
FRANK MIHALOPOULOS: I sometimes call it a food court on steroids. [In New York City], if you go to the food hall at the World Trade Center by Brookfield, it’s in a sophisticated office building, and it looks great. But, there’s not a lot of people. Yet, [other projects] are packed. And a lot of that traffic is driven by tourists.
[In Dallas-Fort Worth], the food hall at Legacy West could work. If there are 45,000 people working there, it’s going to create the traffic. It’s traffic generation that’s going to keep it going.
JENNIFER FRANK: Food halls have created ethnic food options. When you go to these places, they have a wide range of choices. If they keep it current and relevant to the demographic that they’re in, it should do well.
A year ago, two years ago, we said grocers are building and expanding. And, all of a sudden, who is building any new stores? The big boxes, the big grocers, are kind of on hold right now.
MIHALOPOULOS: Trinity Groves [in Dallas] is a food hall, basically. It’s an incubator of 2,500-square-foot restaurants that work because they’re small. It goes back to they don’t want the big restaurant, they want a “get me started.” It gives you that something unique. If [the food halls are] done at the right place with the smaller restaurants, that’s what brings individuality — that creates an environment, and it works.
TOM SALANTY: [Trinity Groves has] the downtown lunch crowd that keeps them busy, — a couple turns during lunch, and then they’ll do a couple turns at dinner. If you make four turns in a restaurant, you’re going to make it. You make two turns in a restaurant, you might not.
MIHALOPOULOS: The other thing that’s been interesting this year versus last year and we talked about it with Whole Foods, but the grocery side of the world is really going through some changes right now. A year ago, two years ago, we said grocers are building and expanding. And, all of a sudden, who is building any new stores? The big boxes, the big grocers, are kind of on hold right now.
SHOR: But the specialty guys are booming, particularly the ones coming in from overseas.
MIHALOPOULOS: Yeah, the LIDLs and Aldis. And they’re going after Wal-Mart. LIDL is coming in and going after that segment.
And now you’ve got LIDL.
MIHALOPOULOS: LIDL is coming in and going after that segment.
FRANK: Everyone says [the name] differently
LIDL is coming in and going after that segment.
SHOR: I called it LIDL. I was in a meeting with those guys in their headquarters in D.C. and it was pronounced four different ways by four different people there.
QUINCY PRESTON: The Dallas Morning News said it rhymed with “needle.”
SALANTY: Now we have the expert.
MIHALOPOULOS: But grocers are the big unknown. If HEB says, "I'm going to open my 25, 30 properties next year" ... they will have a big chain.
SHOR: The real estate they’re sitting on.
I think we’re the most competitive grocery market in the United States.
MIHALOPOULOS: Right. They own the real estate. They just have to say, "let’s start building." And they’re privately owned, so they [can] do it at their pace. Sooner or later that will happen, and there will be another adjustment in the food or grocery business.
SALANTY: I think we’re the most competitive grocery market in the United States.
MIHALOPOULOS: We're up there.
WHAT ARE THE HOTTEST SECTORS?
I have seen a lot of fitness-oriented leases lately. Is that the hottest sector right now? Is it restaurants? What are we seeing?
GEISLER: Restaurants are still the hottest.
SHOR: Entertainment. The Main Events and the Dave & Busters of the world. And TopGolf is as hot of a concept as there is in the country. IFly.
Restaurants are still the hottest.
SALANTY: Movie Taverns.
SHOR: The movie theaters are hot. And medical retail, to your earlier question. The vision and the dentist and the chiropractic, if they go into traditional space, those are businesses that the internet can’t disrupt. They continue to grow. They've been very active for us. And then the other sort of growth, fitness, beauty, Ulta, Beauty Brand. But the other category that are the e-commerce retailers opening up bricks-and-mortar stores. We do Bonobos’ work nationally. They are opening 30 stores a year. Started off purely on the internet. Warby Parker is another great example of that. That’s where you get some additional growth.
SALANTY: Which speaks to bricks-and-mortar still being the last mile and you have to be there. It’s easier to get a new customer in a shopping center than it is online.
TECHNOLOGY AND THE RETAIL EVOLUTION
How is technology changing brick and mortar retailing? The technology demands that brick and mortar retailers are experiencing?
MIHALOPOULOS: We’re getting followed by everything we do. Data is the technology all the companies and consultants are trying to figure out. They know our patterns — how we’re going to shop, where we’re doing it, what our impulses are — they know more about our brain than we do sometimes.
FRANK: It’s data mining. Ulta is a great example of it. They have 15 million beauty club members. And they know specifically what each of their patterns are. They know how to direct market to their e-mails, and they’re great at it. Even when you’re on your own computer and you’re researching something, all of a sudden, you’re looking for a trip to Saint Kitts, different places in Saint Kitts show up, [thanks to retargeting].
GEISLER: [And with] geo-fencing, the retailer knows you’re in the area of a shopping center or certain store, and they can push something out to you to entice you to come in — [like] a discount. There’s a lot going on with that. Technology is affecting the bricks-and-mortar more so with efficiency — maybe more so with power needs — but that’s about it. I don’t see it much more dramatic than that.
SALANTY: So every device, your phone, your computer all has its own IP address, then you join the loyalty club that you mentioned. And if they have your phone number, then your IP address then becomes known. You can walk into the store and they can shoot you a coupon. Boom. Just like that.
FRANK: It’s great for marketing.
MIHALOPOULOS: Yes. The consumer side of technology is changing how we shop. On the retailer side, they’re trying to figure it out —what they can do for inventory control. Some of the department stores are going to say, “OK, I will sell it on the internet, but you come to the store to get it.” They’re having inventory issues. Because if Tom comes in and gets that last size 44 sport coat, and the guy on the internet just ordered it, and they want it there. They need to know, how do we supply it so that we’re not upsetting our customer, because the jacket wasn’t there.
Retailers want smaller stores, but they also want to have the ability to act like a small distribution center.
SALANTY: Retail stores can do more showrooming. If you don’t have the size coat that you want, they can have it on your desk or your office or your home the next day. The store doesn’t necessarily need to have all of the inventory. You might miss your point-of-sale, but if you really need it, they can ship it to you.
MIHALOPOULOS: That’s the customer-service part. Those who do it will succeed. The other part, there is no more — most stores don’t even have storage rooms anymore. The back of the house, the back of the office, everything is on display. At Home does it that way. Bath, they don’t have it. It’s not going to sell if it’s in the back room. They just adjust it for the season.
SHOR: The other major shift with retailers is they want smaller stores, but they also want to have the ability to act like a small distribution center. In other words, the customer can buy online and they can return it to the store. The store has to have the capability to get it back into inventory. Or the customer can place an order online, and pick it up at the store. We’re seeing more and more retailers seeing that as a way to continue to give the customer the experience they’re wanting.
SALANTY: And, if you come into the store to do something like that, you might buy something else. Maybe there’s something at the kiosk that’s the impulse buy while you’re walking through. That’s a big profit center — that impulse-buy stuff.
SHOR: 90 cents of every dollar, roughly, still gets getting rung up in a store, because the customer still wants to have that experience — the interaction, the touch, the feel — to have that instant gratification.
If they close a bricks-and-mortar store, the retailer can lose 30 to 80 percent of their internet sales in those ZIP codes.
But 80 percent of those customers, before they go in the store, they [research online] to help them lead into which stores they’re going to go into. To me, that’s an amazing statistic — eight out of 10 people.
GEISLER: I was at a [retailer-run seminar at RECon (The Global Retail Real Estate Convention) in May] … [They said] that if they close a bricks-and-mortar store, the retailer can lose 30 to 80 percent of their internet sales in those ZIP codes.
SHOR: To a competitor.
GEISLER: They just don’t know. One of [the retailers] was Shoe Carnival or [another in that category]. He said that a women can come in their store and try on three pairs of shoes. She’ll [typically] buy one and go home. Then she’ll buy another pair — or even two — online. There’s a lot you lose, if you lose the brick-and-mortar store.
FRANK: The e-commerce and the point you bring up is really driving more industrial sector growth, too, because I know just even with my couple of examples of two of the tenants that I represent, Ulta opened an 800,000-square-foot fulfillment center in Dallas last year, I believe. And I think we will see a lot more of that, more regional distribution centers, fulfillment centers.
SALANTY: If we are 94 percent leased in retail, how leased are they in warehouse space? It’s got to be higher.
MIHALOPOULOS: The biggest industrial problem is retailers right now. Amazon is your large industrial tenant. They are going crazy. They can’t build enough Amazon distribution centers.
Don’t they have five?
MIHALOPOULOS: They might have more. They might be adding five as we’re speaking.
[I sat in on] an industrial meeting as a retail guy, and I heard everybody talking about how the retailers are taking their space. That’s their new customer.
SHOR: Hillwood has done 7.5 million square feet. I read DFW has the highest amount of warehouse construction growing on than anywhere in the country. It’s an amazing number. Tens of millions of square feet.
SALANTY: [I sat in on] an industrial meeting as a retail guy, and I heard everybody talking about how the retailers are taking their space. That’s their new customer. I said, that’s been your customer for your whole business cycle. It's just a different kind of guy. It used to be the manufacturer. The manufacturer rented the space, and then they send [the products] to the retailer. Now it’s going direct to the warehouse, direct to the customer, or direct to the retailer. So, 70 percent of the economy is retail. That’s not changing. [What's changing] is how we are moving the widgets around.
Joining the Conversation
Duane Dankesreiter, Senior Vice President, Business Information and Research, Dallas Regional Chamber
Linda McMahon, President and CEO, The Real Estate Council
Quincy Cure Preston, Publisher, Dallas-Fort Worth Real Estate Review and Dallas Innovates
SOUTHERN DALLAS RETAIL
DUANE DANKESREITER: I have one question: The Chamber works on projects in southern Dallas — specifically right now, [in talking about] distribution centers, it’s the I-45/I-20 corridor and Inland Port area. [When] I talk to those employers down there, it’s “I can recruit.” But when they’re here, finding a restaurant — even fast food opportunities — in that Inland Port [is tough]. There are numbers down there now. We’ve got employers with 1,500 people. What’s it going to take to get more retail in the I-45/Inland Port corridor?
MIHALOPOULOS: We need daytime business and nighttime business. You’ve got to have both for restaurants. You can’t survive if you just do lunch business and there’s 1,500 employees. You need those numbers, just like a grocery store needs 50,000 people in their immediate market to survive. You’re going to need X amount. I think our biggest challenge in southern Dallas is the income levels and education.
There are many times we think a market is better, and we have to explain, “You haven’t looked at this.”
GEISLER: And housing.
MIHALOPOULOS: Housing will follow. We have to build some of the best schools to get the best people to live there. We’re trying to do that with Redbird, where we are trying to bring in some offices so we can keep employees there. And, we need to get some services there. We’ve done it in some areas of town like Cedar Hill.
When the retailers are looking at the demographics, they’re not trying to be, “Hey, I’m going to help the economy or help southern Dallas. They’re looking at “I have to open a store, and it has to survive. If I don’t have the volume, it’s my job.” If I open a store, and it doesn’t work, that guy doesn’t have a job.
There are many times we think a market is better, and we have to explain, “You haven’t looked at this.” We had to kidnap tenants and put them in helicopters to show them Lake Ridge and some of the pockets of neighborhoods. We need more of that. Unfortunately, the distribution centers are going to have to help put together some intermodal restaurants like the old days and help support it for what it is.
Please sum up your overall impression of the Dallas-Fort Worth retail real estate environment.
SALANTY: When I said that I live in the best city in the best state in the best country, that’s a good summary. We have so much good happening in our market — good people and good developers. We’re on fire. We’re in the middle of the country; we can get anywhere within three hours. We just have to get through July and August.
I think that what is driving Dallas is that everybody is aware they’ve got to operate more efficiently. It’s what is causing retailers to change; it’s why office users are moving to Dallas. Because it’s a more efficient way to live and do business, and it allows your company to excel.
FRANK: I agree. Dallas-Fort Worth is an excellent market. It’s a great test market on all these repurposing of malls and the transition from traditional retail to more entertainment-oriented retail concepts or development projects. We have a great base for retail developers in this community, and they’re going to meet the challenges and the demands of the new consumers.
SHOR: More of the same. DFW is the best place to be, and Texas as an extension is a great place to do business. We’re in a permanent, or certainly a long-term change, in the way retail is going to be conducted. That will have an impact on real estate and an impact on the investments we make and the leasing that we do. But there may be a little bit of unsettling for a period of time. At the end of the day, I think we will all be very happy with how things settle out — and very happy to be doing it from Dallas-Fort Worth.
MIHALOPOULOS: We are blessed to be in a place where [we’ve had] all that’s happened here in the last 20 or 30 years. It’s a can-do city. And it just continues. We create things. Sometimes we don’t have the best waters or the best mountains, but we create transportation, we create parks. It’s a positive to be here.
GEISLER: One of its greatest assets is there’s not a [high] cost of doing business. There’s a lot of opportunity to do business. Many cities around the country, we’ve competed and had envy over, but they’ve always been expensive places to do business. I think that what is driving Dallas is that everybody is aware they’ve got to operate more efficiently. It’s what is causing retailers to change; it’s why office users are moving to Dallas. Because it’s a more efficient way to live and do business, and it allows your company to excel.
QUINCY PRESTON: Is there activity that is unique to the region that you’re seeing?
GEISLER: Wasn’t there a stat that we spend more money dining out than we do grocery shopping?
SALANTY: Yeah. It’s coming.
GEISLER: That is an interesting trend. I think that may be a bigger trend than just Texas or Dallas.
SHOR: I think DFW, Dallas particularly, is known as a consuming market. For retailers that want to test new concepts, Dallas is really high on the list — usually number one.
About the panel
Jennifer Franks is principal at Segovia Retail Group, and has more than 20 years of experience in commercial real estate leasing and development. Her specialty is tenant representation throughout Texas, Arkansas, Louisiana, and Oklahoma. Her clients include IKEA, Ulta Cosmetics, Bath and Body Works, and rue21.
Mike Geisler is founding principal and managing partner at Venture Commercial Real Estate, which he co-founded in 2000 with longtime business colleague and friend, Kenneth Reimer. Geisler has spent more than 30 years as a real estate broker and 20 years leasing specialty and lifestyle centers.
Frank Mihalopoulos is the owner of Corinth Properties and has more than 37 years of experience in real estate investments and development of commercial retail and office properties. He has developments throughout the country, and is a graduate of Southern Methodist University.
Tom Salanty is managing director at JLL in Dallas, having joined the firm in 2016. He has more than three decades of experience in the commercial real estate sector, particularly in the sales of shopping centers.
Alan Shor is a co-founder of The Retail Connection LP, and serves as its president and co-chairman of the board. He is involved in TRC’s strategic direction, and he oversees the day-to-day operations of the company. Shor leads TRC’s investment and merchant banking business.
Herb Weitzman is executive chairman of the Weitzman Group, which he founded in 1990. It is a full-service real estate brokerage firm with the largest retail real estate brokerage force in Texas and one of the largest regional commercial estate firms in the nation. It ranks among the top 50 shopping center management firms in the country.
Talking Shop was published in the Fall 2017 edition of the Dallas-Fort Worth Real Estate Review. The retail roundtable discussion was transcribed and has been edited for length and clarity. The online version includes extended content.